LACBA January 2, 2001

When a California lawyer learns material information during an unsuccessful initial consultation with a prospective client that would be useful to an existing client in an unrelated matter, must the lawyer disclose it to the existing client?

Short answer: Per the opinion, no. The lawyer owes the prospective client a duty to preserve the confidentiality of information disclosed in an initial consultation, even when no engagement results. The lawyer's duty to keep an existing client reasonably informed under Rule 3-500 reaches only matters related to the existing representation, and so does not require disclosure when the information is unrelated to that representation.

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This page answers the general question as of 2001. Ezel answers yours: whether it's allowed on your facts, under the current California Rules of Professional Conduct, with citations.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.

View original ethics opinion (PDF)

Plain-English summary

The committee considers a lawyer (L) who holds an initial consultation with a prospective client (A) and learns, before declining the representation for conflict reasons, that A is considering filing for bankruptcy. The firm's existing client C is engaged in unrelated litigation against A in which C is represented by a different firm. A's prospective bankruptcy filing is material to C because it would automatically stay C's litigation, affect collection of any judgment, and influence settlement.

The committee considers whether L has a duty to preserve A's confidence, a duty to disclose to C, and, if both apply, how to reconcile them.

On the confidentiality side, the committee notes the unsettled definition of "client" in California. Bus. & Prof. Code section 6068(e) does not specify whether a prospective client qualifies; Evidence Code section 951 defines "client" broadly to include one who "consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice"; the Rules of Professional Conduct do not define the term. The committee reviews Flatt v. Superior Court (Cal. 1994), in which the Supreme Court found it unnecessary to decide the prospective client's status to resolve the case, and People v. SpeeDee Oil Change Systems (Cal. 1999), in which the Court treated Mobil as the firm's client for conflicts purposes after a substantive consultation. The committee also reviews LACBA Formal Opinion 366 and State Bar Formal Opinion 1984-84, both holding that section 6068(e) reaches prospective clients. The committee concludes that, regardless of A's precise status, the firm has a duty to preserve A's confidence.

On the disclosure side, the committee reads former Rule 3-500 and section 6068(m) as limited in scope: the duty to communicate "significant developments" applies only to matters within the lawyer's representation of the existing client. Because the bankruptcy information is unrelated to the firm's representation of C, the committee concludes the firm has no Rule 3-500 duty to disclose. The committee distinguishes Flatt's loyalty analysis: in Flatt the information at issue (statute of limitations) would have been the type of general advice the prospective client would expect from the consultation, while here the information would be a windfall to an existing client and is unrelated to that client's representation.

The committee notes (in footnote 3) that it does not address whether the firm would be disqualified from continuing to represent C. It treats that as a separate question outside the inquiry.

In practice

The opinion holds that, under former California Rule 3-500 as it stood in 2001 and Bus. & Prof. Code section 6068(e), a lawyer who declines a representation after an initial consultation must preserve the prospective client's confidences. The committee directs the lawyer not to relay the information to the existing client where the information is unrelated to the existing client's representation. The committee leaves open the separate question of whether continued representation of the existing client may be subject to disqualification.

California's professional-conduct rules were revised effective November 1, 2018; current Rule 1.18 (duties to prospective clients) was added in those revisions, codifying much of the analysis the committee performed under section 6068(e) and the case law. Former Rule 3-500 corresponds substantially to current Rule 1.4. The committee's analysis predates the 2018 revisions.

Common questions

Q: Does a California lawyer owe confidentiality to a prospective client who consults but does not retain the lawyer?

A: Per the opinion, yes. The committee finds the lawyer must preserve the confidence of material information disclosed in an initial consultation, whether or not the consultation results in an engagement.

Q: Must the lawyer pass on to an existing client information learned in the declined consultation that may matter to that client?

A: Per the opinion, no, where the information is unrelated to the lawyer's representation of the existing client. Rule 3-500 and section 6068(m) reach only "significant developments" relating to the lawyer's engagement with the existing client.

Q: Would the answer change if the information were related to the existing client's matter?

A: The committee does not decide that question. The committee's analysis carves out the unrelated-information scenario and reserves what would follow if the prospective client's information were related to the existing representation.

Q: Could the firm be disqualified from continuing to represent the existing client?

A: The committee expressly declines to opine on disqualification, treating it as outside this inquiry.

Q: Does it matter how much the lawyer learned from the prospective client?

A: Per the opinion's reading of People v. SpeeDee Oil, the lawyer who "knowingly obtains material confidential information from the client and renders legal advice or services as a result" represents the prospective client for conflicts purposes. The opinion treats the confidentiality duty as engaged when material information is disclosed; it does not impose a quantum threshold beyond materiality.

Background and rules framework

The opinion interprets former California Rule of Professional Conduct 3-500 (client communication), Bus. & Prof. Code sections 6068(e) (confidentiality) and 6068(m) (duty to keep clients informed), and Evidence Code section 951 (definition of "client" for privilege). It anchors the analysis in Flatt v. Superior Court (Cal. 1994), People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (Cal. 1999), and prior LACBA Formal Opinion 366.

Citations and references

Rules of Professional Conduct:

Former California Rule 3-500 (client communication)

Statutes:

Bus. & Prof. Code section 6068(e) (confidentiality)
Bus. & Prof. Code section 6068(m) (duty to inform)
Evidence Code section 951 (definition of client)

Cases:

Flatt v. Superior Court (Daniel), 9 Cal.4th 275 (Cal. 1994), declined representation and existing-client loyalty
People v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135 (Cal. 1999), substantive consultation creates conflicts-purpose client status

Other opinions cited:

LACBA Formal Opinion 366: section 6068(e) reaches prospective clients
Cal. State Bar Formal Opinion 1984-84: same, in insurance-litigation context

Source

Landing page: https://lacba.org/?pg=ethics-opinions
Original PDF: https://lacba.org/docDownload/2010600

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