March 2015 - So Long, Farewell ... Not So Fast: Duties Owed to Former Clients

by Scott B. Garner

Good night, good night! Parting is such sweet sorrow.
—William Shakespeare (from Romeo & Juliet)

Although a lawyer may part—sorrowfully or otherwise—with his client, the parting may not be as complete as the lawyer might like. Understanding what duties remain even after a lawyer writes that all-important termination letter is critical to avoiding ethical pitfalls that may arise sometimes years after the lawyer bids his client good night.

Indeed, so profound is the concept of continuing fiduciary duties to a client after termination of the attorney-client relationship that some such duties even survive the death of the client. In In the Matter of Lilly, No. 92-C-12350, 1993 Cal. Op. LEXIS 66, at *9 (Cal. State Bar Ct. July 19, 1993), a lawyer was named executor of his client’s estate, but apparently pilfered the estate after the client’s death. In recommending disbarment of the lawyer, the State Bar Court noted that “[i]t is not surprising that clients would look to their most trusted fiduciaries during their lifetime to act as fiduciaries in managing their estates after their death.” Id. at 11. The court found that the sanction of disbarment was appropriate where the victim is “a deceased client whose trust is betrayed by the plundering of his estate by the attorney he named as executor.” Id. at 12. But a lawyer’s duty to a former client need not be so dramatic.

A lawyer’s duties to a former client begin as soon as the client becomes a “former” client, and even while the client is in the process of becoming a “former” client. Rule 3-700 of the Rules of Professional Conduct describes the duties a lawyer owes to a client in connection with the termination itself: The lawyer has the duty to take “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client” that may be caused by the termination. The discussion to rule 3-700 makes clear, however, that, “[a]bsent special circumstances, ‘reasonable steps’ do not include providing additional services to the client once the successor counsel has been employed and rule 3-700(D) has been satisfied.” Cal. R. of Prof. Conduct, R. 3-700(D) (West 2015). Rule 3-700(D) is satisfied when the lawyer returns, at the request of the client, all of the client’s papers and property (subsection (D)(1)) and refunds any unearned fees (subsection (D)(2)). See also Cal. State Bar Op. 2007-174, The State Bar of California, http://ethics.calbar.ca.gov/LinkClick.aspx?fileticket=kiSRjKqnMBg%3D&tabid=838 (last visited Jan. 31, 2015) (discussing return of electronic files).

Notwithstanding that the duties outlined in rule 3-700 appear fairly narrow and straightforward, a lawyer’s duties to his client do not end after he complies with rule 3-700. A lawyer continues to owe his client fiduciary duties after termination. Those duties, which include the duty of confidentiality and the duty of loyalty, may be broader than some lawyers assume or appreciate.

For example, even after the termination of his representation, a lawyer may not attack his own work product that he prepared for his former client. This often arises in the context of a patent dispute, as in Asyst Technologies, Inc. v. Empak, Inc., 962 F. Supp. 1241 (N.D. Cal. 1997). In that case, two lawyers had prosecuted certain patents for Asyst before moving to a different law firm, Wilson Sonsini. Later, when Asyst filed a patent infringement lawsuit against Empak, Wilson Sonsini (but not the same two lawyers) was retained to represent Empak to defend the lawsuit. Wilson Sonsini filed an answer and counterclaims, which included a claim that the very patents the other two Wilson Sonsini lawyers previously had prosecuted, were invalid. Asyst Techs., Inc., 962 F. Supp. at 1241-42. Asyst moved to disqualify Wilson Sonsini because of the two lawyers’ role in prosecuting the patents. The district court granted the motion to disqualify, finding that, in challenging the validity of the patents, the law firm was acting adversely to its former client in a matter that was “substantially related” to the two lawyers’ previous representation. Id. at 1242. “Because of the fiduciary nature of the attorney-client relationship, courts have been loathe to permit an attorney to act adversely to the interests of a former client.” Id.

