State Bar Association
Committee on Professional Ethics
Opinion 980 (9/4/13)
of confidential information to collect a fee; candor toward a tribunal
lawyer, having learned in a prior proceeding that a then-client imparted
material and false information about the client’s finances to the tribunal, has
a duty to take reasonable remedial measures that may still be available,
including, if necessary, disclosure to that tribunal. Even if the correct information about the
former client’s finances is confidential, the lawyer may disclose it in the
former client’s bankruptcy proceeding if, but only to the extent that, the
lawyer reasonably believes that disclosure is necessary to collect a fee that
the former client owes to the lawyer.
the inquiring attorney was representing a client in a contested judicial
proceeding in which the client’s finances were at issue, the client disclosed
confidential information to the attorney about the client’s finances (including
that the client was working “off the books”).
The information was inconsistent with what the client was providing to
the court. The attorney, according to
the inquiry, did not “promote” this information in the judicial proceeding.
the client filed for protection from creditors, including the inquiring lawyer,
who is owed a legal fee from the prior representation. The lawyer wishes to reveal the confidential
information from the first proceeding in the bankruptcy proceeding so as to aid
the lawyer’s effort to be paid the legal fee.
received confidential information from the client in one proceeding, may the
inquiring lawyer disclose that information in a subsequent bankruptcy
proceeding in an effort to collect an unpaid legal fee?
under Rule 1.6(a) of the New York Rules of Professional Conduct (the Rules), a
lawyer shall not “knowingly reveal confidential information” or “use such
information to the disadvantage of a client or for the advantage of the
lawyer.” One of the exceptions to this
proscription is Rule 1.6(a)(3), which says that a lawyer may do so if “the
disclosure is permitted by paragraph (b)” of Rule 1.6. That paragraph, among other things, permits a
lawyer to “reveal or use confidential information to the extent that the lawyer
reasonably believes necessary … to establish or collect a fee.” Rule 1.6(b)(5)(ii).
5. We caution that Rule 1.6(b)(5)(ii) is no license
for counsel to reveal any confidential information beyond what is “reasonably
believe[d] necessary” to collect the fee.
The Rules do not shed much light on these terms. Nonetheless, these terms provide significant limits
beyond which a lawyer may not go in seeking to collect a fee. We have previously discussed those limits,
and while some of the opinions were decided under the prior Code of
Professional Responsibility, we believe they generally remain sound guides
under the Rules.
6. First, a lawyer should
not resort to disclosure to collect a fee except in appropriate circumstances. Second, the lawyer should try to avoid
the need for disclosure. Third, disclosure
must be truly necessary as part of some appropriate and not abusive process to
collect the fee. Fourth, disclosure may not be broader
in scope or manner than the need that justifies it, and the lawyer should
consider possible means to limit damage to the client.
in mind these limits on the fee-collection exception, we now turn to its
applicability. The exception, as set
forth in Rule 1.6(b)(5)(ii) and quoted above, is not reserved for any
particular kinds of proceedings. In
particular, the fee-collection exception “has been applied to bankruptcy
proceedings.” D.C. Opinion 236 (1993)
(citing examples and concluding that a “well-established but narrow exception to the
general rule against revealing client confidences and secrets … permits the
disclosure of such information in connection with actions to establish or
collect fees in bankruptcy proceedings in limited circumstances”).
course the limits on the exception also apply in bankruptcy proceedings. Indeed, there is some authority as to how
those limits may apply to particular uses of confidential information in the
bankruptcy context. However, because the inquiry does not specify
the particular planned uses of confidential information, we leave to the
inquiring attorney a careful consideration of whether disclosure is appropriate
under the above principles, and if so, how to limit it to the minimum
inquiring attorney should also consider whether the information from the client
is not only confidential under the rules of ethics, but also subject to
attorney-client privilege, and whether such privilege might affect the
permissibility of the proposed disclosure. However, questions of privilege are legal
matters on which we do not opine.
turn to a second question that was not part of the inquiry but is raised by its
facts. The inquiring attorney says that
the attorney did not “promote” the client’s apparently false evidence about the
client’s finances during the first proceeding.
Depending on when that first proceeding occurred, however, the lawyer
may have had a greater duty to the tribunal than forbearing from relying on the
false evidence. Specifically, the
applicable rule may have obliged the attorney to disclose the confidential
information to the first tribunal if the client declined to do so and lesser
remedial measures were insufficient to cleanse the record of the untrue
Rules of Professional Conduct became effective, replacing the former Code of
Professional Responsibility, on April 1, 2009.
