Can a lawyer use a cloud-based tool to post and share closing documents with the other parties to a transaction?
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This page answers the general question as of 2014. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer with a real estate practice was considering an electronic project-management tool for closings that would let sellers' and buyers' attorneys, real estate brokers, and mortgage brokers post and view documents (drafts, signed contracts, building financials) in one central place. The lawyer asked whether using such cloud-based technology to post and share documents was permissible (¶¶ 1-2).
The committee assumed the posted materials would include confidential client information, so the answer turned on the duty to preserve confidentiality. Rule 1.6(a) bars knowing disclosure of confidential information absent an exception such as informed consent, and Rule 1.6(c) requires reasonable care to prevent those whose services the lawyer uses from disclosing it. Comment [17] to Rule 1.6 explains that the lawyer must take reasonable precautions but need not use special security measures where the method affords a reasonable expectation of privacy, with reasonableness depending on the sensitivity of the information and legal or contractual protections (¶¶ 3-5).
The committee drew on its line of technology opinions, including N.Y. State 1019 (2014) (remote access to firm files), N.Y. State 842 (2010) (cloud data storage), and N.Y. State 939 (2012) (lawyers from different firms sharing a computer system). Those opinions govern: the inquirer may use the proposed technology provided the lawyer takes reasonable steps to ensure confidential information is not breached, such as trying to ensure that only authorized parties have access. Given the fact-specific and evolving nature of technology, the committee declined to specify the steps that constitute reasonable care (¶¶ 6-8).
The committee added two points. Under Rule 1.1, using electronically stored information may require the competence to determine and follow the steps that constitute reasonable care, not just the duty under Rule 1.6 to protect the information. And under Rule 1.6's informed-consent exception, a client may consent to a technology that would otherwise be prohibited, but only after the firm discloses the risks that the system does not reasonably assure confidentiality, so the consent is "informed" within Rule 1.0(j) (¶¶ 8-10).
In practice
Under the New York rules as they stood at the time of the opinion, the opinion holds that a lawyer may use a cloud-based tool to post and share transaction documents when the technology reasonably protects confidential client information, and otherwise only with the client's informed consent after disclosure of the risks. Per the opinion, the lawyer must take reasonable steps such as restricting access to authorized parties, and the committee declined to prescribe specific measures given the evolving nature of the technology. The opinion also ties the duty to Rule 1.1 competence: the lawyer may need enough technical understanding to identify and follow reasonable safeguards.
Common questions
Q: Is a cloud closing-document tool allowed at all?
A: Yes, if the particular technology provides reasonable protection to confidential client information; the committee found its prior technology opinions govern the outcome (¶ 8).
Q: What must the lawyer do to use it?
A: Take reasonable steps to prevent a breach, such as ensuring that only authorized parties can access the system; the committee did not prescribe specific measures (¶ 8).
Q: What if the technology cannot reasonably protect the information?
A: The lawyer may use it only with the client's informed consent, given after the firm discloses that the system does not reasonably assure confidentiality (¶¶ 9-10).
Q: Does competence come into play?
A: Yes. The committee noted that, under Rule 1.1, using electronically stored information may require the competence to determine and follow the steps that constitute reasonable care (¶ 8).
Background and rules framework
The opinion interprets New York Rule 1.6 (confidentiality, including 1.6(c) and the informed-consent exception) and Rule 1.1 (competence), corresponding to ABA Model Rules 1.6 and 1.1, applying Comment [17] to Rule 1.6 on technology. The analysis turns on whether the chosen technology affords a reasonable expectation of confidentiality.
Citations and references
Rules of Professional Conduct:
- MR 1.6 / NY RPC 1.6, 1.6(c) (confidentiality; reasonable care; Cmt. [17])
- MR 1.1 / NY RPC 1.1 (competence, including technological competence)
Other opinions cited:
- N.Y. State 1019 (2014): remote access to firm files
- N.Y. State 842 (2010): cloud data storage; reasonable-care steps
- N.Y. State 939 (2012): lawyers from different firms sharing a computer system
See also
- NY State Bar Op. 1019: Remote access to firm files from home
- NY State Bar Op. 1077: Scanning and destroying original retainer agreements
Source
- Landing page: https://nysba.org/ethics-opinion-1020/
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