Opinion 99-6
(August 1999)

May a former corporate counsel employed in-house make use in the course of pursuing pursue a wrongful termination claim against his former employer and client of information that may be either privileged and/or confidential within the meaning of those terms under the Rules of Professional Conduct?

This question is dealt with by Rules of Professional Conduct 1.9 and 1.6. Rule 1.9 bars an attorney from using information relating to the representation to the detriment of the former client. However, this rule allows use of such information in the circumstances permitted by Rule 1.6.

Rule 1.6c3 allows an attorney to make limited use of confidential and/or privileged information he or she learned while employed as counsel for the former client. It provides that:

A lawyer may reveal such information, [information relating to representation of a client], to the extent that the lawyer reasonably believes necessary: . . . to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client . . .

It is clear from the Rule's comment that a controversy includes a fee dispute between the parties.

A lawyer entitled to a fee is permitted by paragraph (c)(3) to prove the services rendered in an action to collect it. This aspect of the Rule expresses the principle that the beneficiary of the fiduciary relationship may not exploit it to the detriment of the fiduciary. As stated above, the lawyer must make every effort practicable to avoid unnecessary disclosure of information relating to representation, to limit disclosure to those having the need to know it, and to obtain protective orders and make other arrangements minimizing the risk of disclosure.

The Restatement of the Law Governing Lawyers, still in draft form and not yet adopted by the American Law Institute, provides similarly:

Section 117 Using or Disclosing Information in Compensation Dispute

A lawyer may use or disclose confidential information when and to the extent that the lawyer reasonably believes necessary in order to permit the lawyer to resolve a dispute with the client concerning compensation or reimbursements that the lawyer reasonably claims to be due.

Section 133 of the draft Restatement provides similarly with respect to privileged information, that is, information that is actually privileged and not merely confidential. That Section provides in the material part as follows:

The attorney-client privilege does not apply to a communication that is relevant and reasonably necessary for a lawyer to employ in a proceeding:

(1) To resolve a dispute with a client concerning compensation or reimbursement that the lawyer reasonably believes the client owes the lawyer . . .

Although the comment in the Rules of Professional Conduct does not make explicit that the Rule applies to compensation in the form of salary or benefits to in-house counsel, the Restatement explicitly states that the relevant sections do apply to that situation. See Section 117, comment (c). Moreover, a previous opinion issued by this Committee (Opinion 96-8) applied Rule 1.6 to in-house counsel as well.

We have examined the three cases that were cited in the inquirer's letter. See, e.g., X Corp. v. Doe, 816 F. Supp. 1086 (E.D. Va. 1993). See also X Corp v. Doe, 805 F. Supp. 1298 (E.D. Va. 1992), aff'd mem., 17 F.3 1435 (4th Cir. 1994); United States ex rel. Doe v. X Corp., 862 F.Supp. 1502 (E.D. Va. 1994). Those cases do not conflict with the relevant ethical rules. All three cases grew out of a single dispute involving in-house counsel and his former employer. The dispute involved a wrongful termination claim and the use of information by the former lawyer as a qui tam relator in a False Claims Act claim made against his former employer. The first opinion is the most relevant one. In it, the court explained its reasoning in granting in part and denying in part an application by the former employer for an injunction barring the former lawyer on its staff from using information pending the outcome of the litigation. The court entered an order essentially barring the employer from making any use of it. However, in the course of discussion, it became apparent that the court did not view what it was doing as inconsistent with Rule 1.6. In the course of its discussion, it said:

Doe [the anonymous name assigned to the former counsel] argues that he may need to disclose the portions of X-Corp.'s alleged confidential information in connection with his state law based wrongful termination claim. That matter, however, is currently on appeal, and Doe has no need to make further disclosure of notices contained in the documents for that purpose.(ft) 

(ft) Excluded from X-Corp.'s request for injunctive relief are any disclosures made under seal in connection with Doe's wrongful termination claim. Moreover, should the Fourth Circuit reinstate Doe's state-law claim during the pendency of this litigation, Doe would have leave to request any necessary relief from this preliminary injunction for purposes of pursuing that claim.

The point of this quote is to demonstrate that the Court was treating issues other than the very limited use contemplated by Rule 1.6 of such information. The Court explicitly recognized Doe's right to use the information in the wrongful termination suit that he had begun, should it be necessary.

The other opinions do not deal directly with this point, and they are not inconsistent with Rule 1.6.

It is important to note that a lawyer may not simply act as if the original proscription on revealing either privileged or confidential information does not exist any longer if he or she has a dispute with a former client in which the information would be helpful. All that the Rule allows one to do is, within limited means, make use of that information if it is necessary in the view of a reasonable person to advance a reasonable claim.

Any lawyer should be careful to observe the following principles:

1. The information must be reasonably necessary to advancing the claim that is being made.

2. The claim that is being made must be a reasonable one.

3. The information must be used only after the client has been forewarned that it might possibly be used in connection with advancing the claim. A generalized notice that such information may be used should suffice.

4. The information should be used in the most minimal way possible, and in a way which is designed to preserve the confidentiality of the information to the extent reasonably possible. This could include submitting it to the Court in camera, under seal, entering into confidentiality agreements and the like. The lawyer should make use of any procedural mechanism available to protect the information from any use other than the most narrow use possible in advancing the claim.

Accordingly, the opinion of the Committee is that there is no prohibition on making use of confidential or privileged information provided that it is done in accordance with the steps outlined above.

We express no opinion, of course, on the merits of this particular case or whether or not in this particular situation, the claim that is being made is a reasonable one or the information that may be used is in connection with making that claim is reasonably necessary to be used in order to make it.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.