Divulging Client Confidences and Secrets in a Bankruptcy Proceeding
in Order to Collect Fees Is Permitted in Limited Circumstances
An attorney may divulge client confidences and secrets in order to
collect fees but only where such disclosure is made in the course of
a legal proceeding, is as narrow as possible and there is a good-faith
expectation of more than a de minimis recovery.
Rule 1.6(d)(5) (Divulging Client Confidences And
The inquirer presents the following situation. His firm was retained
by a California resident for whom it provided services and by whom it
is owed fees. Upon threat of a collection action, the client began to
make monthly payments. The client subsequently filed a petition for
bankruptcy seeking to discharge, among other debts, the debt to the
inquiring law firm. This petition has preempted any effort by the firm
to collect the fees which it is owed. The bankruptcy is being treated
as a “no asset” proceeding. The inquiring firm has been instructed
not to file a proof of claim with the trustee and it is quite unlikely,
if the proceeding continues in this form, that the firm will recover
any of its fee which is still outstanding.
As a result of its representation of the client,
the firm has reason to believe that the client’s representations to
the bankruptcy court regarding the nature of her assets and liabilities
may not be accurate or complete. This information is based on information
supplied during the course of the representation although some of the
information is also a matter of public record. The inquirer asks whether,
as part of an effort to collect its fees, it is permissible to disclose
through proceedings available in the bankruptcy court, the information
in the firm’s possession regarding the client’s assets.
Rule 1.6(d)(5) provides that:
A lawyer may use or reveal client confidences or secrets . . .
to the minimum extent necessary in an action instituted by the lawyer
to establish or collect the lawyer’s fee.
This stands as a limited but well-recognized
exception to the general rule regarding the confidentiality of client
information. It is based on “the principle that the beneficiary
of a fiduciary relationship may not exploit it to the detriment of the
fiduciary.” Rule 1.6, Comment .1
The exception has been applied to bankruptcy proceedings. For example,
the Maryland Bar has construed the corresponding code section to permit
an attorney to pursue an Application for Allowance of Fees and Disbursements
to be paid by the bankruptcy estate under the provisions of the Bankruptcy
Code which could involve client confidences and secrets. Committee On
Ethics of the Maryland State Bar Association Opinion 83-19 (9/27/82).
The Los Angeles County Bar Association has determined that a lawyer
who had represented a client in a bankruptcy case and was discharged
by the client may file a claim for fees in the bankruptcy court as well
as proceedings to have his debt declared non-dischargeable. Ethics Committee
of the Los Angeles County Bar Association Opinion 452 (11/21/88).
The comments to Rule 1.6 emphasize that any
disclosure should be as narrow as possible and that the lawyer should
seek the use of John Doe pleadings, in camera proceedings, and/or protective
orders where possible to avoid the unnecessary disclosure of information.
Id. See also “Annotated Model Rules of Professional Conduct”
at 88 (“. . . the lawyer must make every effort practicable to
avoid unnecessary disclosure of information relating to a representation,
to limit disclosure to those having the need to know it, and to obtain
protective orders or make other arrangements minimizing the risk of
disclosure.”). Moreover, disclosure is not permitted in non-fee
proceedings. See Florida Bar v. Ball, 406 So. 2d 459 (Fla. 1981) (lawyer
suspended for disclosing to adoption agency that clients had not paid
the lawyer’s fee and thus might be a financial risk); Matter of Nelson,
327 N.W.2d 576, 578-79 (Minn. 1982) (ethical violation where attorney,
following fee dispute, reported client’s alleged tax violations to state
The course of action proposed by the inquirer
regarding the collection of his fees2
is permitted under the governing Rule assuming several conditions are
First, so long as the proposed disclosure is made by the lawyer in a
proceeding initiated by the attorney or otherwise in the context of
an ongoing legal proceeding, it is properly considered to be part of
an “action instituted by the lawyer.” In the absence of any
specific authority to the contrary, it is the view of the Committee
that this language limits only disclosures made out of the context of
Second, the proposed disclosure to the bankruptcy court must be as narrow
as possible, providing only the minimal information necessary to establish
or collect a fee. In addition, if possible, the inquirer should use
protective orders, in camera proceedings, John Doe pleadings, and/or
other appropriate mechanisms to protect the identity and interests of
Finally, the inquirer must have a good faith
expectation of recovering more than a de minimis amount of the outstanding
fee. It must be emphasized that the exception in the Rule only goes
to an attempt to “establish or collect” a fee. It does not
permit the disclosure of client confidences or secrets for any other
reason. This includes an effort to bring a potential fraud to the attention
of the court, salutary as the underlying policy concern may be. Cf.
Matter of Nelson, supra. As a result, if, for whatever reason, the lawyer
does not have a reasonable expectation of more than a de minimis recovery,
the disclosure would violate the rule.
In sum, the well-established but narrow exception
to the general rule against revealing client confidences and secrets
based in Rule 1.6(d)(5) permits the disclosure of such information in
connection with actions to establish or collect fees in bankruptcy proceedings
in limited circumstances.
Inquiry No. 92-10-36
Adopted: February 9, 1993
- See also Cannon v. U.S. Acoustics Corp.,
532 F.2d 1118, 1120 (7th Cir. 1976) (permits fee collection action to
proceed based on this exception to attorney-client privilege); Nakasian
v. Incontrade, Inc., 409 F. Supp. 1220, 1224 (S.D.N.Y. 1976) (attachment
of client funds facilitated by use of confidential information permissible);
ABA Center for Prof. Resp., Anno. Model Rules of Prof. Conduct (1991)
at 88 (“A lawyer entitled to a fee is permitted . . . to prove the
services rendered in an action to collect it”) and at 96 (citing
Cannon v. U.S. Acoustics Corp.).
- the inquiry nor this opinion directly
addresses the nature of client confidences and secrets that may be disclosed
in order to establish a fee.
- Committee does not decide factual
questions; we therefore express no opinion regarding the underlying
- earlier version of Rule 1.6(d)(5),
which is found in DR 4-101(C)(4), permitted a lawyer to reveal
or secrets necessary to establish or collect his fee or to defend himself
or his employees or associates against an accusation of wrongful conduct.”
The history of Rule 1.6 does not explain this change in language.