Interesting Provisions in New Rules: Rule 1.6(b) through Rule 1.7

By Roy Simon

[Originally published in NYPRR May 2009]

Last month (NYPRR April 2009), I began my review of some of the more interesting new provisions in New York’s Rules of Professional Conduct, which took effect on April 1, 2009. Last month’s column ended with the new definition of “confidential information” in Rule 1.6(a). This month’s column picks up with the exceptions to the duty of confidentiality.

Rule 1.6(a): Impliedly Authorized Disclosure of Confidential Information

(a) A lawyer shall not knowingly reveal confidential information, as defined in this Rule, or use such information to the disadvantage of a client or for the advantage of the lawyer or a third person, unless:

(1) the client gives informed consent …

(2) the disclosure is impliedly authorized to advance the best interests of the client and is either reasonable under the circumstances or customary in the professional community; or

(3) the disclosure is permitted by paragraph (b).

Rule 1.6(a)(2) gives a lawyer flexibility to disclose confidential information based on a client’s implied rather than express authority. By contrast, DR4-101 did not mention implied authority, so (ironically) lawyers often acted as if custom or necessity implied the existence of implied authority. (I called it “implied implied authority.”) But this made lawyers nervous. Lacking an exception in DR4-101permitting disclosure based on “implied” authority, lawyers were reluctant to reveal confidential information without a client’s express consent — but obtaining a client’s express consent in the middle of a court hearing or in the middle of negotiations is often impractical.

In ABA Model Rule 1.6(a), the ABA dealt with the problem of implied authority by expressly permitting a lawyer to reveal confidential information if the disclosure was “impliedly authorized in order to carry out the representation.” The COSAC proposal for Rule 1.6, which the NYSBA House of Delegates approved, tracked the ABA’s “impliedly authorized” language verbatim. I understood the ABA’s broad language to mean that a lawyer was impliedly authorized to make disclosures to help a client but not to harm a client.

In New York Rule 1.6(a)(2), however, the Courts decided to augment the ABA language regarding implied authority. Under New York Rule 1.6(a)(2), disclosures of confidential information are impliedly authorized only if the disclosures both “advance the best interests of the client” and are either (a) “customary in the professional community” or (b) “reasonable under the circumstances.” The courts devised this extra language themselves — it was not in the State Bar’s proposals or the COSAC drafts. The added language is both ambiguous and odd. It is ambiguous because what is “customary” is not defined and will vary from one legal field to another, and from one geographic area to another. The language is odd because it means that if implied authority to disclose is “customary in the professional community,” then it need not be “reasonable under the circumstances.” Do we have customs in New York that permit unreasonable disclosures of confidential information? The courts apparently think so, because otherwise the “either/or” structure of the implied authority clause would make no sense. Unfortunately, the courts do not suggest what customs they are talking about, and I am not aware of any. I do not believe that New York lawyers have any unreasonable customs that grant implied authority to disclose confidential information.

In sum, our new confidentiality rule — the most important and fundamental rule of legal ethics — contains a puzzling ambiguity. Did the Courts mean to allow impliedly authorized disclosures only if they are both customary and reasonable under the circumstances? Problems like this could be avoided if the Courts would circulate draft rules for public comment, or hold public hearings on them, or at least write comments or explanatory memos to illuminate language that they added on their own initiative.)

Rule 1.6(b)(1): Reasonably Certain Death or Substantial Bodily Harm

Rule 1.6(b)(1) is a new exception to the duty of confidentiality that had only a rough equivalent in DR4-101. Rule 1.6(b)(1) provides as follows:

(b) A lawyer may reveal or use confidential information to the extent that the lawyer reasonably believes necessary:

(1) to prevent reasonably certain death or substantial bodily harm.

The exception is based verbatim on ABA Model Rule 1.6(b)(1). According to Comment 6B to New York’s rule, the Rule “recognizes the overriding value of life and physical integrity …” Comment 6B adds that harm is “reasonably certain” to occur if either (1) “it will be suffered imminently” or (2) 2009 “there is a present and substantial risk that a person will suffer such harm at a later date if the lawyer fails to take action necessary to eliminate the threat.” Does this mean that a lawyer for a car company or a car dealer may disclose every engineering weakness that may eventually kill or cripple someone? No. According to Comment 6B, a “statistical likelihood that a mass-distributed product is expected to cause some injuries to unspecified persons over a period of years is not a present and substantial risk under this paragraph.”

