Ethics Opinion 2008-1

I. Factual Background

L1, L2, and L3 are former in-house attorneys who were fired by the firms that employed them. They each want to sue their respective former employers.

L1 represented an entertainment company.  She alleges she was fired because her employer thought she had taken too much maternity leave.  She wants to bring a claim for discrimination based on sex.

L2 represented a technology company. She alleges she was fired for refusing to sign a materially misleading registration statement for the offering of securities. She wants to bring a claim for retaliatory discharge.

L3 represented a medical device company.  He alleges he was fired because he threatened to inform a government agency that the company planned to distribute to hospitals defective kidney dialysis machines.  The defects put patients using the machines at risk of uremic poisoning, which could cause death or serious injury.

L3’s employer did not use his services in connection with the distribution of these machines, but he learned of the defects from an employee who confided in him because the employee considered him trustworthy.  L3 also wants to bring a claim for retaliatory discharge.        

 

II. Questions & Summary

Each lawyer wants to know what they may disclose: (i) confidentially, to their employment counsel; (ii) publicly, in the complaint or other proceedings necessary to prove their claims; and (iii) publicly, to respond to defenses their former employers might raise to their claims. 

Definitions

Two distinctions are relevant to the answers to these questions.  The first distinction is between information related only to employment and information related to the provision of legal services.  The second is between alleged wrongful termination based on the provision of legal services and alleged wrongful termination based on some other reason.  The second distinction is self-explanatory.  This opinion draws the first distinction as follows:

Employment Information is defined as information pertaining to the terms and conditions of in-house counsel’s employment.  This category includes such things as the terms of the lawyers’ contracts, applicable employment policies, workplace conditions, and discussions on such topics with supervisors or other employer-client representatives. 

This category includes no information regarding the provision of legal services, and thus does not include any information subject to the attorney-client privilege.  In terms of the statutory duty of confidentiality (discussed more fully below), this category includes some information that might be termed a client “secret” but no information that could be termed a client “confidence.”

Legal Services Information is defined to include all other information gained by the lawyer in connection with the professional relationship. This category includes all communications subject to the attorney-client privilege, and all non-privileged information the attorney has been able to learn because of her work as a lawyer and which the client has requested be held confidential, or which would be detrimental to the client or beneficial to the lawyer if disclosed.  This category thus includes all confidences and all secrets other than those that qualify as Employment Information.  

With respect to secrets, this category includes both secrets that are part of the lawyer’s work product and secrets that are not, but to which lawyers gained access because of their work as lawyers.  For example, L3 did not learn of defects in the dialysis machines while providing legal services to his employer.  He nevertheless learned the information in connection with his professional relationship with the employer-client. The information therefore qualifies as Legal Services Information.

 

Summary

With these distinctions in mind, the answers to the questions presented are as follows:

1. Disclosure to Employment Counsel

Each of L1, L2 and L3 would not be subject to discipline for disclosing to their employment counsel the facts they reasonably believe are necessary to evaluate their claims.  Such disclosures could include both Employment Information and Legal Services Information. 

2. Public Disclosure

Each of L1, L2, or L3 would not be subject to discipline for initiating disclosure of Employment Information in a manner potentially available to the public, as in a complaint or declaration.  

L2 and L3 seek to bring claims for retaliatory discharge based on conduct lawyers are either required or permitted to take. If an exception to the duty of confidentiality or the attorney-client privilege allows for such disclosure, or if a court issued a protective order authorizing such disclosure, they also would not be subject to discipline for initiating disclosure of Legal Services Information in pleadings or other documents that either might become publicly available or were subject to a protective order.  They would be subject to discipline for such disclosure if no such exception permitted it and a court declined to issue such an order.  

L1’s claim is not based on her acts as a lawyer.  L1 therefore would be subject to discipline were she to initiate disclosure of Legal Services Information in any publicly available manner.  She would not be subject to discipline for disclosures authorized by an exception to the attorney-client privilege in response to claims raised by her client.  In particular, Evidence Code Section 958 would allow her to disclose such information if her former employer defends itself by claiming she breached a professional duty.  L1 should assess any such defenses with care, however: Defenses falling short of a claim of breach of duty within the meaning of that provision would not provide a basis for disclosure.

The following table summarizes these conclusions:

 

 

Disclosure to Employment Counsel

Employment Claim Other Than Retaliatory Discharge

Retaliatory Discharge Claim

Employment Information

May Disclose

May disclose publicly

May disclose publicly

Legal Services Information

May Disclose

Subject to discipline for public disclosure unless disclosure authorized by trial court protective order or an exception to the duty of confidentiality or attorney-client privilege

Subject to discipline for public disclosure unless disclosure authorized by trial court protective order or an exception to the duty of confidentiality or attorney-client privilege

IV. Authorities

Statutes and Rules

California Business and Professions Code §§6068(d)-(e)
California Evidence Code §§956, 958
California Rules of Professional Conduct 3-100, 3-210

 

Cases

Arden v. State Bar, 52 Cal. 2d 310, 320 (1959)
Brockway v. State Bar, 53 Cal. 3d 51, 63-64 (1991).
Carlson, Collins, Gordon & Bold v. Banducci, 257 Cal.App.2d 212 (1967).
Dixon v. State Bar 32 Cal.3d 728, 739 (1982)
Flatt v. Superior Court, 9 Cal. 4th 275 (1995)
Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. App. 4th 294, 313 (2001)
General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164 (1994)
Goldstein v. Lees, 46 Cal. App. 3d 614, 621 (1975)
Hull v. Celanese, 513 F.2d 568 (2d Cir. 1975)
In the Matter of Lilly 2 California State Bar Court Reporter 473 (Review Dept. 1993)
Miller v. Superior Court, 111 Cal. App. 3d 390, 392 (1980)
Pacific Tel. & Tel. Co. v. Fink 141 Cal. App. 2d 332 (1956)
Security Loan & Trust Co. v. Estudillo, 134 Cal. 166 (1901)
Solin v. O’Melveny & Myers, 89 Cal. App. 4th 451 (2001)

