LEGAL: Attorney-Client Secrets Revealed?

Tell your lawyer a secret and it stays confidential, right? Maybe not.

The owner of a prosperous waste management firm was having his bi-monthly meeting with the company's lawyer to discuss general operations and possible new ventures. During the meeting, the client mentioned his interest in some business opportunities and his readiness to move forward on them, thanks to, as he put it, a “significant jump in cash flow.”

Curious, the lawyer asked whether the company's improved financial position was due to increased sales on the hauling side of the business or more traffic at the company's landfill.

“Actually, it's a little bit of both. The collection side has picked up nicely,” the owner said, seemingly oblivious to the stale double-entendre. “I found that I can offer certain customers a combined hauling and disposal service at a very attractive price.”

“It's a little bit tricky,” he continued, “because I'm handling some nasty stuff, but I can get rid of this material for them at the landfill with no questions asked and no annoying paperwork.” He paused for a second, adding, “I've decided to do what the military does about checking on certain things — ‘don't ask, don't tell.’”

“Don't you really want to know what you're handling?” the lawyer asked.

“Better that I don't,” said the client shaking his head.

“Who are these customers?” asked the lawyer.

The client rattled off the names of several industrial fabricating companies and a metal finishing shop.

“It's pretty clear you're handling hazardous wastes on the trucks and at the landfill,” the lawyer matter-of-factly stated. “What happens when the state inspectors visit? What about the effect on nearby homes? You need a special permit for this activity.”

“I understand the state people,” the owner said. “The two guys who come around work hard, and they're not paid all that well. And they understand me as a hard-working businessman whose family has been in the community for generations.

“Anyway, it's just you and me who know for sure what's happening,” the owner continued. “And you're a lawyer, so all this is confidential, right?”

Traditionally, yes. But probably no longer.

In August, the House of Delegates for the American Bar Association (ABA), Chicago, voted to approve a proposal to dramatically change legal ethics, allowing lawyers to disclose client-provided information when necessary to prevent fraud, injury or death. The vote represents the first update of the Model Rules of Professional Conduct in almost 20 years. Action by the delegates is preliminary. A final vote may not be taken until Feb. 2002 or not until next summer when delegates meet again in Philadelphia.

Under the existing rule, lawyers may disclose confidential information if necessary “to prevent the client from committing a criminal act that the lawyer believes is likely to result in imminent death or substantial bodily harm.” Now, a lawyer who, for example, learns about a defective product may warn users and potential victims.

“This is a great expansion in the freedom of lawyers to warn victims and persons in danger of substantial bodily harm or death, regardless of who's causing it,” New York University law professor Stephen Gillers told The New York Times. “That's important in a world of dangerous products, where you have exploding tires and cars that overturn,” he added.

Supporters and opponents of the new rule agree that the obligation to protect client confidences is not paramount, but differ on when a client confidence can be disclosed. Some lawyers who are skeptical of the new rule cite the importance of preserving client disclosures. Clients need to know that everything they tell their lawyers will be confidential. If a client hides information from his lawyer about, say, potential environmental violations, the lawyer's ability to provide competent legal advice will be impaired.

Professional life under the new rule — deciding when circumstances must be disclosed and when not — may be difficult for lawyers. For example, who can predict when an action is “reasonably likely” to cause bodily injury? Must the injury be imminent? What about health effects or environmental damage that might — or might not — occur only after many years of exposure to a chemical or pollutant?

Lawyer conduct is directly regulated by the states through court rules and grievance and disciplinary panels. However, the ABA rules greatly influence rules of conduct developed by state courts. Many states already have adopted permissive disclosure rules, notes Professor Lester Brickman of the Benjamin Cardozo School of Law at Yeshiva University, New York, N.Y. “All the ABA is doing right now is playing catch-up,” he says.