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February 11, 2021 Articles

ABA Formal Opinion 492: Confidentiality, Conflicts, and “Significantly Harmful” Information

The ABA clarifies the obligations resulting from a consultation with a prospective client from those owed to a current or former client.

By Tiffany Rowe
A client-lawyer relationship may be formed during a consultation.

A client-lawyer relationship may be formed during a consultation.

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On June 9, 2020, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility published Formal Opinion 492 to provide greater clarity regarding when an exchange with a potential client creates certain duties or limitations on the lawyer (or lawyer’s firm) even though an attorney-client relationship does not exist. The opinion distinguishes the obligations resulting from a consultation with a prospective client from those owed to a current or former client. Notwithstanding that distinction, a consultation with a prospective client imposes certain duties of confidentiality regarding the information received and may also create instances where the exchange of information with a lawyer creates a conflict that impacts the lawyer’s ability to take on other matters.

Model Rule 1.18: Definition of Prospective Client

Model Rule 1.18(a) defines prospective client as “[a] person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter.” Model Rules of Pro. Conduct r. 1.18 (Am. Bar Ass’n 2019). Whether such consultations make a person a prospective client depends on the circumstances. If there is a specific request or invitation to provide the lawyer information about a potential representation “without clear and reasonably understandable warnings” informing the person of the limit on the lawyer’s obligations, and the lawyer receives such information, the person becomes a prospective client. Id. 1.18(b) cmt. 2. However, if a person communicates information unilaterally to a lawyer, the person does not become a prospective client unless he or she has a reasonable expectation that the lawyer will discuss the possibility of representation. Id.

It is important to note that a client-lawyer relationship may be formed during a consultation. The lawyer should take the precautions discussed in Formal Opinion 492 to avoid that result if that is not the lawyer’s intention.

Obligation to Protect Confidential Information

Model Rule 1.18(b) creates a duty to protect confidential information obtained during a consultation with a prospective client, even when the attorney-client relationship does not exist. This duty requires the lawyer to protect all information obtained during the consultation. The information obtained cannot be used or revealed unless the lawyer has the prospective client’s informed consent at the time of consultation that the lawyer will not keep the information confidential. Model Rule 1.0(e) defines informed consent as “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” Model Rules of Pro. Conduct r. 1.0(e).

“Significantly Harmful” Information: Disqualifying Conflict of Interest

A consultation with a prospective client can potentially disqualify a lawyer from other work. Because a lawyer’s consultations with prospective clients are typically limited in time and depth, however, the conflict-of-interest protections afforded to prospective clients are specific to “significantly harmful” information provided during the consultation. Model Rules of Pro. Conduct r. 1.18 cmt. 1; see also N.Y.C. Bar Ass’n Comm. on Pro. Ethics, Formal Op. 2013-1 (2013) (“The ‘significantly harmful’ test makes the [Rule 1.18(c)] restriction less exacting than the corresponding restriction on representations that are materially adverse to a former client.”). A person and a lawyer may, of course, have as many consultations and discussions as they mutually find beneficial in order to determine whether to enter into a client-lawyer relationship. However, multiple discussions make it more likely that the lawyer will receive information that could be significantly harmful in a later representation adverse to the prospective client.

Model Rule 1.18(c) states that a lawyer subject to the confidentiality provisions of Model Rule 1.18(b) shall not represent a client whose interests are “materially adverse to those of a prospective client in the same or a substantially related matter” if information received from the prospective client “could be significantly harmful to that person in that matter. . . .” Model Rules of Pro. Conduct r. 1.18(c) (emphasis added). Model Rule 1.18 is not a blanket protection for a prospective client who contacts a lawyer for consultation and unilaterally provides information to the lawyer, or for a prospective client who contacts a lawyer intending to disqualify the lawyer from another matter. To be afforded the protections of Model Rule 1.18, the prospective client must show some evidence beyond the mere fact of a consultation. The prospective client must show that he or she communicated information that “could be significantly harmful” in a subsequent matter.

The use of the phrase significantly harmful distinguishes the duties owed to prospective clients from those duties owed to current and former clients. Information viewed as significantly harmful typically includes information about settlement issues, personal accounts of relevant events, the prospective client’s thoughts about how to manage the matter, and discussions in which the lawyer outlined potential claims and addressed potential settlement options. Significantly harmful information is not information that is simply detrimental to the formerly prospective client; to give rise to a potential conflict of interest, the information must be “prejudicial to the former prospective client within the confines of the specific matter in which disqualification is sought.” O Builders Assocs., Inc. v. Yuna Corp. of N.J., 19 A.3d 966, 978 (N.J. 2011) (citations omitted).