The result in Asyst is based on a duty owed to the former client itself, and less so on the fact it was the lawyers’ work product that was at issue. In Telectronics Proprietary, Ltd. v. Medtronic, Inc., 836 F.2d 1332 (Fed. Cir. 1988), for example, the owner of a patent sought to disqualify a law firm that had prosecuted that patent from attacking its validity. The law firm had never represented the current owner, however, but rather had prosecuted the patent on behalf of the inventor, who subsequently assigned the patent to the current owner. Because the law firm had not represented the current owner, it owed that owner no duties and, thus, the court denied the motion for disqualification. Id. at 1336; see also Alchemy II, Inc. v. Yes! Entm’t Corp., 844 F. Supp. 560, 564 (C.D. Cal. 1994) (refusing to disqualify law firm from defending copyright infringement action brought by the assignor of the copyright, where law firm previously represented the assignee of the copyright in efforts to enforce the copyright). Accordingly, under this line of cases, disqualification for attacking one’s work product is appropriate only if the owner seeking disqualification is a former client on whose behalf the lawyer created the work product.

One of the most important duties of an attorney is to preserve the secrets of his client. “No rule in the ethics of the legal profession is better established nor more rigorously enforced than this one.” Wutchumna Water Co. v. Bailey, 216 Cal. 564, 572 (1932). That duty is enforced not only by rule 3-100, but also by statute. The State Bar Act, Business and Professions Code section 6068(e)(1), states it is the duty of an attorney “[t]o maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” Cal. Bus. & Prof. Code § 6068(e)(1) (West 2004).

It is undisputed that a lawyer’s duty of confidentiality, as well as his duty to preserve attorney-client privileged communications, survives the termination of the lawyer-client relationship. See People v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1147 (1999). After all, if a client knew that his lawyer could disclose his darkest secrets the minute the relationship ended, no rational client would trust his lawyer with those secrets in the first place. But the duty to maintain a former client’s secrets may be broader than many lawyers realize. The duty requires not only refraining from telling others the secrets of one’s client, but also refraining from using the confidential knowledge against the former client.

In Wutchumna, a lawyer represented a group of plaintiffs against a water corporation in a dispute concerning certain water rights. Previously, the lawyer had represented the water corporation itself in connection with its water rights, which was the corporation’s sole asset. During that previous representation, the lawyer had obtained confidential information from the water corporation. The California Supreme Court reversed a lower court’s finding that the lawyer could continue in his representation against his former client, stating,

[A]n attorney is forbidden to do either of two things after severing his relationship with a former client. He may not do anything which will injuriously affect his former client in any matter in which he formerly represented him nor may he at any time use against his former client knowledge or information acquired by virtue of the previous relationship.
Wutchumna Water Co., 216 Cal. at 573-74. This quote from the California Supreme Court has become the leading statement of a lawyer’s continuing duty to his former clients.


The Wutchumna Court was careful not to find that the lawyer had intended to do anything wrong, but concluded that the lawyer’s use of confidential information obtained during his previous representation was all but inevitable: “[H]e cannot but use therein confidential knowledge and information gained by virtue of that relationship of attorney and client.” Id. at 574. Thus, whether or not a lawyer actually divulges confidential information learned from or about his client as a result of the representation, he runs afoul of his duty to maintain his client’s confidences if he uses that information to the detriment of his former client.

Similar reasoning is reflected in the conflict of interest rules addressing former clients. Rule 3-310(E) provides that a lawyer may not, without the informed written consent of his former client, be adverse to that former client in a matter in which, “by reason of the representation of the ... former client, the [lawyer] has obtained confidential information material to the employment.” Cal. R. of Prof. Conduct, R. 3-310(E) (West 2015). Disqualification under rule 3-310(E) does not require that the lawyer actually use the confidential information he obtained about the former client, but only that he obtained it in the first place. It is therefore intended as a prophylactic rule to prevent the lawyer from using the confidential information, even inadvertently, while giving the client assurance that detrimental information about him will not be used against him by his own former lawyer. Thus, this rule seeks to avoid even the mere possibility that the lawyer might use against the client confidential information he may have obtained during the representation. See Elan Transdermal Ltd. v. Cygnus Therapeutic Sys., 809 F. Supp. 1383, 1388 (N.D. Cal. 1992) (under the “substantial relationship” test, “actual possession of confidential information is not required”).

