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.


Recent News Highlight the Difficult Issues Facing Corporate Attorneys Made Aware of Potential Criminal Activity

As most people have seen in the news, General Motors agreed to pay a $35 million civil penalty last May for delays in responding to defective ignition switches that could change to the "accessory" position, disabling air bags and making steering and braking more difficult. The company launched an internal probe that found "a pattern of incompetence and neglect" but no intentional cover-up of ignition-switch issues. Six in-house attorneys were reportedly among 15 employees fired after the investigation.

An ethics complaint filed in Washington, D.C., accuses a former in-house lawyer for General Electric of disclosing confidential company information to a federal prosecutor, the Securities and Exchange Commission and a journalist regarding her allegation that the company was improperly helping some customers in Brazil avoid value added taxes by misrepresenting the regions to which goods were being shipped. (http://www.abajournal.com/news/article/ethics_complaint_accuses_former_ge_lawyer_of_discl
osing_client_secrets)

These news stories are reminders of the constraints imposed on corporate attorneys in California who may be in a “whistleblower” situation. According to rule 3-600(B) of the California Rules of Professional Conduct: "If a member acting on behalf of an organization knows that an actual or apparent agent of the organization acts or intends or refuses to act in a manner that is or may be a violation of law reasonably imputable to the organization, or in a manner which is likely to result in substantial injury to the organization, the member shall not violate his or her duty of protecting all confidential information as provided in Business and Professions Code section 6068, subdivision (e)."

The Business and Professions Code carves out a limited exception to an attorney's duty to protect confidential information when "the attorney reasonably believes the disclosure is necessary to prevent a criminal act that the attorney reasonably believes is likely to result in death of, or substantial bodily harm to, an individual." (Bus. & Prof. Code, § 6068(e)(2).) Evidence Code section 956, the crime/fraud exception, provides that "[t]here is no privilege under this article if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or a fraud." But the exception only “applies to attorney communications sought to enable the client to plan to commit a fraud, whether the fraud is successful or not." (BPAlaska Exploration, Inc. v. Superior Court (1988) 199 Cal.App.3d 1240, 1262.) Where the client has already committed a wrongdoing and confesses the matter to the attorney, the information exchanged between the two is privileged. (State Farm Fire & Casualty Co. v. Superior Court (1997) 54 Cal.App.4th 625, 644.)

Thus, in California, an attorney wishing to disclose the issues at GM would have to, without disclosing attorney client confidences, establish he or she reasonably believes the disclosure would have prevented “death of, or substantial bodily harm” to the drivers or GM sought advice to cover up the issues as opposed to seeking legal advice to address the issues.  Either would be a tall order without unprivileged information corroborating requests for advice for a cover-up of the ignition issues particularly if GM engineers did not believe the ignition issues were likely to result in any harm, much less death or substantial bodily harm.

These events are stark reminders to attorneys of their duties of confidentiality that must be balanced with their duty to “support the Constitution and laws of the United States”(Bus. & Prof. Code 6068(a)) and “not advise the violation of any law, …unless the member believes in good faith that such law” is “invalid.” (CRCP, Rule 3-210.)

– Andrew Servais

**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 only and not of the SDCBA or its Legal Ethics Committee.**