Can a New York lawyer reveal a former client's confidential financial information in the client's bankruptcy to collect an unpaid fee, and what duty applies if the client misled an earlier court?

Plain-English summary

While representing a client in a contested proceeding where the client's finances were at issue, the lawyer learned confidential information (including that the client was working "off the books") that was inconsistent with what the client was telling the court; the lawyer did not "promote" that information in the proceeding. The client later filed for bankruptcy, listing the lawyer among creditors for an unpaid fee. The lawyer asked whether he may reveal the confidential information in the bankruptcy to help collect the fee.

The opinion concludes the lawyer may, but only within strict limits. Rule 1.6(b)(5)(ii) permits revealing confidential information to the extent the lawyer reasonably believes necessary to establish or collect a fee, and the opinion confirms this fee-collection exception applies in bankruptcy proceedings, citing D.C. Opinion 236 (1993). It stresses four limits drawn from prior opinions: disclosure only in appropriate circumstances, an effort to avoid the need for disclosure, disclosure that is truly necessary as part of a non-abusive collection process, and disclosure no broader than the need justifies, with the lawyer considering protective orders and other means to limit damage. Because the inquiry did not specify the planned uses, the opinion leaves the application of these limits to the lawyer, and notes that whether attorney-client privilege bars disclosure is a legal question it does not decide.

The opinion then addresses a second issue raised by the facts: the lawyer's candor duty as to the client's apparently false financial evidence. It explains that the duty depends on when the client gave the false information to the tribunal. Under the former Code (DR 7-102(B)(1)), a lawyer who learned the client perpetrated a fraud had to urge correction but had no duty to disclose information protected as a confidence or secret. Rule 3.3, effective April 1, 2009, sweeps more broadly: when the lawyer comes to know that material evidence the client offered is false, the lawyer must take reasonable remedial measures including, if necessary, disclosure to the tribunal, with no exception for confidences (Rule 3.3(c)). So if the false information was imparted before April 1, 2009, the confidence exception applied; if on or after that date, the remedial duty attaches. The opinion adds that the Rule 3.3 duty may continue past the proceeding's conclusion but only so long as a remedial measure remains available and meaningful, citing N.Y. State 837 (2010) and N.Y. City 2013-2.

In practice

The opinion holds that, under the New York rules as they stood at the time, a lawyer may invoke the Rule 1.6(b)(5)(ii) fee-collection exception in a former client's bankruptcy, but only to the extent reasonably necessary, in appropriate circumstances, after trying to avoid disclosure, and no broader than the need, with protective measures considered. Per the opinion, whether privilege bars the disclosure is a separate legal question. The opinion also makes clear that for false material evidence given to a tribunal on or after April 1, 2009, Rule 3.3 requires reasonable remedial measures including disclosure if lesser measures fail, with no confidence exception, while pre-2009 conduct is governed by the former Code's confidence-protective rule.

Common questions

Q: Can a lawyer reveal a former client's confidences in bankruptcy to collect a fee?

A: Yes, within limits. The opinion concludes Rule 1.6(b)(5)(ii) permits disclosure to the extent reasonably necessary to collect the fee, and that the exception applies in bankruptcy proceedings.

Q: How far can the lawyer go in disclosing?

A: Per the opinion, only in appropriate circumstances, after trying to avoid the need, only as truly necessary, and no broader than the need justifies; the lawyer should consider protective orders and other means to limit harm.

Q: Does the lawyer have any duty about the client's false financial statements to the earlier court?

A: It depends on timing. The opinion explains that if the client gave the false material evidence on or after April 1, 2009, Rule 3.3 requires reasonable remedial measures including, if necessary, disclosure; if before that date, the former Code protected confidences from disclosure.

Q: How long does the Rule 3.3 remedial duty last?

A: The opinion states the duty may continue past the proceeding's conclusion, but not beyond the point at which a remedial measure remains available and could still protect the integrity of the process.

Background and rules framework

The opinion interprets New York Rule 1.6 (confidentiality, the analog of Model Rule 1.6), in particular the fee-collection exception in Rule 1.6(b)(5)(ii), and Rule 3.3 (candor toward the tribunal, the analog of Model Rule 3.3), including Rule 3.3(c)'s override of Rule 1.6. It contrasts the current rules with former DR 7-102(B)(1) and notes the April 1, 2009 effective date as the dividing line.

Citations and references

Rules of Professional Conduct:

• MR 1.6 / NY Rule 1.6; Rule 1.6(b)(5)(ii) (revealing confidences to establish or collect a fee); Comment [14]
• MR 3.3 / NY Rule 3.3(a)-(c) (candor; remedial measures; override of Rule 1.6)
• Former DR 7-102(B)(1) (pre-2009 confidence exception)

Statutes:

• N.Y. CPLR § 4503(a) (attorney-client privilege)

Other opinions cited:

• N.Y. State 837 (2010): scope and duration of the Rule 3.3 remedial duty
• N.Y. State 831 (2009): pre-April 2009 frauds governed by the former Code
• N.Y. State 684 (1996): limits on disclosure to collect a fee
• D.C. Opinion 236 (1993): fee-collection exception applied in bankruptcy

See also

• NY State Bar Op. 982: obligation to disclose potential fraud on a tribunal
• NY State Bar Op. 1118: disclosing confidences to collect a fee
• NY State Bar Op. 998: disclosing client fraud after a short-sale closing

Source

• Landing page: https://nysba.org/ethics-opinion-980/