 

Opinions and Commentary

American Bar Association, Model Rule of Professional Conduct 1.6(b)
California Bar Association, Committee on Professional Responsibility and Conduct, Opinions 1981-58, 1982-52, 1993-133
Restatement (Third) of the Law Governing Lawyers §64

 

V

Business and Professions Code §6068(e) provides it is the duty of an attorney to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” The only statutory exception to this duty grants lawyers discretion to disclose client confidential information if and to the extent the lawyer “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.” 1  The obligations of Section 6068(e) extend beyond termination of the attorney-client relationship. E.g. Flatt v. Superior Court, 9 Cal. 4th 275 (1995) (referring to interest in “the permanent confidentiality of matters disclosed to the attorney in the course of the prior representation”).

The State Bar’s Committee on Professional Responsibility and Conduct (COPRAC) has defined the terms “confidence” and “secrets” refer to different things.2 COPRAC has defined “confidences” as information meeting the criteria of Evidence Code Section 952 (COPRAC Opinion 1993-133), which defines the scope of the attorney-client privilege.  “Confidence” in Section 6068(e) therefore should be read as referring to communications between an attorney and client that are not distributed to any third party other than those necessary to facilitate the representation.

The category of secrets is broader than confidences and broader than the scope of the attorney-client-privilege.  COPRAC has defined the term “secrets” to include “any information obtained by the lawyer during the professional relationship, or relating to the representation, which the client has requested to be inviolate or the disclosure of which might be embarrassing or detrimental to the client.” Id.; see also COPRAC Ops. 1980-52; 1981-58 (secrets include all information “gained in the professional relationship” that would be embarrassing or detrimental to a client if disclosed). 

Both Employment Information and Legal Services Information are secrets because they are gained in the professional relationship between an in-house attorney and that attorney’s employer-client. It would be detrimental to a former client for a lawyer to disclose such information for the purpose of bringing a claim against the former client or defending a claim brought by the former client.  Section 6068(e) therefore presumptively precludes lawyers from disclosing either Employment Information or Legal Services Information. 

California Rule of Professional Conduct 3-100(A) provides that "A member shall not reveal information protected from disclosure by Business and Professions Section 6068, subdivision (e)(1) without the informed consent of the client, or as provided in paragraph (B) of this rule."3  Attorneys therefore are presumptively subject to discipline for disclosing either Employment Information or Legal Services Information to any third party.

VI

California courts have not applied Section 6068(e) literally, however.  They have presumed an exception to the duty of confidentiality when a lawyer seeks to establish the scope of his authority,4 defend against disciplinary proceedings initiated by the client,5 or a claim brought by a client,6 or to collect a fee.7 The exception for fee collection plainly contemplates that lawyers may initiate disclosure in some cases, rather than being limited to responding to allegations brought by a client or disciplinary body.

Courts have justified such an exception on three different grounds: fairness,8 convention,9 and, in the context of discharged in-house attorneys, exceptions to the attorney-client privilege.10 This interpretation of privilege exceptions allows lawyers to disclose confidential information on their own initiative, rather than in response to a discovery demand.

As a general matter, the duty of confidentiality governs voluntary disclosure by lawyers, while the privilege governs the circumstances in which the rules of evidence compel lawyers to disclose information. Exceptions to the privilege are not exceptions to the duty.11  Judicial invocation of the privilege exceptions deviates from the general rule that the duty of confidentiality and the attorney client privilege are different bodies of law that must be analyzed separately.

Important differences between the two bodies of law support this general rule.
The duty of confidentiality defines obligations the lawyer owes to the client.  It prohibits the lawyer from using or disclosing, without client consent, information the lawyer acquires in the course of her work for the client.  The privilege is a rule of evidence providing a defense against disclosure that otherwise would be compelled by the rules of some tribunal.
12 It therefore defines the circumstances in which the demands of adjudication trump confidentiality.

The duty is broader than the privilege in two ways.13  The duty applies to more things than the privilege, and it applies in more circumstances than the privilege.  The duty applies to information the lawyer acquires in the course of working for the client.  Such information includes but is not limited to confidential client communications for the purpose of securing legal services, which is the scope of the privilege.14 The duty also applies regardless whether there is a matter pending before some tribunal, which is the only circumstance in which the privilege may be asserted.15

In some cases, the duty of confidentiality and the privilege lead to conflicting results.  A communication between client and lawyer for the purpose of committing a crime or fraud is not privileged, for example,16 but that fact would not free a lawyer voluntarily to reveal the content of the communication unless the crime contemplated threatened death or substantial bodily harm and the lawyer complied with Rule of Professional Conduct 3-100.17  Conversely, the privilege exception would only apply if the client used the lawyers’ services in connection with the crime or fraud, while the exception to the duty imposes no such limitation.

These differences require that, as a general rule, the duty of confidentiality and the attorney-client privilege be analyzed as distinct bodies of law.  Nevertheless, the case law treating exceptions to the privilege as exceptions to the duty provide the most relevant controlling authority with regard to the subjects of this opinion.  To the extent required by such authority, this opinion treats exceptions to the privilege as exceptions to the duty.  Neither those judicial exceptions, however, nor this opinion, create a new general rule.

 

VII

The committee’s opinion relies heavily on two cases brought by former in-house attorneys against their employer/clients. We summarize these cases in this Part.  We relate their holdings to our conclusions in part VIII.

