If a lawyer holds confidential information from one client that would help another client, does that alone create a conflict barring the second representation?
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This page answers the general question as of 2005. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.
Plain-English summary
The opinion addresses a subtle situation: a lawyer holds confidential information acquired representing one client that would be useful to another client, even though the two clients' interests are not otherwise in conflict, and the lawyer is barred from disclosing or using the information for the second client. It uses scenarios such as learning issuer due-diligence information while representing underwriters, then being asked to represent an acquirer of that issuer.
The committee first confirms the lawyer may not, and need not, use the first client's confidences for the second client's benefit. The duty of zealous representation (Canon 7, DR 7-101) is expressly limited to lawful means and the Disciplinary Rules, and DR 4-101(B)(3) and DR 5-108(A)(2) bar using a confidence or secret for a third person's advantage without consent. A client therefore has no legitimate expectation that the lawyer will deploy another client's confidential information on its behalf, and is not charged with the lawyer's knowledge from an unrelated representation.
On the conflicts question, the committee concludes that mere possession of such embargoed information does not, without more, create a conflict under DR 5-105. The critical question is whether either representation would be impaired. A conflict exists if the lawyer cannot avoid using the embargoed information in the second representation, or if possessing it might reasonably affect the lawyer's independent professional judgment for the second client. Whether that is so depends on the facts, especially the information's materiality to the second matter and whether it can be effectively segregated from the work.
On waiver, the committee explains that whether the conflict is consentable depends on whether the lawyer can disclose enough to obtain informed consent (which may itself be constrained by the duty not to reveal the embargoed information) and whether a disinterested lawyer would believe the lawyer's judgment would not in fact be affected. If the lawyer must withdraw, the lawyer still may not reveal the information that gave rise to the conflict. The committee notes it does not address co-client representations.
In practice
The opinion was issued in 2005 under the former New York Code, which the New York Rules of Professional Conduct replaced effective April 1, 2009; the confidentiality and conflict provisions map onto current Rules 1.6, 1.7, and 1.9. Under the framework as it stood at the time, the opinion holds that a lawyer holding embargoed confidences should assess whether the new matter can be handled without using that information and whether judgment would be affected; if not impaired, the representation may proceed, and if impaired, the lawyer should evaluate consentability and, failing that, withdraw without revealing the protected information.
Common questions
Q: Does holding one client's confidences automatically conflict the lawyer out of an adverse-to-that-information matter?
A: No. The opinion concludes mere possession does not, without more, create a conflict; the test is whether either representation would be impaired.
Q: When does possession become a conflict?
A: When the lawyer cannot avoid using the embargoed information in the second representation, or when holding it might reasonably affect the lawyer's independent judgment for the second client.
Q: Can the lawyer use the first client's confidential information to help the second client?
A: No. The opinion concludes the lawyer may not use one client's confidences or secrets for another's advantage without consent, and the second client has no legitimate expectation that it will be used.
Q: Can the conflict be waived?
A: It depends on whether the lawyer can disclose enough to obtain informed consent without revealing the protected information, and whether a disinterested lawyer would believe the lawyer's judgment would not be affected.
Background and rules framework
The opinion interprets the former New York Code's confidentiality and conflict provisions, DR 4-101 (confidences and secrets), DR 5-105 (concurrent conflicts and the disinterested-lawyer consent test), DR 5-108 (former-client duties), and DR 2-110 (withdrawal), against the zealous-advocacy duty of Canon 7 and DR 7-101. These correspond to Model Rules 1.6 (confidentiality), 1.7 (concurrent conflicts), and 1.9 (former clients). It draws the no-imputed-knowledge point from the Restatement.
Citations and references
Rules of Professional Conduct:
- MR 1.6 / NY DR 4-101 (confidences and secrets)
- MR 1.7 / NY DR 5-105 (concurrent conflicts; consent and the disinterested-lawyer test)
- MR 1.9 / NY DR 5-108 (duties to former clients)
- NY DR 2-110 (withdrawal); NY DR 7-101 (zealous representation within the law)
Cases:
- Spector v. Mermelstein, 485 F.2d 474 (2d Cir. 1973), duty to use information for a client's benefit
Other opinions cited:
- N.Y. City 2001-1; N.Y. State 555 (1984); ABA Formal Op. 358 (1990); Restatement (Third) of the Law Governing Lawyers §§ 20, 28
See also
- NYC Bar Ethics Op. 2005-03: Voluntarily Testifying About a Former Client
- NYC Bar Ethics Op. 2005-05: Unforeseeable Concurrent Client Conflicts
- NYC Bar Ethics Op. 2008-02: Conflicts Between Represented Corporate Affiliates
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