A lawyer cannot disclose a real estate contract to a broker without the client’s informed consent, which must include disclosure of any personal, financial, or business interests of the lawyer.
According to the New York State Bar Association’s Committee on Professional Ethics Opinion 1161, a real estate contract is deemed to be confidential information, and a lawyer who discloses such confidential information without the client’s informed consent violates New York’s Professional Code of Conduct Rule 1.6(a).
Contract Deemed to Be Confidential Information
In some areas in New York, the lawyer, rather than the broker, prepares the contract of sale in real estate transactions. In one such area, a lawyer had represented the seller in a real estate transaction, and the client’s broker requested from the lawyer a copy of the signed contract between the buyer and the seller. The committee received an inquiry from the lawyer expressing concern about (1) sharing the contract with the broker without the client’s consent and (2) the broker learning about unique contract provisions crafted by the lawyer because the lawyer often did other business with the broker.
The committee explained that, in part, Rule 1.6(a) prohibits a lawyer from knowingly revealing confidential information unless the client gives informed consent. It defines “confidential information” as “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential.” Maintaining a client’s confidential information is a principal obligation of a lawyer under the New York Rules of Professional Conduct, according to the committee.
The committee pointed out exceptions to Rule 1.6’s disclosure prohibition. Disclosure of confidential information is permitted if 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.” Disclosure is also permitted in other circumstances, such as to prevent a client from committing a crime. The committee concluded that none of Rule 1.6’s exceptions applied to the circumstances of this inquiry and assumed the real estate contract was confidential information that the lawyer could not disclose without the client’s informed consent.
Adequate Information Needed to Give Informed Consent
Under New York Professional Code of Conduct Rule 1.0, informed consent means there is an agreement “by a person to a proposed course of conduct after the lawyer has communicated information adequate for the person to make an informed decision, and after the lawyer has adequately explained to the person the material risks of the proposed course of conduct and reasonably available alternatives.” A lawyer must promptly inform the client of any decision or circumstance that requires the client’s informed consent, among other matters.
The committee concluded that a conflict of interest may arise because of the lawyer’s own admitted personal, financial, and business reasons for resisting disclosure of the contract. New York Professional Code of Conduct Rule 1.7(a) states, in part, that a lawyer shall not represent a client if there is significant risk that the lawyer’s professional judgment will be adversely affected. However, under Rule 1.7(b), a conflict of interest may be waived if the lawyer reasonably believes that competent and diligent representation can be provided. The committee noted that, in this case, it did not believe that a lawyer could comply with Rule 1.7(b) without fully disclosing the lawyer’s own interests before advising the client about whether to consent to share the contract with the broker.
Know Your Jurisdiction’s Confidentiality Rules
ABA Section of Litigation leaders caution that this ethics opinion highlights the importance of protecting the confidentiality of client information, regardless of the specific area of law or the circumstances giving rise to the existence of confidential information. “Confidentiality is a core value of the profession,” observes Thomas G. Wilkinson Jr., Philadelphia, PA, member of the ABA House of Delegates and the ABA Standing Committee of Professionalism. “When there is a question whether the disclosure is impliedly authorized to advance the client’s interests, the safest route is to discuss the advantages and possible disadvantages with the client before making the disclosure,” urges Wilkinson.
The ABA Model Rules of Professional Conduct can be a starting guide, but it is important to “know your own jurisdiction’s ethics rule on confidentiality and its exceptions, including any ethics opinions in your own jurisdiction that may be similar to this one from New York,” suggests William W. Jacobs, Cleveland, OH, cochair of the Section of Litigation’s Real Estate, Condemnation, & Trust Litigation Committee. “ABA Model Rule 1.6 is very broad. It covers any ‘information relating to the representation of a client.’ New York’s version is a little different, and includes all client information that is privileged, likely to be embarrassing or detrimental to the client, or information the client has requested be kept confidential,” explains Jacobs. “Both rules have only limited exceptions, and the only two that would apply here are the client’s express consent, and the client’s implied authorization to disclose,” he notes.
Onika K. Williams is an associate editor for Litigation News.
Hashtags: #confidentiality, #client, #disclosure, #informedconsent, #modelrule1.6
- N.Y. State Bar Ass’n Comm. on Prof’l Ethics Op. 1125 (June 2, 2017).
- N.Y. State Bar Ass’n Comm. on Prof’l Ethics Op. 1059 (June 12, 2015).
- Am. Bar. Ass’n Standing Comm. on Ethics & Prof’l Responsibility Formal Op. 480, “Confidential Obligations for Lawyer Blogging and Other Public Commentary” (Mar. 6, 2018).
Copyright © 2019, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).