On that day, a lawyer’s duty in appearing before a tribunal materially
changed. The relevant provision of the
Code had required that a lawyer who learned that the lawyer’s client had clearly
perpetrated a fraud upon a tribunal “shall promptly call upon the client to rectify the same, and if
the client refuses or is unable to do so, the lawyer shall reveal the fraud to
the affected … tribunal, except when the information is protected as a
confidence or secret.” DR
7-102(B)(1) (emphasis added).
contrast, one of the new rules that took effect on April 1, 2009, sweeps more
broadly. The duty to take remedial steps
is triggered when “a lawyer, the lawyer’s client, or a witness called by the
lawyer has offered material evidence and the lawyer comes to know of its
falsity.” Rule 3.3(a)(3). The duty is
also triggered whenever the lawyer knows of “fraudulent conduct related to the
proceeding.” In either case, “the lawyer shall take
reasonable remedial measures, including, if necessary, disclosure to the
tribunal.” Rule 3.3(a)(3), (b). There is no longer any exception for
confidences or secrets. See Rule
3.3(c) (duty applies “even if compliance requires disclosure of information
otherwise protected by Rule 1.6”); N.Y. State 837 ¶¶ 6-7 (2010).
application of the new standards of Rule 3.3 depends on when the first
proceeding occurred. In N.Y. State 831
(2009), we concluded that, notwithstanding the adoption of Rule 3.3, DR
2-107(a) remained in force as to a fraud committed by the client prior to April
1, 2009, regardless of when the lawyer came to know the falsity of the
information. Here, the lawyer’s duty to
disclose the information to the tribunal depends on whether the client imparted
the false information to the tribunal before or after April 1, 2009.
the false information was imparted before that date, the lawyer had a duty to
call upon the client to rectify the fraud.
However, if the client declined to do so, the lawyer had no further duty
to disclose the information to the tribunal if that information was protected
as a confidence or secret. And the
information was undoubtedly so protected, given its nature and the way the
lawyer learned it. On the other hand, if
the false information was material and was imparted to the tribunal on or after
April 1, 2009, then the lawyer had a duty to take reasonable remedial measures,
and if measures short of disclosure were insufficient, then the lawyer would
have a duty of disclosure to the tribunal.
leaves us with two remaining matters, each on the assumption that Rule 3.3, not
DR 7-102(B), governs the lawyer’s obligations.
One is the issue of whether, even if the Rules of Professional Conduct
would seem to require disclosure of the false information, such information
might nevertheless be shielded from disclosure in the first proceeding by the
attorney-client privilege. As noted above, however, privilege issues are
questions of law beyond our purview.
other remaining issue is the duration of the lawyer’s obligation to make a Rule
3.3(a) disclosure to a tribunal. Although
the State Bar proposed that the duty continue only to the conclusion of the
proceeding, the courts did not adopt that proposal. N.Y. State 837 ¶16 (2010). Thus it appears that the obligation to
disclose “may continue even after the conclusion of the proceeding in which
the false material was used.” We
nevertheless opined that the endpoint of the obligation “cannot sensibly or
logically be viewed as extending beyond the point at which remedial measures
are available, since a disclosure which exposes the client to jeopardy without
serving any remedial purpose is not authorized under Rule 3.3.” Id. (citations omitted); accord
N.Y. City 2013-2 (opining that “for a measure to be remedial, it must have a reasonable prospect
of protecting the integrity of the adjudicative process,” and discussing how
application of that standard requires consideration of law and court procedures
applicable to correction of the false evidence in question).
lawyer who in one proceeding obtains confidential information about a client’s
financial affairs may disclose that information in a subsequent bankruptcy
proceeding if, but only to the extent that, the lawyer reasonably believes that
disclosure is necessary to collect a fee that the former client owes to the lawyer
and disclosure is not barred by attorney-client privilege.
18. If a
lawyer learns that a client has imparted false and material information to a
tribunal since Rule 3.3 has been in effect, then the lawyer has a duty to take
reasonable remedial measures that are still available, including, if necessary,
disclosure to that tribunal, unless disclosure is barred by attorney-client
A lawyer “reasonably believes” something when “the lawyer believes the matter
in question and … the circumstances are such that the belief is
reasonable.” Rule 1.0(r). The Rules do not define “necessary,” but Webster’s
Unabridged Dictionary at 1200 (2nd ed. 1983) says that the word
means “unavoidable, essential, indispensable, needful.”
See N.Y. State 684 (1996)
(analogizing to rule allowing withdrawal when client “deliberately disregards”
a fee obligation, which occurs when “‘the
failure is conscious rather than inadvertent, and is not de minimis in either amount or
duration’”); Restatement (Third) of the Law Governing
Lawyers §41 cmt. c (2000) [hereinafter Restatement] (“The lawyer’s fee claim
must be advanced in good faith and with a reasonable basis.”).
