CHAPTER 12 LEGAL ETHICS: CONFIDENTIALITY ON INFORMATION AND DISCLOSURE ISSUES IN COLLABORATIVE PROJECTS
| Jurisdiction | United States |
(May 2015)
LEGAL ETHICS: CONFIDENTIALITY ON INFORMATION AND DISCLOSURE ISSUES IN COLLABORATIVE PROJECTS
Partner
Bennett, Main & Gubbrud, P.C.
Belle Fourche, South Dakota
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MAX MAIN is a member of the Belle Fourche, South Dakota law firm of Bennett, Main & Gubbrud, P.C. He is licensed to practice in South Dakota and Wyoming. His areas of practice are natural resources, mining, oil and gas, water, and environmental law. He served as president of the Rocky Mountain Mineral Law Foundation from 2010-2011, and has been a Trustee of the Foundation since 1987. He is named in Best Lawyers in America (1989-present). Mr. Main received his J.D. from the University of Colorado School of Law, and his B.S. Mech. Engineering (with High Honors) from the South Dakota School of Mines and Technology.
INTRODUCTION
This paper discusses confidentiality of information, including attorney-client privilege, disclosure, and other related ethical considerations that may arise for attorneys involved in negotiations, document preparation, regulatory proceedings, or other activities relating to enhanced oil recovery ("EOR") projects. The basis for the analyses in this paper will be the American Bar Association ("ABA") Model Rules of Professional Conduct ("Model Rules").2 The Model Rules were adopted by the ABA House of Delegates in 1983.3 They are the result of the work of the ABA's Kutak Commission, and they serve as the model for the ethics rules in the individual states.4 California is the only state that does not have professional conduct rules following the format of the Model Rules.5
The Model Rules "serve as the ethics map for lawyers and should be a lawyer's primary authority when [ethics issues] arise."6
I. CONFIDENTIALITY OF INFORMATION
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A. In General.
"The long odds, high stakes, and intense competition in the oil and mining industries create very special needs for confidentiality."7 This is especially true in EOR negotiations and projects, when non-public, proprietary information from several different parties is being used to assess the viability of the project, and to develop formulas to allocate production during different phases of the project.
Rule 1.6 is the Model Rule expressly addressing confidentiality of information, and since this paper will be discussing the Rule in detail, it is set forth here in its entirety:
Rule 1.6
Confidentiality Of Information
(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily harm;
(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;
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(4) to secure legal advice about the lawyer's compliance with these Rules;
(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client;
(6) to comply with other law or a court order;
(7) to detect and resolve conflicts of interest arising from the lawyer's change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.
(c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client. 8
Note that the Rule is not entitled "Confidential Information," and it does not itemize what information is or is not confidential. Similarly, Rule 1.0 of the Model Rules does not set forth a definition of what information is confidential.9 Rather, Model Rule 1.6 is entitled "Confidentiality of Information," and it takes the position that "[g]enerally, all information that a lawyer learns from or about a client during representation of the client is presumed to be confidential."10 This is a "broad concept and encompasses much information."11
B. Information in the Public Domain.
To demonstrate just how broad this confidentiality of information concept is, Comment 3 to Model Rule 1.6 states that the confidentiality rule "applies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source"12 This includes information that
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is already in the public domain:
• "lawyer violated Rule 1.6 by disclosing information relating to representation of client, even though information 'was readily available from public sources and not confidential in nature.'" 13
• "`ethical duty of confidentiality is not nullified by the fact that the information is part of a public record."' 14
• "lawyer must 'maintain the confidentiality of information relating to representation even if the information is a matter of public record.'" 15
There is some limited authority holding that the disclosures of the existence of a recorded mortgage or the existence of a debt already of public record are not violations of the duty of confidentiality.16
At first, it sounds strange that a lawyer's disclosure of information that is already in the public domain could be a violation of the duty of confidentiality. However, conscientious lawyers should follow the practice of not disclosing any information they have learned about a client during their representation of the client, even when that information is already public. When a lawyer discloses any information about a client, even when that information is public, it still appears that the lawyer is breaching confidentiality. The required, and better, course is for the lawyer to refrain from disclosing even public information about a client.
C. Confidentiality of Information Vis-a-vis the Attorney-Client Privilege.
"The attorney-client evidentiary privilege is so closely related to the ethical duty of confidentiality that the terms 'privileged' and 'confidential' are often used interchangeably. But the two are entirely separate concepts, applicable under
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different sets of circumstances and using different standards."17 The ethical duty to maintain confidentiality of information as set forth in Model Rule 1.6 is as broad as it can possibly be -- it prohibits the disclosure of all "information relating to the representation of a client."18 The attorney-client privilege, on the other hand is limited in scope. It is a rule of evidence that protects attorney-client communications from disclosure in the context of a legal proceeding.19 The privilege is a part of each state's rules of evidence, and it can vary widely from state to state.
A judicial ruling that information is not subject to the attorney-client privilege does not mean the information is then not subject to the confidentiality mandates of Model Rule 1.6.20 Interestingly, even if a lawyer makes a permitted disclosure of confidential information under Model Rule 1.6, the information may still remain privileged, with the lawyer protected from being compelled to testify about it.21
D. Lawyer's Use of Nonlawyers.
Model Rule 5.3 details the duties and responsibilities of lawyers when dealing with nonlawyer assistants.22 The Rule requires that lawyers with management authority in law firms "shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the [nonlawyer's] conduct is compatible with the professional obligations of the lawyer."23 Similarly, lawyers who have direct supervision over nonlawyers "shall make reasonable efforts to ensure that the [nonlawyer's] conduct is compatible with the professional obligations of the lawyer."24
Ensuring that the nonlawyer's "conduct is compatible with the professional obligations of the lawyer" includes ensuring that the nonlawyer observes the same duty of confidentiality that is applied to lawyers.25 This duty of confidentiality
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must be observed by nonlawyers both within and outside a law firm.26 When utilizing nonlawyer services outside the firm, a supervising lawyer's duty to ensure that the nonlawyer's services are provided in a manner compatible with the lawyer's professional obligations will depend in part on "the legal and ethical environments of the jurisdictions in which the services will be performed, particularly with regard to confidentiality."27
If a client, and not the lawyer, selects a nonlawyer assistant outside the firm, "the lawyer ordinarily should agree with the client concerning the allocation of responsibility for monitoring as between the client and the lawyer."28 This monitoring could include supervision as to observance of the duty of confidentiality. Whoever is responsible, the nonlawyer -- whether engineer, geologist, landman or any other discipline -- should understand the duty of confidentiality "before the lawyer [begins] substantive discussions with that person."29 The best...
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