The “death or substantial bodily harm” exception in Rule 1.6(b)(1) is broader than the exception in DR4-101(C)(3), which permitted a lawyer to reveal the “intention of a client to commit a crime and the information necessary to prevent the crime.” Rule 1.6(b)(1), in contrast, permits a lawyer to disclose confidential information to prevent reasonably certain death or substantial bodily harm even if the client is not involved and even if the conduct in question is not criminal. For example, suppose a client says, “My consulting engineer told me that the apartment building we want to buy is going to collapse soon because a load-bearing beam has a huge crack.” Under DR4-101(C)(3), the lawyer could not reveal this information but under Rule 1.6(b)(1) he can.

Rule 1.6(b)(3): Noisy Withdrawal

A familiar exception — but with one change — is found in Rule 1.6(b)(3), which provides as follows:

(b) A lawyer may reveal or use confidential information to the extent that the lawyer reasonably believes necessary:

(3) to withdraw a written or oral opinion or representation previously given by the lawyer and reasonably believed by the lawyer still to be relied upon by a third person, where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.

This language is essentially identical to DR4-101(C)(5) except that Rule 1.6(b)(3) deletes one crucial word — “implicit”. Under DR4-101(C)(5), a lawyer was free to disclose confidences and secrets only to the extent “implicit” in withdrawing a written or oral opinion, etc. Does Rule 1.6(b)(3) contain the same restriction? That is unclear. The ambiguity occurred because the New York State Bar Association House of Delegates voted to reject a proposal that would have allowed explicit disclosure of a client’s past fraud or crime under certain circumstances (e.g., if the lawyer’s services had been used), and voted to substitute the language of DR4-101(C)(5). But the word “implicit” did not fit the grammatical structure of Rule 1.6(b), which allows a lawyer to reveal or use confidential information “to the extent the lawyer reasonably believes necessary” to accomplish the purpose of each enumerated exception.

I would argue that only a bare-bones disclosure is “reasonably necessary” to withdraw an opinion or representation — for example, “I hereby withdraw my opinion letter relating to this matter dated March 5, 2006,” or “I hereby withdraw my oral representation that the home you have contracted to purchase from my clients has never suffered termite damage.” These disclosures implicitly reveal that the opinion or representation was “based on materially inaccurate information or is being used to further a crime or fraud.” But Rule 1.6(b)(3) does not expressly authorize a lawyer to disclose the actual facts, or to disclose how the lawyer came to know that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud. In my view, the Rule allows only “implicit” disclosure of those things — the same restriction that appeared in DR4-101(C)(5).

Rule 1.6(b)(4): Seeking Legal Advice About the Rules or Other Law

Anew exception to the duty of confidentiality which had no equivalent in the old Code of Professional Responsibility is found in Rule 1.6(b)(4), which provides as follows:

(b) A lawyer may reveal or use confidential information to the extent that the lawyer reasonably believes necessary:

(4) to secure legal advice about compliance with these Rules or other law by the lawyer, another lawyer associated with the lawyer’s firm or the law firm.

This exception allows lawyers to seek ethics advice or legal advice from lawyers in other law firms. We can already consult other lawyers within our own firm, of course, and we don’t need an exception for in-house consultations, but many law firms — especially solo and small firms, which make up the bulk of New York’s law firms — do not have sufficient in-house expertise in legal ethics (or in other areas of law). And even firms that have sufficient ethics expertise may want to consult someone with greater expertise, or to consult an expert outside the firm whose opinion is more likely to be objective.

But it is a bit misleading to say that this exception is new. For many decades, lawyers have been requesting formal and informal opinions from bar association ethics committees and from lawyers outside their own firms. I have always considered disclosures for that purpose to be impliedly authorized by custom under DR4-101. Still, it is comforting to see that custom codified in the Rules of Professional Conduct. I hope the new exception will encourage lawyers to seek independent ethics advice when they have concerns about whether a proposed course of conduct is proper.

Rule 1.7(a): What is a Conflict of Interest?

Perhaps the biggest change in the rules governing day-to-day law practice is found in Rule 1.7, the general rule governing conflicts of interest. It provides as follows:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if a reasonable lawyer would conclude that either:

(1) the representation will involve the lawyer in representing differing interests; or

(2) there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.

Thus, Rule 1.7(a) combines into a single rule the language defining conflicts among two or more current clients (formerly governed by DR5-105) and conflicts between a client and the lawyer’s personal interests (formerly governed by DR5-101).