 

A. General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164 (1994)

General Dynamics is the leading case regarding employment litigation by in-house counsel.  The plaintiff, Andrew Rose, alleged he was a “career oriented” employee, who had worked as a lawyer for General Dynamics (“GD”) for 14 years before being fired.  7 Cal. 4th at 1140.  GD claimed it had lost confidence in Rose.  He claimed he was fired because he had investigated vigorously matters GD wanted covered up or left alone, and because he had given GD advice it did not want to hear about its compensation policies.  He also claimed his firing violated an implied agreement not to terminate him but for good cause.  Id. at 1170-71.doctrine, and matters protected under ethical standards of confidentiality, all as established in law, rule and policy.”)


court overruled the demurrer, a ruling the Supreme Court ultimately affirmed.  GD’s argument was based on Fracasse v. Brent, 6 Cal. 3d 784, 790 (1972), which held “a client should have both the right and the power at any time to discharge his attorney with or without cause.”  The General Dynamics Court affirmed this proposition as applied to the facts of Fracasse, which involved a personal injury plaintiff’s termination of her counsel shortly after his retention, but distinguished the position of in-house attorneys such as Rose.  7 Cal. 4th at 1173-75. 

The Court emphasized economic and social pressures that might render in-house attorneys more vulnerable than private practitioners to client coercion to depart from professional norms. The Court noted “the economic fate of in-house attorneys is tied directly to a single employer, at whose sufferance they serve,” Id. at 1172, and cited forces that might “subject the in-house attorney to unusual pressures to conform to organizational goals, pressures that are qualitatively different from those imposed on the outside lawyer.”  Id.

The Court also noted that “General Dynamics' claim of an unqualified immunity from any liability for terminating in-house counsel is inconsistent with the law in other areas, notably claims grounded in alleged violations of antidiscrimination laws and statutory rights to public collective bargaining.” Id.  The Court therefore held that the employer’s ability to terminate in-house counsel did not imply an ability to do so without cost. 

The Court was concerned that this holding not interfere with “the distinctive values subserved by the attorney-client relationship.” The most important of these values was confidentiality. Id. at 1179. It therefore analyzed Rose’s contract and tort claims differently.

The Court believed that “so-called `just cause’ contractual claims are unlikely to implicate values central to the attorney-client relationship.” Id. at 1169. The Court reasoned that “`[f]or matters of compensation, promotion, and tenure, inside counsel are ordinarily subject to the same administrative personnel supervision as other company employees.’” Id. at 1178-79, quoting Nordling v. Northern States Power Co. (Minn. 1991) 478 N.W.2d 498, 502. The Court therefore held “there is no valid reason why an in-house attorney should not be permitted to pursue such a contract claim in the same way as the nonattorney employee.” 7 Cal. 4th at 1169.18

The Court approved two categories of tort claims for retaliatory discharge.  The first includes cases where counsel was fired for  “adhering to the requirements of . . . a mandatory professional duty, either by an affirmative act required by the ethical code or statute or by resisting a demand of the employer on the ground that it is unequivocally barred by the professional code,” Id. at 1186. The Court did not specifically discuss confidentiality concerns in connection with this category.

The second category includes cases “in which in-house counsel's nonattorney colleagues would be permitted to pursue a retaliatory discharge claim and governing professional rules or statutes expressly remove the requirement of attorney confidentiality . . . .”  Id. at 1188. Among such statutes, the Court specifically included “the statutory exceptions to the attorney-client privilege codified in the Evidence Code (see id., §§956-958).” Id. at 1189. The Court also held that “where the elements of a wrongful discharge in violation of fundamental public policy claim cannot, for reasons peculiar to the particular case, be fully established without breaching the attorney-client privilege, the suit must be dismissed in the interest of preserving the privilege.”  Id. at 1190.

B. Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. App. 4th 294 (2001)

Gia Paladino was an in-house attorney for Fox, which declined to renew her contract.  She retained counsel to sue Fox, alleging wrongful termination based on sex and pregnancy, in particular her use of maternity leave.  89 Cal. App. 4th at 298-99.  Her counsel drafted a complaint and sent it to Fox, to permit Fox to review it and object to any information it considered privileged. 

Fox then sued Paladino, alleging that by disclosing confidential information about Fox to her counsel she violated her employment contract, fiduciary duties to Fox, and the rules of professional conduct.  Id. at 299.  Paladino responded by filing a motion to strike the complaint as a SLAPP suit and by filing her complaint; Fox replied by moving to disqualify her counsel on the ground that they improperly received information regarding Fox.  Id

The trial court denied the motion to disqualify and the SLAPP motion.  The Court of Appeal affirmed the first order and reversed the second.  Its discussion of General Dynamics was relevant to the question whether Fox had demonstrated a reasonable probability of prevailing on its claims against Paladino. The court held Fox had not, because former in-house attorneys lawfully may disclose client confidences and secrets to their own employment counsel. The court did not rule on the question whether such attorneys may be held liable for public disclosure of such information. Id. at 308.

The court reasoned in part that disclosures to the fired lawyer’s own counsel of information the former in-house employee reasonably believed necessary for counsel to evaluate and possibly proceed with a claim were not the sort of public disclosures General Dynamics cautioned against. Id. at 310-312. It also concluded that without an exception allowing a fired lawyer to disclose confidential information to her own employment counsel, General Dynamics would be essentially meaningless. Id. at 314.  The court held that, in order to advise a discharged attorney regarding permissible disclosure, litigation counsel would need “complete knowledge of all potentially confidential information known to their client and relevant to the litigation.”  Id. at 313.

VIII

General Dynamics departs from the general principle that the duty of confidentiality and the attorney-client privilege must be analyzed separately. To the extent of this departure, the opinion provides a safe harbor from discipline for lawyers who voluntarily disclose information the duty of confidentiality otherwise would prohibit them from disclosing.

