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ABA/BNA Lawyers' Manual on Professional Conduct Conference Report August 15, 2001 MODEL RULES: ABA STANDS FIRM ON CLIENT CONFIDENTIALITY, REJECTS 'SCREENING' FOR CONFLICTS OF INTEREST CHICAGO – The ABA rejected two sweeping proposals to relax the model legal ethics rules on confidentiality of lawyer-client communications, while accepting two less controversial changes to the confidentiality rule. The ABA's policymaking House of Delegates, meeting in Chicago Aug. 6-7, made substantial progress in its consideration of amendments to the Model Rules of Professional Conduct. The changes were recommended by the Commission on Evaluation of the Rules of Professional Conduct, better known as the Ethics 2000 Commission, after a four-year effort to update the model rules to take account of the intervening changes in law practice and the growing disparity in state ethics codes. The current rules were adopted in 1983. Some of the changes recommended by the commission were quite controversial. During the five- plus hours of debate on the proposed amendments, the delegates: ! approved the commission's amendment permitting disclosure of client confidences to prevent "reasonably certain" death or serious bodily injury; ! rejected the commission's proposal to allow lawyers to disclose client confidences to prevent crimes or fraud reasonably certain to result in substantial injury to another's financial interests; ! approved a new per se rule prohibiting most client-lawyer sexual relationships. State bar regulators are free to adopt or ignore the ABA's model rules. Members of the Ethics 2000 Commission pointed out to the delegates that 41 jurisdictions adopted many of the commission's proposed changes even before Ethics 2000 recommended them. Confidentiality. The commission proposed to amend Rule 1.6, governing a lawyer's duty to keep client confidences and secrets, by broadening the grounds for discretionary disclosure of client communications. Specifically, the proposed amendments to Rule 1.6(b) would permit, but not require, lawyers to disclose client confidences: (1) to prevent "reasonably certain death or substantial bodily harm," (2) to prevent a client from committing a crime or fraud, through use of the lawyer's services, that is "reasonably certain to result in substantial injury to the financial interests or property of another," (3) to "mitigate or rectify substantial injury" to another's financial interests or property that is "reasonably certain" to result or has resulted from client crime or fraud using the lawyer's services, and (4) to obtain legal advice about the lawyer's compliance with ethics rules. After debating each of these measures seriatim, the delegates approved (1) and (4) but struck (2) and (3). The current Rule 1.6(b)(1) allows a lawyer to disclose client confidences only to prevent a client from committing a criminal act that is likely to result in "imminent" death or substantial bodily harm. The amended version allows disclosure to prevent "reasonably certain" death or substantial bodily harm. Gone is the predicate of client criminality, as well as the requirement that the death or injury be "imminent." Proponents argued that this change would allow a lawyer to confront a client who is distributing a defective product or dumping toxic waste--situations in which harm may not be imminent--and demand that the client desist from such conduct or risk the lawyer's disclosure of the wrongdoing. Judge Patrick Higginbotham, of the U.S. Court of Appeals for the Fifth Circuit, stressed that the disclosure contemplated by the Ethics 2000 formulation is "an option, not an obligation," and that it is the client's abuse of the lawyer's services that triggers the lawyer's disclosure of client confidences. Critics charged that such a change would threaten the "core value" of confidentiality and would transform lawyers into whistleblowers. "Exceptions to the duty to keep client confidences should be kept at a minimum," argued U.S. bankruptcy judge Samuel Bufford on behalf of the Los Angeles County Bar Association. He said the L.A. bar favors the current rule allowing disclosure only of criminal acts likely to result in imminent death or injury. "The current exception for 'crime' and 'imminent' death or injury simply recognizes that the lawyer may be the last person able to avoid such harm," Bufford said, adding that "this is where we drew the line 18 years ago and this is where it should stay." The Ethics 2000 amendment of Rule 1.6(b)(1) was approved 243-184. Fraud Disclosures Nixed. The commission did not fare so well, however, with its proposals to add new subsections (b)(2) and (b)(3), allowing lawyers to disclose confidences to prevent or rectify client fraud. The