Scruples
A Paralegal Change of Employment
and the Duty to Protect Client Confidences
Part 2
Laurie
Borski, Ethics Chair
This is the second installment of a two-part article. In the first
installment, we presented Ethics Opinion 472 and began to unpack the committee’s
conclusion with a discussion of paralegal obligations under the Code of Ethics
and Professional Responsibility of the Paralegal Division of the State Bar of
Texas and the definition of "confidential information" under Texas
Disciplinary Rules of Professional Conduct. In Part 2, we conclude our
discussion with the definitions of "conflicts of interest" and
"former client conflicts of interest" followed by a summary of the
opinion, the definitions and the ethical obligations of a paralegal to protect
client confidences.
The question posed is: does a paralegal have an ethical duty to protect
confidential information regardless of whether they are currently employed by
the client’s attorney? The answer is yes.
In Part 1, we discussed the Code of Ethics and Professional Responsibility of
the Paralegal Division of the State Bar of Texas, 1 Ethics Opinion 472 2 and the
Ethics Committee’s conclusion that the supervising lawyer of the paralegal who
changed jobs from an opposing lawyer must protect client confidences so as to
ensure that the paralegal’s conduct is compatible with the lawyer’s
professional obligations. Rule 1.05(a) defines a client confidence as any
information about the client gained during the course of representation and
includes both privileged and unprivileged information. A paralegal has an
ethical duty to safeguard client confidences regardless of whether he or she is
currently employed by the client’s attorney.
Ethics Opinion 472 also addressed compliance with Rules 1.06 and 1.09
concerning conflicts of interest and former client conflicts of interest. The
Opinion concluded that so long as the supervising lawyer of the new paralegal
complied with Rules 1.05, 1.06 and 1.09 so as to ensure the paralegal’s
conduct was compatible with the professional obligations of a lawyer, then under
the Disciplinary Rules, the new law firm was not ethically required to
disqualify itself from representation of a party adverse to the former employer’s
client. 3
Conflicts of Interest
Next, in order to fully understand the Ethics Opinion, we explore
"conflicts of interest" as defined under Rule 1.06:
(a) A lawyer shall not represent opposing parties to the same litigation.
(b) In other situations and except to the extent permitted by paragraph (c),
a lawyer shall not represent a person if the representation of that person: (1)
involves a substantially related matter in which that person’s interests are
materially and directly adverse to the interests of another client of the lawyer
or the lawyer’s firm; or (2) reasonably appears to be or become adversely
limited by the lawyer’s or law firm’s responsibilities to another client or
to a third person or by the lawyer’s or law firm’s own interests.
(c) A lawyer may represent a client in the circumstances described in (b) if:
(1) the lawyer reasonably believes the representation of each client will not be
materially affected; and (2) each affected or potentially affected client
consents to such representation after full disclosure of the existence, nature,
implications, and possible adverse consequences of the common representation and
the advantages involved, if any.
(d) A lawyer who has represented multiple parties in a matter shall not
thereafter represent any of such parties in a dispute among the parties arising
out of the matter, unless prior consent is obtained from all such parties to the
dispute.
(e) If a lawyer has accepted representation in violation of this Rule, or if
multiple representation properly accepted becomes improper under this Rule, the
lawyer shall promptly withdraw from one or more representations to the extent
necessary for any remaining representation not to be in violation of these
Rules.
(f) If a lawyer would be prohibited by this Rule from engaging in particular
conduct, no other lawyer while a member or associated with that lawyer’s firm
may engage in that conduct.
See Rule 1.06, Texas Disciplinary Rules of Professional Conduct.
The first Comment to Rule 1.06 says it all: "Loyalty is an essential
element in the lawyer’s relationship to a client." If a conflict exists
before representation, that representation must be declined and if a conflict
arises during representation, it must be cured, even if it becomes necessary for
the lawyer to withdraw from representation. 7 Conflicts of interest do not arise
only in litigation. There may be a conflict between parties to a real estate
transaction, potential beneficiaries in estate planning situations, or the duty
an in-house lawyer owes to the employing corporation and its board of directors.
