CONFLICT OF INTEREST is an ethical issue that is universal.
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Aug 8 (Reuters) - The American Bar Association House of Delegates this week approved an amended model rule that for the first time recognizes as ethical the disclosure of client information when lawyers are seeking to move from one firm to another.
Previously, ABA ethics rules did not address the issue of whether lawyers involved in job or firm merger talks could disclose the identities of their clients or how much business these clients generate.
Under the new model rule, the ABA is advising that such disclosures are permitted in order to determine whether client conflicts exist between the lawyer and a prospective firm. But the model rule says these disclosures should be limited to the identities of clients and should not include detailed billing or other financial information.
The rule is advisory only, though state bars typically adopt the ABA model rules. Currently many state bar associations, including those in California, New York and Illinois, do not have rules covering whether client information can be disclosed during lateral partner hiring or law firm merger discussions.
Some state and city bars that do have rules covering this issue, including Colorado and Boston, mirror the new ABA rule and hold that client disclosures should be done on a limited basis only, to check conflicts of interest.
"Our hope is that with clear rules there will be less disclosure of client information that shouldn't be disclosed," said Jamie Gorelick, the co-chair of the ABA Commission on Ethics 20/20, which recommended the rule. Gorelick said the rule would bring "more certainty by both lawyers and clients as to what can be said."
Michael Traynor, another co-chair of the commission, said the change was made to ensure a law firm can't use a lawyer's client information as an "insidious device to open the door to any trade secrets."
David Eisen, a Los Angeles lawyer who specializes in disputes between lawyers and law firms, acknowledged the need for a rule regarding client disclosures. He said he has handled a number of cases in recent years involving disputes between lawyers and law firms focused on disclosure of clients.
While Eisen declined to discuss specific matters, he said he has recently handled cases in which law firms end discussions with a prospective hire and then use client information the lawyer disclosed to poach business.
"It's a real issue," Eisen said.
At the ABA meeting, held in Chicago, the proposed model rule drew opposition from the ABA litigation section. Critics said the rule should require lawyers to receive consent from clients before disclosing their information.
But the ABA House of Delegates, in a voice vote Monday, rejected that approach.
Now it's up to the state bar associations to either adopt the rule or not. The process can take some time.
"It's a complicated change and we haven't begun to study whether to advance it in New York," said Lise Bang-Jensen, a spokeswoman for the New York State Bar Association.
(Reporting By Casey Sullivan)
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