In the context of a subsequent representation, these conflict rules, and the continuing duty of confidentiality on which they are based, may limit a lawyer’s ability to take on future clients and, in that way, may impede the lawyer’s ability to generate work and, consequently, income. But that trade-off allows clients to feel safe confiding in their lawyer, knowing that, even after the relationship ends, their secrets are safe.

Most lawyers would not be surprised to learn they cannot disclose their client’s confidential information to third parties, even after the representation ends. Similarly, most lawyers would not be surprised to learn they cannot accept representation adverse to their former client when, in connection with their previous representation, they obtained confidential information that could be material to the contemplated new representation and, thus, used against the former client. What may surprise some lawyers, however, are the limitations on their ability even to pursue their own First Amendment right to speak out on issues of personal concern—as opposed to on behalf of another client—when those issues relate to their former representation.

In Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811 (2011), a lawyer’s First Amendment right to speak out publicly on an issue of personal concern was blocked by his continuing duties of confidentiality and loyalty to his former client. The lawyer, Kenneth Goldman, had formerly represented a real estate developer in connection with obtaining approval of a redevelopment project from the Beverly Hills City Council. Two years after the representation ended, the lawyer became involved in a campaign to stop the same redevelopment project—not on behalf of another client, but on behalf of himself. The former client filed a lawsuit against the lawyer for, among other things, breach of fiduciary duty. Goldman filed an anti-SLAPP motion under Civil Procedure Code section 425.16, which the trial court denied. The court of appeal reversed, but the Supreme Court reversed again, holding that Goldman’s anti-SLAPP motion was properly denied.

Oasis explicitly recognized a lawyer’s continuing duties of confidentiality and loyalty after a representation has ended. Id. at 822-23. The opinion stated:

It is well established that the duties of loyalty and confidentiality bar an attorney not only from using a former client’s confidential information in the course of “making decisions when representing another client,” but also from “taking the information significantly into account in framing a course of action” such as “deciding whether to make a personal investment”—even though, in the latter circumstance, no second client exists and no confidences are actually disclosed.
Id. at 822-23 (quoting Restatement (Third) of the Law Governing Lawyers, § 60 cmt. (c)(i) (2000)). The court also quotes the passage from Wutchumna discussed above, noting that an attorney may not do anything to injure his former client nor use against the former client information acquired by virtue of the previous relationship. Id. at 819 (discussing Wutchumna, 216 Cal. at 573-74).


Notwithstanding this broad language about the duty of loyalty, both Wutchumna and Oasis base their holdings primarily on the fact that the lawyer was in possession of the client’s confidential information, and consequently could use that confidential information against the client. Thus, even though both cases discuss the continuing duties of confidentiality and loyalty, both appear to rely more heavily on the duty of confidentiality. Indeed, in concluding that Goldman had not met his burden on his anti-SLAPP motion, the court stated, “Oasis has presented a prima facie case that Goldman did use confidential information, to the detriment of his former client, with respect to the precise subject of the prior representation.” Id. at 825. Nothing in the facts of Oasis supports a conclusion that Goldman’s duty of loyalty to his former client—independent of his duty of confidentiality—contributed to the court’s conclusion. One can logically infer that, had Goldman not obtained and used against Oasis confidential information about the development project, the result might have been different.

The court’s discussion of the Restatement Third of the Law Governing Lawyers makes this point. A comment to Section 125 states that “[i]n general, a lawyer may publicly take personal positions on controversial issues without regard to whether the positions are consistent with those of some or all of the lawyer’s clients. ...” Oasis W. Realty, 51 Cal. 4th at 824 (quoting Restatement (Third) of the Law Governing Lawyers, § 125 cmt. e (2000)). This statement suggests that the duty of loyalty owed to former clients may be limited, particularly where it restricts the lawyer’s First Amendment right to express political positions. But the rest of the comment is equally telling: “However, a lawyer’s right to freedom of expression is modified by the lawyer’s duty to clients. ... The requirement that a lawyer not misuse a client’s confidential information ... similarly applies to discussion of public issues.” Id. (quoting Restatement (Third) of the Law Governing Lawyers, § 125 cmt. e (2000)) (emphasis in original). According to the Restatement, then, a lawyer’s duty of loyalty to a former client may not be absolute, but rather may be confined to situations where the duty of confidentiality is implicated. This is consistent with the conflict rules, discussed above, which do not preclude a lawyer from opposing a former client in all instances, but only where the two representations are substantially related, and the lawyer obtained confidential information from the first client that is material to the subsequent representation. Cal. R. Prof. Conduct, R. 3-310(E) (West 2015); Flatt v. Superior Court, 9 Cal. 4th 275, 283 (1994).

