Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association for SDCBA members.

The Case for an In-House Ethics Advisor

State courts in Illinois, Massachusetts and Georgia have recently examined when and to what degree internal communications, deliberations and analysis within a law firm concerning ethical, regulatory and risk management issues are discoverable if related to malpractice allegations by a current client. 

In Garvy v. Seyfarth Shaw LLP, et al., 966 N.E.2d 523 (Ill. App. Ct. 1st Dist. 2012), Peter Garvy retained Seyfarth to render advice in a dispute with his siblings over control of a family business.  The siblings later sued Garvy for actions he took based upon Seyfarth’s advice.  Garvy asked Seyfarth to represent him in the litigation.  Seyfarth sent a conflict disclosure letter encouraging Garvy to seek independent counsel, which he did not sign; instead, he asked the firm to continue its representation.  After Garvy retained independent counsel, his new lawyer asserted malpractice claims against Seyfarth and requested the firm enter into a tolling agreement, which it did while continuing to represent Garvy in the sibling litigation. Eventually, Seyfarth withdrew entirely from its representation of Garvy, who then sued the firm.

In discovery, Garvy sought the production of communications with Seyfarth’s in-house general counsel and its outside lawyers.  The trial court ordered the production of documents up to the time of Seyfarth’s withdrawal, finding the firm should have withdrawn immediately despite Garvy’s objection, and that it owed a fiduciary duty of loyalty as long as it remained his counsel.

The Illinois Appellate Court reversed, finding “‘[a] lawyer’s confidentiality obligations do not preclude a lawyer from securing confidential legal advice about the lawyer’s personal responsibility to comply with these Rules’ (emphasis added) (Ill. S.Ct. R. Prof’l Conduct 1.6(b)(4), cmt. 9 (eff. Jan. 1, 2010)), and that lawyers are permitted to make confidential reports of ethical issues to designated firm counsel.” (Id., at 538.)  The court also rejected the argument Seyfarth had no expectation of confidentiality due to the disclosure requirements of the Illinois Rules of Professional Conduct 1.4 (Communication) and 1.7 (Conflict of Interest).

Similarly, the court in RFF Family Partnership, LLP v. Burns & Levinson, LLP, et al., 465 Mass. 702 (Mass. 2013), found the attorney-client privilege protected a current client’s effort to discover confidential communications among law firm attorneys and the law firm’s in-house counsel provided: (1) the law firm designated an attorney or attorneys within the firm to represent the firm as in-house counsel, (2) the in-house counsel did not perform any work on the client matter at issue or a substantially related matter, (3) the time spent by the attorneys in these communications with in-house counsel was not billed to a client, and (4) the communications were made in confidence and kept confidential.

The court observed that “[i]n law, as in architecture, form should follow function, and we prefer a formulation of the attorney-client privilege that encourages attorneys faced with the threat of legal action by a client to seek the legal advice of in-house ethics counsel before deciding whether they must withdraw from the representation to one that would encourage attorneys to withdraw or disclose a poorly understood potential conflict before seeking such advice. (Id., at 22.)  The court also noted: “a law firm is not disloyal to a client by seeking legal advice to determine how best to address [a] potential conflict, regardless of whether the legal advice is given by in-house counsel or outside counsel. (Id., at 720.)

Finally, in St. Simons Waterfront, LLC v. Hunter, Maclean, Exley & Dunn, P.C., 293 Ga. 419 (Georgia, 2013), the Georgia Supreme Court determined the attorney-client privilege could apply to a firm’s in-house counsel if there was a genuine attorney-client relationship, the communications at issue were intended to address the firm’s interest in limiting exposure rather than the client’s interest in obtaining sound legal advice, the communications were confidential, and no exceptions to the privilege applied. (Id., at 429.)

Garvy, RFF and St. Simons, at least as applied in their respective jurisdictions, suggest attorneys may in confidence consult with a designated in-house ethics officer regarding the legal and ethical obligations that attend client representation.  Here, as elsewhere, mandatory disclosure of all client-related communications would discourage counsel from taking steps to analyze and better understand their duties through discussion with colleagues, and could result in the premature (and sometimes unnecessary) termination of the attorney-client relationship to ensure the confidentiality of communications related to a particular client.

Presumably, California will address this issue in the foreseeable future.  Until then, Garvy, RFF and St. Simons may offer practical guidance on a challenging subject.

-- Eric R. Deitz, Wingert Grebing Brubaker & Juskie LLP

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author and not of SDCBA or its Legal Ethics Committee.*