The version of Rule 1.7(a) adopted by the Courts differs from the version of Rule 1.7(a) proposed by the New York State Bar Association, from ABA Model Rule 1.7(a), and from DR5-101 and 5-105. Instead of using one of those models, the courts wrote their own rule on the fly, under a tight schedule, relying on a small (six person) special committee, without the benefit of public comment or public hearings. In this hasty, secret, elite process, the Courts significantly weakened the regulation of client-to-client conflicts. I will explain.

Under DR5-105(A), a lawyer was barred from accepting or continuing a representation if the lawyer’s independent professional judgment “will be or is likely to be adversely affected” by the representation “or if the representation “would be likely to involve the lawyer in representing differing interests.” Under Rule 1.7(a)(1), a lawyer is prohibited from undertaking or continuing a representation absent informed client consent if the representation “will involve the lawyer in representing differing interests.” [Emphasis added.] What happened to the “likely” standard of DR5-105(A)? It is gone. Nor does it reappear in the definition of “differing interests” in Rule 1.0(f), which provides:

“Differing interests” include every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest. [Emphasis added.]

Reading Rule 1.7(a)(1) literally, therefore, a lawyer may represent a client without client consent even if the representation is likely to adversely affect the lawyer’s independent professional judgment on behalf of another client or the representation is likely to involve the lawyer in representing differing interests. I do not believe that the Courts intended that result. Nor would I advise a lawyer to undertake such a representation without client consent. But Rule 1.7(a)(1) by its terms does not regulate conflicts that are merely “likely” to arise — it only regulates conflicts that “will” arise. Ethics opinions and case law will probably repair this flaw before long, but it is disappointing to find such a serious omission in brand new rules — it’s like pulling your shiny new car into your driveway and having to drive it right back to the dealer for a major repair. A period of public comment on the new rules would have avoided this.

Rule 1.7(a)(2), which defines personal interest conflicts, is more carefully written. It properly focuses on whether there is a “significant risk” that the lawyer’s “financial, business, property or other personal interests” will adversely affect the lawyer’s professional judgment on behalf of a client. (By the way, whatever happened to a lawyer’s “independent” professional judgment? The phrase “independent professional judgment” does appear sporadically in the new Rules, but why is it missing from the general rule on conflicts of interest?)

Unfortunately, in contrast to ABA Model Rule 1.7(a)(2), the New York rule does not refer to a significant risk arising out of the lawyer’s responsibilities to a “former client” or to some other “third party.” This is an awkward and potentially dangerous gap. For example, suppose a new client asks a lawyer to file suit against Acme. The lawyer knows that Acme is a former client but the new client does not. The lawyer also knows that the proposed new suit is substantially related to the work the lawyer once did for Acme — and of course the lawyer will be prohibited from using any of Acme’s confidential information without consent. When the lawyer seeks Acme’s consent, Acme gladly consents to the lawyer’s representation of the new client against it — but not to the lawyer’s use of its confidential information to prosecute the suit. Does this situation fall within the types of conflicts governed by Rule 1.7(a)? No, at least not literally. The lawyer will not be “representing” differing interests because the lawyer will be representing only the new client, not the former client. The situation thus does not fall under Rule 1.7(a)(1). Nor does the prohibition on the lawyer’s use of the former client’s confidential information implicate the lawyer’s “financial, business, property or other personal interests.” Yet I have no doubt that a lawyer could not agree to represent the new client against the former client in this situation without obtaining the new client’s informed consent after explaining that the lawyer would be barred from using or revealing any confidential information obtained from the former client. Why should New York lawyers have to suffer from this ambiguity when the ABA provided a clear model?

Rule 1.7(b): Client Consent to Conflicts

Perhaps the biggest change in the rules governing day-to-day law practice is found in Rule 1.7(b), the rule governing consent and consent ability for conflicts of interest. Rule 1.7(b) provides as follows:

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

The first three subparagraphs define non-consentable conflicts. A conflict is non-consentable — meaning that client consent would not remedy the conflict — if (1) the lawyer does not reasonably believe he can competently and diligently represent each affected client; or (2) the representation is prohibited by law (a rare situation); or (3) the lawyer will be handling both sides of a claim before a tribunal (also rare). Rule 1.7(b)(1)-(3) are not really new in practice — all of these situations would have presented non-consentable conflicts under DR5-101 and DR5-105 — but it will help lawyers to see the three situations spelled out in a rule. Also, the “reasonably believes” standard of Rule 1.7(b)(1) is more familiar than the “disinterested lawyer” standard that reigned in DRs 5-101 and 5-105 (and virtually nowhere else in America) from 1999 to 2009.

