School District Practice Bulletin: Loose Lips Can Sink More Than Ships

We all understand how idle conversation and gossip can negatively impact relationships and workplace morale. But can they cause a school district to lose their lawyer? It is black-letter law that confidential communications between attorney and client are privileged, inadmissible, and cannot be later used against that client by third parties. However, under many circumstances confidential communications that occurred just outside the traditional attorney-client relationship can result in disqualification of counsel. In an environment when many educators become lawyers and education lawyers go from job to job and from client to client, care must be given to the context in which such communications occur.

I.    The Ethical Duty of Confidentiality Is Broader Than the Attorney-Client Privilege.

Generally, every lawyer has a duty to refuse to disclose, and to prevent another from disclosing, a confidential communication between the attorney and client. (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal. App .4th 294, 309; Evid. Code § 954.) The attorney-client privilege is statutory and permits the holder of the privilege to prevent disclosure, including testimony by the attorney, as to communications that are subject to the privilege. (Evid. Code §§ 952-955.)

The attorney’s ethical duty of confidentiality under Business & Professions Code section 6068(e) is broader than the attorney-client privilege. It extends to all information gained in the professional relationship that the client has requested be kept secret or the disclosure of which would likely be harmful or embarrassing to the client. (See Cal. State Bar Formal Opns. No. 1993-133, 1986-87, 1981-58, and 1976-37; Los Angeles County Bar Association Formal Opns. Nos. 456, 436, and 386. See also In re Jordan (1972) 7 Cal.3d 930, 940-41.) However, if the status of the person and the purpose of the conversation is unclear to the attorney, highly negative outcomes may result.

II.    California Rule of Professional Conduct 1-100

Regardless of the existence of an attorney-client relationship, the receipt of confidential information may create a conflict of interest in violation of Rule of Professional Conduct 1-100. Rule 1-100 states that the general intent of the rules of professional conduct is “to protect the public and promote the respect and confidence of the legal profession…The prohibition of certain conduct in these rules is not exclusive.” As such, obtaining confidential information in a conversation outside the attorney-client relationship may undermine the integrity of the legal profession if a lawyer may later use it against the speaker. For example, if a district special education lawyer obtains sensitive information about a child, and then becomes involved in litigation against that child, the acquisition of such information may necessitate self-recusal or disqualification.

This was the decision reached by the federal Court of Appeals in Allen v. Academic Leagues of America Inc., 831 F.Supp 785 (1993). In Allen, a non-attorney received considerable confidential information outside of an attorney-client relationship. Thereafter, that individual became an attorney and sued the entity. The court found disqualification was not warranted under the “conflict of interest” provisions of California Rule of Professional Conduct 3-310 because there had been no formal attorney-client relationship at the time of the communication. However, the court did find disqualification was warranted under Rule 1-100.

The Allen Court relied, in part, on William H. Raley Co. v. Superior Court (1983) 149 Cal App 3d 1042, which held that “[A] conflict of interest [under RPC 5-102(B)] may arise from an attorney’s relationship with a non-client where the attorney has acquired confidential information in the course of such a relationship which will be, or may appear to the person or entity to be, useful in the attorney’s representation in an action on behalf of a client,” and thus found that a potential conflict existed.

The Allen Court then applied the balancing test for disqualification of attorneys set forth in, In re Lee G (1991) 1 Cal.App.4th 17: “[T]he court must weigh the combined effect of the party’s right to counsel choice, an attorney’s interest in representing a client, the financial burden on a client of replacing disqualified counsel and any tactical abuse underlying a disqualification proceeding against the fundamental principle that fair resolution of disputes within our adversary system requires vigorous representation of parties by independent counsel unencumbered by conflicts of interest.” Applying this balancing test, the Allen Court found that the confidential information obtained in the course of the attorney’s prior personal relationship outweighed all other factors. The court appeared to base its decision on the calculation that the more sensitive the confidential information received, the more likely recusal or disqualification would be appropriate.

III.    Firm-Wide Disqualification

In California, the Supreme Court has consistently held that the need to maintain client confidences requires disqualification of an entire law firm when one of the attorneys in the firm has acquired confidential information of the adverse party. (People Ex Rel. Department of Corrections v. Speedee Oil Change Systems, Inc. 20 Cal.4th 1135 (1999).) The general rule is that when an attorney is disqualified from representation, the entire firm is vicariously disqualified as well. Accordingly, an ethical wall between the disqualified attorney and his or her firm will generally not preclude the disqualification of the firm. A California appellate court went further, concluding that a firm representing one party in litigation must be disqualified when it employs an attorney who previously obtained confidential information from the opposing party, even in the absence of any evidence that any confidential information was shared between the firm and the attorney. (Pound v. Demera Demara (2005) 135 Cal.App.4th 70.) Accordingly, if any attorney in a law firm obtains confidential information from an adverse party, whether before or during association with the firm, and even if the communication(s) which revealed the information occurred outside the scope of the attorney-client relationship, disqualification of the entire law firm on that particular matter will likely be required.

IV.    Recommendations

Many lay people freely discuss their personal issues and problems, particularly with people they trust like educators, or even education lawyers. However, circumstances can and often do change. One day a teacher, the next day a lawyer. One day a happy parent, the next an angry, adverse litigant. Lawyers in particular need to be sensitive to the consequences of receiving confidential information which could later compromise your client’s legal position and choice of counsel. This may be especially acute in the education context, as described above in the Allen case. Once informal conversations veer towards sensitive areas that could relate to the subject matter of possible future litigation of the type handled by the lawyer-participant in the conversation, it’s a very good time to consider whether the time is right to change the subject.

This document is intended to provide you with information about public entity/school district related developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.

April 7, 2014