See Rule 1.6, Cmt.  (“Before
making a disclosure, the lawyer should, where practicable, first seek to
persuade the client to take suitable action to obviate the need for
disclosure.”); N.Y. State 608 (1990) (noting Code principle that a lawyer should “zealously avoid,” and “attempt amicably to
resolve,” fee controversies with clients, and concluding that lawyer may use
a collection agent to collect a fee but only after all other reasonable efforts
short of litigation have been exhausted).
See N.Y. State 684 (1996) (disclosure to a
credit bureau would appear to aid collection process if at all “only by virtue of its in terrorem effect on the client,” and
where “the client's potential injury arising from the disclosure of the client secret is the very vehicle of
collection, such disclosure cannot be viewed as the type that is ‘necessary’
for the collection”); Restatement §41 cmt. c (lawyer
“may not disclose or threaten to disclose information to nonclients not
involved in the suit in order to coerce the client into settling”).
See Rule 1.6, Cmt.  (“a
disclosure adverse to the client’s interest should be no greater than the
lawyer reasonably believes necessary to accomplish the purpose,” and disclosure
in adjudicative proceeding “should be made in a manner that limits access to
the information to the tribunal or other persons having a need to know the
information, and appropriate protective orders or other arrangements should be
sought by the lawyer to the fullest extent
practicable”); Restatement §65, cmt. d (describing requirements that use or
disclosure of confidential information in compensation dispute be proportionate
and restrained); id. §41, cmt. c (“lawyer
should not disclose the information until after exploring whether the harm can
be limited by partial disclosure, stipulation with the client, or a protective
inquirer must have a good faith expectation of recovering more than a de
minimis amount of the outstanding fee.”
D.C. Opinion 236 (1993). “[T]he 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 the
client. Id.; accord
Los Angeles County Opinion 452 (1988) (attorney may prosecute adversary
proceeding to have a debt declared non-dischargeable but “as in any fee
collection action, the attorney should avoid the disclosure of confidences and
secrets to the extent feasible, and should obtain appropriate confidentiality
orders for this purpose”).
ethics committee, while opining that an “attorney may make a claim in the
bankruptcy case, and may prosecute a dischargeability proceeding as to the
claim,” also opined that the attorney may not participate in the “collective
collection effort of the bankruptcy process.” In other words, “the attorney may
not use confidential or secret information to challenge the right of his former
client to a discharge, and may not disclose such information to the trustee or
other creditors,” or otherwise “assist [the] trustee or other creditors in
Los Angeles County Opinion 452 (1988).
We have previously noted a question whether the court-adopted rules of legal
ethics “can override the statutory protection to
the attorney-client privilege afforded by CPLR § 4503(a).” N.Y. State 831 (2009). Even if they cannot, however, it is not clear
that privilege would bar disclosure in the case at hand. We note that
in certain proceedings seeking relief from creditors, the privilege typically
belongs to the Trustee and not to the person seeking relief. Thus, the person with capacity to waive the
privilege may reside in someone other than the lawyer’s onetime client. Moreover, an exception
to the privilege could apply. See, e.g.,
Alexander, CPLR §4503 Practice Commentaries, C4503:5(b) (McKinney) (discussing,
as an exception to the privilege, “the rule that permits a lawyer to reveal
confidences in order to collect a fee from the client”); Restatement
privilege does not apply to a communication that is relevant and reasonably necessary for a lawyer to employ in a proceeding
… to resolve a dispute with a client concerning compensation or reimbursement
that the lawyer reasonably claims the client owes the lawyer”); Restatement §82(a) (exception
to privilege when client “consults
a lawyer for the purpose, later accomplished, of obtaining assistance to engage
in a crime or fraud”).
Rule 3.3(b). Under the new rules, “fraudulent”
conduct includes not only conduct that is fraudulent under applicable law, but
also conduct that “has a purpose to deceive.”
Rule 1.0(i). This new definition
apparently broadened the category of conduct constituting client frauds that
could require remedial steps. See N.Y. State 831 (2009).
We have already noted issues as to whether privilege might bar disclosure
otherwise permitted for the purpose of collecting a fee, see footnote 8 supra, and some of the same
considerations (including possible applicability of the crime-fraud exception)
apply to whether privilege might bar disclosure otherwise mandated by Rule
3.3. In any
event, even if the privilege applied to the client communications in question,
it may not extend to the context of disclosure under Rule 3.3. See
Rule 1.6, Cmt.  (attorney-client privilege is part
of evidence law and applies “when compulsory process by a judicial or other
governmental body seeks to compel a lawyer to testify or produce information or
evidence concerning a client”); N.Y. State 837 ¶¶ 12-13 (2010)
(noting that CPLR §4503’s limit on remedial measures
“extends only to the introduction of protected information into evidence”); Restatement §86(1) (privilege may be invoked “[w]hen an attempt is made to introduce in evidence or
obtain discovery” of a privileged communication).