Because it is an exception to the general rule against voluntary disclosures, the scope of the General Dynamics safe harbor extends only so far as the holding of that case.  Outside this safe harbor, Section 6068(e), as interpreted by the courts and as implemented in Rule of Professional Conduct 3-100, governs voluntary disclosure.  The balance of this opinion defines the parameters of the safe harbor. 

A. Disclosures to Employment Counsel

The General Dynamics safe harbor allows discharged in-house attorneys to disclose both Employment Information and Legal Services Information to their own employment counsel, to the extent necessary to allow such counsel to evaluate their prospective claims.  Each of L1, L2, and L3 could make such disclosures without being subject to discipline.

As noted in Part V of this opinion, the language of Section 6068(e) provides no exception allowing a discharged in-house attorney voluntarily to disclose any information regarding her employment that could be detrimental to the client.  Each of the hypothetical attorneys considered here wish to make such detrimental disclosures; they therefore fall within the literal scope of the rule. 

Judicial exceptions to the duty of confidentiality, however, implicitly approve disclosures to counsel retained in connection with the subject matter of the exception.  Any other reading of such cases would imply, for example, that lawyers could not retain counsel to collect fees or defend malpractice actions.  The cases neither state nor imply such a conclusion. 

The same is true of General Dynamics.  The Court’s approval of certain causes of action would be largely pointless if discharged in-house attorneys could not provide their own employment counsel with enough information properly to evaluate prospective claims.  Indeed, it would be perverse for a rule aimed at upholding professional standards to deprive discharged attorneys of one of the main benefits of professionalism: an independent evaluation of their claims. General Dynamics therefore should be read to approve such disclosures implicitly. Paladino approves them explicitly.

The General Dynamics safe harbor extends to both Employment Information and Legal Services Information.  The Court explicitly addressed treatment of Legal Services Information.  Although it did not explicitly address Employment Information, its conclusion that the plaintiff could proceed on a breach of contract theory entails the conclusion that the plaintiff could disclose Employment Information to his own employment counsel. 

The safe harbor also extends to L1’s claim for sex discrimination, even though no such claim was alleged in General Dynamics.  The Court’s reasoning distinguished between claims that “unduly endanger[ed] the values lying at the heart of the professional relationship” and those that did not.  7 Cal. 4th at 1169.  The Court found that the “just cause” contract claim alleged in that case did not present such a danger.  It concluded that lawyers and non-lawyers were in a similar position with regard to the elements of that claim, so that lawyers should have the same rights as non-lawyer employees to pursue such claims.  These same premises apply to L1’s claim, and thus compel the same conclusion, which Paladino supports as well.

B. Publicly Available Disclosures

Disclosures that might become publicly available, such as in a complaint or declaration, must be evaluated with great care.  Because the text of Section 6068(e) provides no exceptions for employment-related claims, lawyers contemplating public disclosures should presume that any public disclosure of an employer’s confidences is prohibited unless it is authorized by General Dynamics.  

The following analysis distinguishes between wrongful discharge claims based on a lawyer’s provision of legal services and claims unrelated to such services.  The distinction may be contested in some cases: Discharged in-house attorneys may believe they were discharged because of their legal while employers may claim they were discharged for some reason unrelated to such work. 

The cases provide little guidance on whose perspective governs in the event of such a dispute.  The General Dynamics Court made clear, however, that its exceptions do not extend to “strike suits” or those filed in bad faith.  7 Cal. 4th at 1191.  This holding implies that the scope of the safe harbor extends to claims made in good faith and supported by facts creating probable cause.  Discharged in-house attorneys who have both probable cause to believe, and a good faith belief, that they were discharged because of their provision of legal services, are not subject to discipline for disclosing information reasonably necessary to maintain such claims.  Discharged in-house attorneys who lack either probable cause or a good faith belief could be subject to discipline for such disclosures.  Cf Dixon v. State Bar 32 Cal.3d 728, 739 (1982) (imposing discipline for gratuitous disclosure by counsel in dispute between counsel and former client).

1. Claims based on conduct unrelated to the provision of legal services

Some claims against clients, such as Paladino’s claim that her contract was not renewed because her employer was unhappy with the amount of maternity leave she had taken, may be based on conduct other than a lawyer’s work as a lawyer. Discharged in-house attorneys who wish to bring such claims are not subject to discipline for disclosing Employment Information in a publicly available manner.  They would be subject to discipline for publicly disclosing Legal Services Information, unless a court order protected disclosure from public view, or an exception to the attorney-client privilege allowed the disclosure.


a. Employment Information

Claims based on something other than the lawyer’s work as a lawyer are analogous to the contract claim at issue in General Dynamics.  As noted above, although the Court did not discuss confidentiality with regard to that claim, the Court allowed it to proceed and stated that it did not threaten core values of the attorney-client relationship. That holding implies that a lawyer bringing such a claim may disclose information relevant to it to the extent necessary to prosecute the claim.

This conclusion holds even though a discharged attorney presumably would have acquired Employment Information in the course of her professional relationship, and even though disclosure of such information would be detrimental to the client.  These facts imply that Section 6068(e) prohibits public disclosure of Employment Information, but that conclusion effectively would negate the holdings of General Dynamics.  The conclusion therefore must be rejected.

For the reasons stated in Part VIII.A, this conclusion extends to L1’s sex discrimination claim even though no such claim was at issue in General Dynamics.  L1 therefore could disclose employment information in a publicly available manner without being subject to discipline.

b. Legal Services Information

The Default Rule: No Public Disclosure

Claims not based on a lawyer’s professional work do not fall within the scope of the retaliatory discharge tort recognized in General Dynamics. The logic of the Court’s opinion was limited to causes of action based on conduct either required or permitted by rules specifically governing the conduct of lawyers.

