Disclosure of Confidential Information in Suit to Collect a Fee
Adopted: July 16, 2004
Opinion rules that a lawyer may disclose confidential client information to collect a fee, including information necessary to support a claim that the corporate veil should be pierced, provided the claim is advanced in good faith.
Inquiry:
Attorney was engaged by Husband to represent a corporation in several matters. Husband's wife (Wife) is the corporation's sole shareholder. Husband and the corporation failed to pay the fee for Attorney's services. Pursuant to Rule 1.5(f), Attorney's firm sent the necessary notice of right to participate in the State Bar's fee dispute resolution program to the client. The client did not respond to the notice within the requisite 30 days. Attorney would now like to sue the corporation to collect the fee, and he would like to include a claim in the complaint that the corporate veil should be pierced in order to impose personal liability on Wife and gain access to her assets.
During his representation of the corporation, Attorney learned that Husband has experienced legal trouble before and, therefore, titled most of his assets in Wife's name. By reason of the representation of the corporation, Attorney is also aware that the corporation does not follow the corporate formalities.
In the litigation, may Attorney reveal the information that he learned during the representation of the corporation in order to establish the basis for asking the court to pierce the corporate veil?
Opinion:
Rule 1.6(b)(6) allows a lawyer to disclose confidential client information, "to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client…." Comment [12] to the rule specifies that "[a] lawyer entitled to a fee is permitted by paragraph (b)(6) to prove the services rendered in an action to collect it. This aspect of the rule expresses the principle that the beneficiary of a fiduciary relationship may not exploit it to the detriment of the fiduciary." Nevertheless, Comment [15] cautions that disclosures under paragraph (b) of the rule must be limited:
…a disclosure adverse to the client's interest should be no greater than the lawyer reasonably believes necessary to accomplish the purpose. If the disclosure will be made in connection with a judicial proceeding, the disclosure should be made in a manner that limits access to the information to the tribunal or other persons having a need to know it and appropriate protective orders or other arrangements should be sought by the lawyer to the fullest extent practicable.
In light of limited nature of the disclosure allowed under Rule 1.6(b)(6), Attorney may disclose the information necessary to establish the claim that the corporate veil should be pierced, provided Attorney has a good-faith belief that the piercing claim is war ranted by the law and the facts and, further provided, appropriate protective orders or actions are undertaken to limit access to the information.