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October 01, 2011

ABA Recommends That DOL Reconsider Proposed Rule

ABA President Wm. T. (Bill) Robinson III urged the Labor Department Sept. 21 to reconsider a proposed rule that the association maintains would require many labor lawyers and law firms to report sensitive and confidential client information to the government.

The proposed rule, implementing Section 203 of the Labor-Management Reporting and Disclosure Act of 1959, would substantially narrow, in a way unintended by Congress, the longstanding “advice” exemption to the “persuader activities” reporting rule issued under the act.

The persuader rule requires employers and their labor consultants, including lawyers, to file extensive periodic disclosures with the department when they are involved in persuading employees on union formation or membership issues. Currently, lawyers are excluded from the rule’s reporting requirements when they merely provide advice or other legal services directly to their employer clients on these unionization issues but have no direct contact with the employees.

In his comment letter, Robinson emphasized that the ABA is not taking sides on a union-versus-management dispute but is defending the confidential client-lawyer relationship and urging the department not to impose “an unjustified and intrusive burden on lawyers, law firms and their clients.” Similar comment letters opposing the proposed rule also were submitted by at least 16 state and local bars from across the country.

The department is proposing major changes to the existing rule that would require lawyers who both provide legal advice to employer clients and engage in any persuader activities to file periodic disclosure reports even if the lawyer had no direct contact with the employees. These reports, in turn, would require lawyers and their employer clients to disclose a substantial amount of confidential client information, including the existence of the client-lawyer relationship and the identity of the client, the general nature of the legal representation, and a description of the legal tasks performed. The proposed rule also would require lawyers to disclose a great deal of confidential financial information about clients that is unrelated to persuader activities that the act is intended to monitor.

The association also expressed concerns that the proposed rule is inconsistent with Rule 1.6 of the ABA Model Rules of Professional Conduct and many binding state rules of professional conduct dealing with confidentiality of information that closely track the ABA model rule.

“In our view, these required disclosures proposed by the department are unjustified and inconsistent with a lawyer’s existing ethical duties under Model Rule 1.6 (and the related state rules) not to disclose confidential client information absent certain narrow circumstances not present here,” Robinson wrote.

He explained that lawyers for employer companies play a key role in helping these entities and their officials to understand and comply with the applicable law and to act in the entity’s best interest. To maintain the trust and confidence of the employer client and provide it with effective legal representation, its lawyers must be able to consult confidentially with the client, he said.

“Only in this way can the lawyer engage in a full and frank discussion of the relevant legal issues with the client and provide appropriate legal advice,” Robinson declared.

In conclusion, Robinson urged the department to reaffirm its longstanding broad interpretation of the advice exemption with respect to lawyers engaged in the practice of law. He also recommended that the department narrow the scope of the financial disclosures required by the rule so that disclosure is required only for those receipts and disbursements that relate directly to the employer clients for whom persuader activities were performed.


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