As noted above, the Court reasoned that employer-clients have significant economic power over in-house attorneys, who generally cannot diversify their client base. 7 Cal. 4th at 1172. The Court felt this fact contributed to a risk that in-house attorneys might feel unique pressures “to cut corners by bending the ethical norms that regulate an attorney’s professional conduct.” Id. The Court approved a limited tort cause of action as a way of counteracting such pressures, by making it less costly for in-house attorneys to adhere to such norms.19

This reasoning does not apply to in-house attorneys who were fired for reasons unrelated to their professional work.  The Court’s holding therefore does not extend to such claims, and lawyers who seek to bring them may not rely on Evidence Code exceptions to the attorney-client privilege to justify voluntary disclosure of Legal Services Information.20 As a default matter, therefore, L1 would be subject to discipline for publicly disclosing Legal Services Information in connection with her sex discrimination claim.

The Court’s reference to general constraints on termination, such as “alleged violations of antidiscrimination laws and statutory rights to public collective bargaining,” 7 Cal. 4th at 1172, does not compel a different conclusion. Though this passage is suggestive, and might usefully guide future decisions, Rose brought no statutory claim.  The passage was therefore not necessary to the Court’s decision, which elsewhere cautions that language in opinions must be read in the context of the facts at hand.  Id. at 1176. 

More substantively, the passage was written in connection with Rose’s contract claim, which the Court presumed could be maintained without need for disclosures going to the heart of the attorney-client relation.  The Court’s reference therefore was not directed to cases in which a former in-house attorney might need to disclose Legal Services Information in order to maintain a claim.  The Court made no law on that point.  Until it does, the safe harbor it created does not extend to such cases, and the language of Section 6068(e) provides the default rule of discipline.21 At this stage in the development of the law, we do not believe lawyers may rely with assurance on the reference in General Dynamics as establishing an exception permitting public disclosure of Legal Services Information in such suits.

ii. Exceptions: Protective orders and breach of duty defenses

The conclusion that L1 would be subject to discipline for publicly disclosing Legal Services Information is subject to two qualifications. 

First, L1 would not be subject to discipline if the trial court entered orders sufficient to protect Legal Services Information from public view. General Dynamics stated that trial courts “can and should apply an array of ad hoc measures from their equitable arsenal designed to permit the attorney plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege.” 7 Cal. 4th at 1191. 

This statement is at odds with the Court’s equally clear statement that it “reject[ed] any suggestion that the scope of the privilege should be diluted in the context of in-house counsel and their corporate clients” and its insistence that “the contours of the statutory attorney-client privilege should continue to be strictly observed” id. at 1190.  It also is at odds with the Court’s holding that the tort cause of action in recognized was limited to “circumstances in which the Legislature has manifested a judgment that the principle of professional confidentiality does not apply.”  Id. at 1189. 

If an exception to the privilege allows disclosure, there would be no need for protective orders.  The Court’s observations are therefore either superfluous or contradictory.  Nevertheless, the Court plainly contemplated disclosure in cases where a plaintiff’s “necessary proof” would include “client confidences subject to the privilege” so long as the trial court minimized the risk to “legitimate privilege interests.”  Id. at 1191.  The scope of the safe harbor must accommodate this holding.  L1 therefore could disclose Legal Services Information so long as the trial court issued order protecting such information from public view.

Second, that lawyers may not initiate disclosures in such cases (absent the orders discussed above) does not imply that they may not disclose confidences defensively.  If the employer argued that the lawyer was fired because she breached a professional duty, the lawyer would not be subject to discipline for disclosing Legal Services Information to defend against that argument.  Such disclosures would fall within Evidence Code Section 958. A lawyer relying on this exception should proceed carefully, however: Not all defenses related to an attorney’s conduct rise to the level of a claim that the lawyer breached a duty.

2. Claims based on the provision of legal services

a. General rules

General Dynamics places no restrictions on retaliatory discharge suits by attorneys fired for doing something required by a law regulating their professional conduct or refusing to do something prohibited by such a law.22  The Court contrasted such suits with claims based on conduct permitted by the relevant rules and statutes, but not required.  The Court held such claims could be maintained only if a non-attorney employee could bring a retaliatory discharge claim under the relevant circumstance,23 and the attorney could bring the claim without violating the duty of confidentiality or the privilege. 7 Cal. 4th at 1189.

The Court’s different treatment of these two types of suits might be read to imply that a lawyer who alleges he was discharged in retaliation for complying with a mandatory ethical rule may disclose Legal Services Information in a publicly available manner whether or not an exception to the duty of confidentiality or attorney-client privilege would otherwise authorize such disclosure. 

Other language in the opinion calls this interpretation into question, however.24  In addition, two appellate courts have, in dicta, interpreted General Dynamics as limiting wrongful termination claims to circumstances in which some exception to the duty or the privilege allows the claims to be prosecuted; neither court distinguished between claims based on mandatory or permissible conduct.25  Finally, the Court’s distinction between the two classes of cases would survive even if they were treated the same with regard to confidentiality. The Court could be read as holding that mandatory ethics rules automatically satisfy the requirement that a retaliatory discharge plaintiff demonstrate that she was fired in violation of a policy designed to protect the public, while lawyers seeking to bring cases based on permissible conduct would have to establish that element of their claim. 

For these reasons, and because the statutory default of Section 6068(e) allows no exceptions at all for such cases, the narrower reading of the Court’s opinion is preferable. Under that reading, even a lawyer who claims she was fired for adhering to a mandatory duty may initiate disclosure only if a statute or rule provides an exception to the duty of confidentiality that applies to her case.