Rule 1.7(b)(4), however, signals a big change and will affect thousands of New York lawyers every day. It requires that every client’s informed consent to a conflict of interest under Rule 1.7 must be “confirmed in writing.” What does this mean? Anew definition in Rule 1.0(e) defines the phrase as follows:

“Confirmed in writing” denotes (i) a writing from the person to the lawyer confirming that the person has given consent, (ii) a writing that the lawyer promptly transmits to the person confirming the person’s oral consent, or (iii) a statement by the person made on the record of any proceeding before a tribunal. If it is not feasible to obtain or transmit the writing at the time the person gives oral consent, then the lawyer must obtain or transmit it within a reasonable time thereafter.

Another key term in Rule 1.7(b)(4) is “writing,” which is defined in Rule 1.0(x) (also new) as follows:

“Writing” or “written” denotes a tangible or electronic record of a communication or representation, including handwriting, typewriting, printing, photocopying, photography, audio or video recording and email. A “signed” writing includes an electronic sound, symbol or process attached to or logically associated with a writing and executed or adopted by a person with the intent to sign the writing.

Reading Rule 1.7(b)(4) in light of these two definitions, a lawyer may satisfy the confirmation requirement in any of three ways, all equally valid. First, the lawyer can ask the client to send a signed or unsigned letter, memo, or email to the lawyer memorializing the client’s consent. Second, the lawyer can write a letter or memo or email to the client memorializing the client’s consent. Third, the lawyer can ask the client to confirm consent to the conflict by making a statement on the record in a proceeding before a tribunal. Whatever method is used, it must be done “at the time the person gives oral consent” or, if that is not feasible, then “within a reasonable time thereafter.”

The first method — a writing from the client to the lawyer — will often be risky. The client may fail to transmit the writing to the lawyer within it a “reasonable time” after giving consent, or may send a writing that does not adequately describe the conflict, or may omit key language such as “this confirms my consent to the conflict you have described” (or words to that effect). Even if the lawyer drafts the writing for the client to send to the lawyer, the client may forget to sign it or send it, or may have a change of heart and decide not to send the confirming writing.

The third method — a statement on the record before a tribunal — will be relatively rare. I would expect it to be used only in criminal cases (where judges often ask defendants to confirm consent to conflicts on the record) or in cases where a conflict unexpectedly arises in the middle of a trial or hearing.

The second method — a writing from the lawyer to the client — is the safest and simplest, and will be the most common method of confirmation. The writing from the lawyer to the client need not be countersigned by the client (though of course it may be), so the lawyer will fully control both the timing and the content of the writing, without depending on any action by the client once the client has given oral consent. The writing from the lawyer does not need to repeat the disclosures the lawyer made in order to obtain the client’s informed consent in the first place — it just needs to briefly describe the nature of the conflict so that the client (and anyone else who later reads the letter) knows what the lawyer is confirming.

In NYPRR June 2009, I will continue to explore New York’s new Rules of Professional Conduct.

Professor Roy Simon is the author of Simon’s New York Rules of Professional Conduct Annotated. The brand new 2015 edition analyzes more than 100 new cases, ethics opinions, and other developments critical to New York practice. It’s the legal ethics bible for all New York-area lawyers. To purchase, click here.

In addition, Professor Simon advises lawyers and law firms on questions of professional conduct and serves as an expert witness in cases raising issues of lawyer conduct. You may reach Professor Simon at 516-463-5289 or Roy.Simon@hofstra.edu.

DISCLAIMER: This article provides general coverage of its subject area and is presented to the reader for informational purposes only with the understanding that the laws governing legal ethics and professional responsibility are always changing. The information in this article is not a substitute for legal advice and may not be suitable in a particular situation. Consult your attorney for legal advice. New York Legal Ethics Reporter provides this article with the understanding that neither New York Legal Ethics Reporter LLC, nor Frankfurt Kurnit Klein & Selz, nor Hofstra University, nor their representatives, nor any of the authors are engaged herein in rendering legal advice. New York Legal Ethics Reporter LLC, Frankfurt Kurnit Klein & Selz, Hofstra University, their representatives, and the authors shall not be liable for any damages resulting from any error, inaccuracy, or omission.

Roy Simon