A Paralegal Change of Employment and the Duty to Protect Client Confidences, Part 2

Laurie Borski

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.

 

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.