Comparing the conflict-of-interest protections afforded to current and former clients under Model Rule 1.9 with those owed to a prospective client under Model Rule 1.18 demonstrates an important distinction between the impact on the lawyer’s current/former work and the impact on the lawyer’s future work. Given the attorney-client relationship, information received from a former client need not meet the “significantly harmful” standard before the lawyer is disqualified from representing a client with materially adverse interests in the same or a substantially related matter. With regard to a former client, the question is not whether confidences were shared or whether the information shared was significantly harmful. Rather, the lawyer cannot represent another person in the same or a substantially related matter where the other person’s interests are materially adverse to those of the former client. Model Rule 1.9 defines a “substantially related matter” as one that involves the same transaction or legal dispute or one in which there is a substantial risk that confidential factual information that would normally be obtained in the prior representation would materially advance the client’s position in the subsequent matter. In Analytica v. NPD Research, Judge Posner explained that the possibility of obtaining confidential information in the first representation is enough once it is determined that the matters are “substantially related.” 708 F.2d 1263, 1267 (7th Cir. 1983).

“Significantly Harmful” Information: Resolving Disputes

When the basic facts of a consultation are contested, a review by the court or disciplinary authority may help to determine the credibility of the person invoking Model Rule 1.18. However, such review may not be necessary; if conducted, though, it should avoid having the prospective client reveal confidential information.

Evidence that the prospective client communicated information that could be significantly harmful does not require disclosure of the prospective client’s confidential information or the substance of the conversation. Rather, the evidence required is described as similar to a privilege log, including the date, duration, and manner of communication and a high-level description of the topics discussed. Fed. R. Civ. P. 26(b)(5) (requiring that privilege logs “describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim [of privilege or other protection]”).

Initial Consultation: Limiting Information

A lawyer may avoid receiving significantly harmful information from a prospective client by warning prospective clients against disclosing detailed information. The caution to the prospective client is not meant to discourage lawyers from having a thorough discussion during the consultation; rather, it serves as a reminder that the more information disclosed to the lawyer while consulting with a prospective client, the more likely that the lawyer may be precluded from representation of other parties in a substantially related matter.

There remains the possibility, as noted above, that the prospective client may give informed consent that no information disclosed during the consultation prohibits representation of a different client in the matter. Alternatively, the lawyer and prospective client can come to an agreement that “expressly so provides” that the lawyer can subsequently use information received from the prospective client. Model Rules of Pro. Conduct r. 1.18 cmt. 5; see also N.Y.C. Bar Ass’n Comm. on Pro. Ethics, Formal Op. 2013-1, at 5 (noting that the consent must be informed and confirmed in writing, and recommending other steps to ensure the effectiveness of the waiver); Model Rules of Pro. Conduct r. 1.0 cmt. 6 (discussing how adequacy of disclosure and explanation by the lawyer may depend on the sophistication of the client).

To be sure, while the lawyer may be disqualified from the representation of a prospective client, the lawyer’s firm may still take on future adverse representations. Screening from other lawyers at the firm could, in certain circumstances, avoid imputation of the prospective client conflict to other firm lawyers. Representation by the firm may proceed if the firm can obtain informed consent from both the affected client and prospective client, or if the lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether representation would occur. At that point, the disqualified lawyer must be timely screened from participation in the matter and the prospective client promptly given written notice. Model Rules of Pro. Conduct r. 1.18(d).

Informed consent under Rule 1.18 may occur in different contexts. For example, informed consent may be obtained at the outset of a consultation via a condition that any information provided by the prospective client will not be disqualifying. Model Rules of Pro. Conduct r. 1.18 cmt. 5. Informed consent may allow a lawyer who has received significantly harmful information from a prospective client to represent an adverse party pursuant to Model Rule 1.18(d). (For the requirements of informed consent, see Model Rules of Pro. Conduct r. 1.0(e); Model Rules of Pro. Conduct r. 1.0 cmts. 6, 7.)

Tiffany Rowe is a senior associate with Orrick, Herrington & Sutcliffe LLP in Washington, D.C.

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