Thus, where a lawyer claims she was discharged because of her conduct as a lawyer, she may disclose Legal Services Information: (i) to the extent disclosure is permitted by the statutory exception to Section 6068(e), qualified by the additional requirements of Rule of Professional Conduct 3-100(c); or (ii) by a statutory exception to the attorney-client privilege; or (iii) pursuant to a protective order as discussed in Part VIII.B.1.b.ii. 

The scope of disclosure may be no broader than the scope of the exception or order, but the plaintiff lawyer may initiate such disclosure herself.  She therefore may disclose such information in a complaint or other document, such as a declaration, necessary to prove her claim. She need not wait for the employer to put her conduct as a lawyer at issue.

b. Application to L2 and L3

Under these rules, both L2 and L3 would not be subject to discipline for publicly disclosing such client confidences and secrets as are reasonably necessary to establish their claims.  General Dynamics suggests that a disclosure is reasonably necessary if it is relevant to a claim or defense in an action and not made for an improper purpose.  7 Cal. 4th at 1191, citing Dixon v. State Bar 32 Cal.3d 728, 739 (1982) (imposing discipline for gratuitous disclosure by counsel in dispute between counsel and former client).

L2 is ethically prohibited from assisting the client in a scheme to sell securities through materially fraudulent statements.26  Her firing would fall within the first General Dynamics category because she would have been fired for obeying a mandatory ethical rule.  In addition, communications by which client representatives attempted to coerce L2 into participating in their fraudulent scheme would fall within the crime-fraud exception to the attorney-client privilege. Evidence Code §956.  L2 therefore would not be subject to discipline for disclosing such information in such documents and proceedings as were necessary to prove her claim.

L2 would be subject to discipline for disclosing such information to third parties unconnected with her suit against her former employer, however.  General Dynamics does not create a generalized exception to the duty of confidentiality.  It creates an exception only for the purpose of bringing retaliatory discharge claims.  Outside that context, the default duty of confidentiality applies.  Section 6068(e) does not allow disclosure to stop financial misconduct, and L2 therefore may not initiate such disclosure outside the context of her suit. 

L3 also would not be subject to discipline for initiating disclosures in connection with his retaliatory discharge claim.  His case differs from L2’s, however.  First, on the hypothetical facts stated no privilege attached to the communication by which L3 learned that his employer planned to distribute defective machines; the communication was not made for the purpose of securing legal advice.27

Because distribution of the defective dialysis machines would be “likely to result in death of, or substantial bodily harm to, an individual,” Section 6068(e)(2) would permit L3 to disclose information “to the extent that the attorney reasonably believes the disclosure is necessary to prevent” the distribution.28 

L3’s conduct therefore falls within the second General Dynamics category, because L3 was fired for threatening to engage in ethically permissible conduct, not for following a mandatory rule. Assuming that this exception satisfies the requirement that L3 demonstrate he was fired in contravention of a policy aimed at protecting the public, L3 would be able to bring a claim for retaliatory discharge and would not be subject to discipline for disclosing Legal Services Information in a publicly available manner.

Although the two General Dynamics categories do not differ for purposes of retaliatory discharge litigation, if the facts were such that the Section 6068(e) exception did apply, and if L3 complied with the provisions of California Rule of Professional Conduct 3-310(C), then L3, unlike L2, would not be subject to discipline for disclosing these facts to third parties to whom disclosure was necessary to prevent the criminal distribution, in addition to disclosing such facts in connection with his retaliatory discharge claim. 

 

IX. Conclusion

Former in-house attorneys and their employment counsel should approach the question of disclosure with great care.  Because Section 6068(e) allows for no disclosures in this context, counsel should presume they are subject to discipline for making such disclosure unless the case law creates an unambiguous exception to the statutory duty. 

At present, the case law creates qualified exceptions for disclosure to employment counsel of both Employment Information and Legal Services Information. Case law also creates exceptions for public disclosure of Employment Information.  Public disclosure of Legal Services Information presumptively subjects the former in-house attorney to discipline unless disclosure is allowed by: (i) an exception to Section 6068(e); (ii) an exception to the attorney-client privilege; or (iii) a trial court order protecting client information from public view. 

 

Id. at 1182 (describing view that lawyers have an even stronger claim than non-lawyers to protection of retaliatory discharge causes of action because lawyers are subject to conflicting demands of employers and the profession); 1186 (“by providing the employee with a remedy in tort damages for resisting socially damaging organizational conduct, the courts mitigate the otherwise considerable cultural and economic pressures on the individual employee to silently conform”); 1188 (declining to provide limited tort remedy for termination for adhering to mandatory ethical rules would increase likelihood of unethical conduct); 1189 (cause of action designed to support in-house attorneys in adhering to ethical obligations).

Attorneys would not be subject to discipline for disclosures authorized by the exception stated in Section 6068(e), or judicially recognized exceptions to the duty of confidentiality.  None of those exceptions applies to L1, however.

Precedent from other jurisdictions suggests that a rule governing such cases must be crafted with care. In Hull v. Celanese, 513 F.2d 568 (2d Cir. 1975), an in-house attorney defending a claim of gender discrimination concluded that the claim had merit and that she, too, had a claim against her employer.  She quit and attempted to join the pending action as a plaintiff, and to have it certified as a class.  To hold that the duty of confidentiality presents no impediment whatever to such suits would be to hold that such acts are permissible.  Whether a rule that would entail that result is desirable, or whether some qualified rule would be preferable, are questions on which further judicial guidance is needed.

Thus, according to the Court, if “in-house counsel is asked to commit a crime, or to engage in an act of moral turpitude that would subject him to disbarment . . . and is discharged for refusing to engage in such an act, counsel would have been discharged for adhering to a mandatory ethical obligation; under most circumstances, the attorney would have a retaliatory discharge cause of action against the employer.” 7 Cal. 4th 1188-89.  The Court did not elaborate on the qualification: “most.”