There may be a conflict with the lawyer’s own interests or responsibilities to
others, financial or otherwise. In these instances, the lawyer must decide if
any potential conflict will materially and adversely affect the lawyer’s
independent professional judgment. 8
Former Client Conflicts of Interest
And finally, "former client conflicts of interest" is defined under
Rule 1.09:
(a) Without prior consent, a lawyer who personally has formerly
represented a client in a matter shall not thereafter represent another person
in a matter adverse to the former client:
(1) in which such other person questions the validity of the lawyer’s
services or work product for the former client;
(2) if the representation in reasonable probability will involve a
violation of Rule 1.05; or
(3) if it is the same or a substantially related matter.
See Rule 1.09(a) Texas Disciplinary Rules of Professional Conduct [Emphasis
added].
Absent prior consent from the former client, a lawyer cannot represent a
client adverse to that former client if the obligations owed under Rule 1.05
might be violated. That is, if an unauthorized disclosure of confidential
information or an improper use of that information is "a reasonable
probability" then the lawyer must decline representation. 9
Nor can a lawyer represent a client adverse to a former client if the
representation involves the same or a substantially similar matter. "[T]his
prohibition prevents a lawyer from switching sides…and representing a party
whose interests are adverse to a person who sought in good faith to retain
the lawyer." 10 [Emphasis added.] You will note that the term
"former client" includes one who sought to retain the lawyer. So, even
if the lawyer declined to represent the party, the duty is owed to them as a
"former client" because the lawyer could have acquired confidential
information. It does not matter that the lawyer may not have acquired any
confidential information or that the lawyer declined to represent the party.
Rule 1.09 goes further:
(b) Except to the extent authorized by Rule 1.10, when lawyers are or have
become members of or associated with a firm, none of them shall knowingly
represent a client if any one of them practicing alone would be prohibited from
doing so …
(c) When the association of a lawyer with a firm has terminated, the lawyers
who were then associated with that lawyer shall not knowingly represent a client
if the lawyer whose association with that firm has terminated would be
prohibited from doing so …
See Rule 1.09(b) and (c) Texas Disciplinary Rules of Professional
Conduct.
In the situation addressed in Ethics Opinion 472, the Ethics Committee said
that the new law firm was not ethically required to disqualify itself from
representing a party adverse to the former employer’s client. However, had the
transferring employee been an associate lawyer, the new law firm may well have
had to disqualify itself from representation based on Rule 1.09 (b) and (c).
Lawyers will and do hire paralegals that have worked on cases adverse to the
firm’s client’s interests if an effective Ethical Wall can be erected. There
are also situations in which the lawyer may decide that the risk is simply too
great to consider employing a paralegal that presents a potential conflict of
interest. Full disclosure on the part of the interviewing paralegal is essential
in order that all parties can be fully informed.
Paralegals must be loyal to a former employer’s client, keeping the
confidences learned during the former employment and not acting in a manner that
is adverse to the former employer’s client. The supervising lawyer of a
transferring paralegal must ensure that the newly acquired paralegal adheres to
this standard of behavior while at the same time protecting his or her client’s
interests to avoid a conflict of interest.
Citations for Parts 1 and 2:
1 Code of Ethics and Professional Responsibility of the Paralegal Division of
the State Bar of Texas, Canon 4.
2 Tex. Comm. On Professional Ethics, Op. 472, V. 55 Tex. B.J. 520 (1992).
3 Texas Disciplinary Rules of Professional Conduct, Rules 1.05, 1.06 and
1.09.
4 Id., Rule 1.05(d).
5 Id., Rule 1.05(d).
6 Id., Rule 1.05, Comment 5.
7 Id., Rule 1.06, Comment 1.
8 Id., Rule 1.06, Comments.
9 Id., Rule 1.09, Comment 4.
10 Id., Rule 1.09, Comment 4A.
© 2005 Laurie Borski
Laurie Borski is Chair of the Professional Ethics Committee of the Paralegal
Division, State Bar of Texas. She has served on the Division’s Annual Meeting
and Election Committees and is a past president of the Alamo Area Professional
Legal Assistants in San Antonio. You can reach her at 210.250.6041 or laurie.borski@strasburger.com.
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