primary force behind the opposition was the minority report filed by commission member Lawrence J. Fox, of Philadelphia. In moving to delete (b)(2) from the commission's proposed amendments, Fox argued that a lawyer who learns that a client is about to commit a crime or fraud that will injure another's financial interests should simply withdraw from the representation. "Confidentiality should be virtually absolute," Fox declared. He said the delegates should "examine whether there is a real need for an exception and whether the exception will create mischief." Noting that fraud is seldom clear except in hindsight, Fox warned that "once we lose the shield of confidentiality, we will be the subject of litigation." Backing the Fox motion, Benjamin H. Hill III, of Tampa, Fla., argued that (b)(2) "is an attempt to take away from our common law tradition of the attorney-client privilege," and creates a standard that "will keep clients from being forthright with their lawyers." Former ABA President William G. Paul, Oklahoma City, echoed those sentiments, and added that exceptions to the rule of client confidentiality "must be rare" and that (b)(2) "goes too far." Commission reporter Nancy J. Moore refuted Hill's historical argument. The common law tradition, she said, is that a "statement by a client of intent to commit a future crime or fraud is not protected by the attorney-client privilege." Before the ABA model rules were adopted in 1983, Moore said, states widely accepted the proposition that lawyers were permitted to disclose a client's intent to commit a crime. By limiting disclosure to crimes likely to result in death or bodily injury, the model rules were a "break from the tradition that is now accepted in the vast majority of the states," she said, noting that only nine states have adopted the current Model Rule 1.6. After one hour of debate and many other speakers, Fox's motion to strike the proposed subsection (b)(2) from Rule 1.6 was approved 255-151. Fox's success prompted the commission to withdraw its proposal in (b)(3), which would have allowed even broader disclosure of client confidences to rectify or mitigate consummated frauds. No Sex With Clients. The commission proposed a number of changes to Rule 1.8, the conflict of interest rule that addresses "prohibited transactions," or, as renamed in the amended version, "Current Clients: Specific Rules." The only specific provision that aroused controversy was proposed new Rule 1.8(j), providing that "a lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced." Both Fox and Peter F. Langrock, of Middlebury, Vt., sought to delete the new per se ban on client- lawyer sexual relationships. Fox moved to delete the black-letter subsection (j) and to add a new comment to Rule 1.8 stating that a lawyer who has a sexual relationship with a client "runs a significant risk of unfairly exploiting the lawyer's fiduciary position." For his part, Langrock merely moved to strike subsection (j), with no additional comment. Fox contended that it is impossible to write an ethics rule that covers all the bad situations but does not sweep in the innocuous ones. "You cannot write a rule that will not capture perfectly appropriate conduct," he said. Langrock supported the Fox motion, arguing that a per se rule would be more onerous in small rural communities, where there are only a few lawyers in town, than in large urban areas. He also charged that the commission has gathered "no empirical evidence" demonstrating that most lawyer- client sexual relationships are evil. Defending the proposed rule, reporter Moore pointed out that a number of jurisdictions already have a per se ban on lawyer-client sexual relationships. She also noted that other professional organizations--including the American Medical Association, the American Psychiatric Association, the American Psychological Association, and the National Association of Social Workers--have similar rules banning sexual relationships with patients or clients. Moore argued that such liaisons threaten to impair the lawyer-client relationship, abuse client trust, deprive clients of independent judgment, and create conflicts of interest. Ethics 2000 Commission Chair E. Norman Veasey, chief justice of the Delaware Supreme Court, refuted Fox's argument that a comment discouraging such relationships would be adequate. In arguing that a black-letter prohibition is needed, Veasey cited an incident in Delaware in which a local lawyer was accused of numerous sexual transgressions with clients, but bar disciplinary counsel had no clear rule to apply and instead had to charge the lawyer under a variety of different rules and make arguments by analogy. The Fox amendment was defeated by a vote of 160-164. The Langrock motion failed 129-196.