This element requires that any claim be based on fundamental policy clearly established in positive law and which exists for the protection of the public.  7 Cal. 4th at 1180, citing Gantt v. Sentry Insurance, 1 Cal. 4th 1083, 1095 (1992).

In particular, the Court’s comment that

Except in those rare instances when disclosure is explicitly permitted or mandated by an ethics code provision or statute, it is never the business of the lawyer to disclose publicly the secrets of the client. . . . where the elements of a wrongful discharge in violation of fundamental public policy claim cannot, for reasons peculiar to the particular case, be fully established without breaching the attorney-client privilege, the suit must be dismissed in the interest of preserving the privilege.

 7 Cal. 4th at 1190 (emphasis added).  See also id at 1169 (authorizing retaliatory discharge cause of action “provided it can be established without breaching the attorney- client privilege . . . .”).

Solin v. O’Melveny & Myers, 89 Cal. App. 4th 451, 458 (2001):

“there can be no balancing of the attorney-client privilege against the right to prosecute a lawsuit to redress a legal wrong. Consequently, as General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487 (hereafter "General Dynamics ") teaches, unless a statutory provision removes the protection afforded by the attorney-client privilege to confidential communications between attorney and client, an attorney plaintiff may not prosecute a lawsuit if in doing so client confidences would be disclosed.

Paladino, 89 Cal. App 4that 304 (in General Dynamics “our Supreme Court held a former in-house counsel may sue her employer for wrongful termination so long as she does not publicly disclose information the employer is entitled to keep secret.”).

E.g. Business & Professions Code §6068(d); Cal. R. Prof. Conduct 3-210.

In such circumstances, Evidence Code Section 956.5 would negate the privilege even it otherwise would have attached.

Section 6068(e)(2) was passed after the General Dynamics decision, and therefore does not appear among the provisions the Court listed as exceptions to confidentiality on which a retaliatory discharge plaintiff might rely.  The Court did cite Evidence Code Section 956.5, however, which creates an exception to the privilege for the same information Section 6068(e)(2) allows to be disclosed.  In addition, Section 6068(e)(2) is a provision manifesting specifying “circumstances in which the Legislature has manifested a judgment that the principle of professional confidentiality does not apply,” 7 Cal 4th at 1189, and therefore is part of the General Dynamics safe harbor.




1 California’s duty of confidentiality is significantly stricter than the rule stated by the ABA’s Model Rules of Professional Conduct.  Model Rule 1.6(b)(4) allows lawyers to disclose confidential information “to secure legal advice about the lawyer's compliance with these Rules.”  Rule 1.6(b)(5) allows disclosure “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.”  It is also significantly stricter than the rules stated in the Restatement (Third) of the Law Governing Lawyers §64 (“A lawyer may use or disclose Legal Services Information when and to the extent that the lawyer reasonably believes necessary to defend the lawyer or the lawyer's associate or agent against a charge or threatened charge by any person that the lawyer or such associate or agent acted wrongfully in the course of representing a client.”).  Although California courts sometimes cite the Model Rules as persuasive authority, the Supreme Court’s opinion in General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164, 1190 n.6 (1994), makes clear that the Court rejects the Model Rules provision on this point.

2 The COPRAC definitions are taken from the distinction drawn in the Model Code of Professional Responsibility.  We use the definitions here to relate this opinion to existing interpretations with which lawyers may be familiar.  We do not intend to endorse the use of Model Code definitions to interpret Section 6068(e).   

3 The exception of subsection (B) provides that "A member may, but is not required to, reveal confidential information relating to the representation of a client to the extent that the member reasonably believes the disclosure is necessary to prevent a criminal act that the member reasonably believes is likely to result in death of, or substantial bodily harm to, an individual" provided the attorney must, if reasonable under the circumstances, attempt to persuade the client to desist from the unlawful plan and, at an appropriate time, inform the client of the attorney’s decision to disclose information.

4Security Loan & Trust Co. v. Estudillo, 134 Cal. 166 (1901); Pacific Tel. & Tel. Co. v. Fink 141 Cal. App. 2d 332 (1956).

5Arden v. State Bar, 52 Cal. 2d 310, 320 (1959); Brockway v. State Bar, 53 Cal. 3d 51, 63-64 (1991).

6Miller v. Superior Court, 111 Cal. App. 3d 390, 392 (1980).

7Carlson, Collins, Gordon & Bold v. Banducci, 257 Cal.App.2d 212, 227-228 (1967).

8Pacific Tel. & Tel. Co. v. Fink, 141 Cal. App. 3d at 335.

9Carlson, 257 Cal. App. 2d at 227-28.

10General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164, 1189, 1191 (1994)(referring generally to exceptions to the privilege); Fox Searchlight Pictures, Inc. v. Paladino, 89 Cal. App. 4th 294, 313 (2001)(citing Section 958 as one provision that “specifically permit[s] the attorney to depart from the usual rules of client confidentiality,” such as Section 6068(e)).

11Fox Searchlight Pictures, 89 Cal. App. 4th at 314 n.56, asserts that the State Bar Court “has held the duty of confidentiality expressed in Business and Professions Code section 6068, subdivision (e) is modified by the exceptions to the attorney-client privilege contained in the Evidence Code.” The authority cited for this claim, In the Matter of Lilly (Review Dept. 1993) 2 California State Bar Court Reporter 473, 478, does not support it.  Lilly dealt with the question whether the word “client” for purposes of summary disbarment included deceased clients.  The bar court simply noted that, as used in both section 6068(e) and in the Evidence code, the word “client” pertains to deceased as well as living clients.  The case presented no issue under Section 6068(e), and the court decided none. 

12See Cal. Rule Prof. Conduct 3-100 cmt 2 (“The attorney-client privilege and work-product doctrine apply in judicial and other proceedings in which a member may be called as a witness or be otherwise compelled to produce evidence concerning a client. A member's ethical duty of confidentiality is not so limited in its scope of protection for the client-lawyer relationship of trust and prevents a member from revealing the client's confidential information even when not confronted with such compulsion.”); COPRAC Op 1981-58 (Same).

13See Cal. Rule Prof. Conduct 3-100, cmt 2 (“The principle of client-lawyer confidentiality applies to information relating to the representation, whatever its source, and encompasses matters communicated in confidence by the client, and therefore protected by the attorney-client privilege, matters protected by the work product doctrine, and matters protected under ethical standards of confidentiality, all as established in law, rule and policy.”)

14Goldstein v. Lees, 46 Cal. App. 3d 614, 621 (1975).

15 Rule 3-100, cmt 2.

16 Evidence Code §956.

17 Business and Professions Code §6068(e)(2).

18The Court did not refer to Business and Professions Code Section 6149, which provides that fee agreements are confidential communications within the meaning of Evidence Code Section 952.  Presumably the court perceived a distinction between fee agreements and employment agreements of in-house attorneys.  The Court later qualified the unqualified language quoted in the text, stating “as creatures of contract, implied-in-fact limitations on a client-employer's right to discharge in-house counsel are not likely to present issues implicating the distinctive values subserved by the attorney-client relationship. Such suits can thus for the most part be treated as implied-in-fact claims brought by the nonattorney employee.”  Id. at 1179 (emphasis added).  The Court did not elaborate on what qualifications the emphasized language might imply.

19Id. at 1182 (describing view that lawyers have an even stronger claim than non-lawyers to protection of retaliatory discharge causes of action because lawyers are subject to conflicting demands of employers and the profession); 1186 (“by providing the employee with a remedy in tort damages for resisting socially damaging organizational conduct, the courts mitigate the otherwise considerable cultural and economic pressures on the individual employee to silently conform”); 1188 (declining to provide limited tort remedy for termination for adhering to mandatory ethical rules would increase likelihood of unethical conduct); 1189 (cause of action designed to support in-house attorneys in adhering to ethical obligations).

20Attorneys would not be subject to discipline for disclosures authorized by the exception stated in Section 6068(e), or judicially recognized exceptions to the duty of confidentiality.  None of those exceptions applies to L1, however.

Attorneys would not be subject to discipline for disclosures authorized by the exception stated in Section 6068(e), or judicially recognized exceptions to the duty of confidentiality.  None of those exceptions applies to L1, however.

21Precedent from other jurisdictions suggests that a rule governing such cases must be crafted with care. In Hull v. Celanese, 513 F.2d 568 (2d Cir. 1975), an in-house attorney defending a claim of gender discrimination concluded that the claim had merit and that she, too, had a claim against her employer. She quit and attempted to join the pending action as a plaintiff, and to have it certified as a class. To hold that the duty of confidentiality presents no impediment whatever to such suits would be to hold that such acts are permissible. Whether a rule that would entail that result is desirable, or whether some qualified rule would be preferable, are questions on which further judicial guidance is needed.

22Thus, according to the Court, if “in-house counsel is asked to commit a crime, or to engage in an act of moral turpitude that would subject him to disbarment . . . and is discharged for refusing to engage in such an act, counsel would have been discharged for adhering to a mandatory ethical obligation; under most circumstances, the attorney would have a retaliatory discharge cause of action against the employer.” 7 Cal. 4th 1188-89.  The Court did not elaborate on the qualification: “most.”

23This element requires that any claim be based on fundamental policy clearly established in positive law and which exists for the protection of the public.  7 Cal. 4th at 1180, citing Gantt v. Sentry Insurance, 1 Cal.

24In particular, the Court's comment that

Except in those rare instances when disclosure is explicitly permitted or mandated by an ethics code provision or statute, it is never the business of the lawyer to disclose publicly the secrets of the client. . . . where the elements of a wrongful discharge in violation of fundamental public policy claim cannot, for reasons peculiar to the particular case, be fully established without breaching the attorney-client privilege, the suit must be dismissed in the interest of preserving the privilege.

7 Cal. 4th at 1190 (emphasis added). See also id at 1169 (authorizing retaliatory discharge cause of action "provided it can be established without breaching the attorney- client privilege . . . .").

25 Solin v. O’Melveny & Myers, 89 Cal. App. 4th 451, 458 (2001):

“there can be no balancing of the attorney-client privilege against the right to prosecute a lawsuit to redress a legal wrong. Consequently, as General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487 (hereafter "General Dynamics ") teaches, unless a statutory provision removes the protection afforded by the attorney-client privilege to confidential communications between attorney and client, an attorney plaintiff may not prosecute a lawsuit if in doing so client confidences would be disclosed.

 

Paladino, 89 Cal. App 4that 304 (in General Dynamics “our Supreme Court held a former in-house counsel may sue her employer for wrongful termination so long as she does not publicly disclose information the employer is entitled to keep secret.”).

26E.g. Business & Professions Code §6068(d); Cal. R. Prof. Conduct 3-210.

27In such circumstances, Evidence Code Section 956.5 would negate the privilege even it otherwise would have attached.

28Section 6068(e)(2) was passed after the General Dynamics decision, and therefore does not appear among the provisions the Court listed as exceptions to confidentiality on which a retaliatory discharge plaintiff might rely.  The Court did cite Evidence Code Section 956.5, however, which creates an exception to the privilege for the same information Section 6068(e)(2) allows to be disclosed.  In addition, Section 6068(e)(2) is a provision manifesting specifying “circumstances in which the Legislature has manifested a judgment that the principle of professional confidentiality does not apply,” 7 Cal 4th at 1189, and therefore is part of the General Dynamics safe harbor.