Also clear from Oasis, however, is that the continuing duty to maintain a client’s secrets—whether described only as the duty of confidentiality or also as the duty of loyalty—is not limited to actions taken or statements made by the lawyer in the context of a subsequent representation. Goldman had not taken on another client in opposition to Oasis’s redevelopment project, but rather was speaking as a private citizen on an issue of public concern. That did not change the result. And, although the majority in Oasis did not emphasize Goldman’s First Amendment rights, the concurring opinion found there was no dispute that Goldman’s actions under attack by his former client constituted constitutional free speech. Oasis, 51 Cal. 4th at 828 (“[D]efendants have easily made the necessary showing that the action by Oasis is based on Goldman’s exercise of his constitutional right to free speech in connection with a public issue”).

Oasis may not close every loop as to what a lawyer can and cannot do or say with respect to former representations, but at a minimum it should make lawyers think twice before speaking out adversely to a former client on an issue related to a former representation. Indeed, even investing money in a way that may be influenced by confidential information obtained during a former representation could lead to questions about a possible breach of fiduciary duty. Id. at 823 (discussing Restatement (Third) of the Law Governing Lawyers, § 60, cmt. (c)(i) (2000)). That is not to say lawyers may not speak out against former clients or take other actions in some way connected to their former representation, but before doing so, the lawyer should ask himself whether his speech or activity was influenced by, or even touches upon, confidential information obtained from the representation. If it was, then the lawyer must exercise caution lest he be accused of breaching a duty to his former client.

Finally, it is worth noting that, even where law and ethical rules permit a lawyer to use, and even disclose, a client’s confidential information, the lawyer still has a duty to protect that confidential information as much as possible. California Evidence Code section 958, for example, expressly allows a lawyer to disclose attorney-client privileged communications, without the client’s or former client’s consent, if those communications are “relevant to an issue of breach, by the lawyer or by the client, of a duty arising out of the lawyer-client relationship.” In other words, if a client sues a lawyer for legal malpractice, the lawyer may defend himself by disclosing attorney-client communications. See McDermott, Will & Emery v. Superior Court, 83 Cal. App. 4th 378, 383-84 (2000). That disclosure, however, may not be any broader than is reasonably necessary to defend the claim. See Dixon v. State Bar, 32 Cal. 3d 728, 735 (1982) (finding violation of duty of confidentiality when lawyer included in a declaration filed in an action against the lawyer a gratuitous statement about a suspected affair of the client’s husband that was not relevant to the dispute); LACBA Formal Ethics Op. No. 498 (March 8, 1999), http://www.lacba.org/showpage.cfm?pageid=435 (last visited Jan. 31, 2015) (discussing that a lawyer may disclose otherwise confidential information relevant to a fee dispute, but that this exception is limited to information “reasonably necessary to support the attorney’s position”). Thus, even where the former attorney-client relationship has so deteriorated that the client is suing the lawyer for legal malpractice, the lawyer still owes a duty to the former client to protect his confidential information as much as is reasonably possible.

Although writing that termination letter is a good and necessary practice to end the attorney-client relationship, lawyers must understand that certain duties owed to their client continue on past the client’s receipt of that letter and, in some cases, even past the client’s trip to the grave.

Scott B. Garner is a litigation partner in Morgan, Lewis & Bockius’s Orange County office. His practice focuses on complex business litigation, with an emphasis on attorney liability defense, securities litigation, and intellectual property litigation. Mr. Garner is the Chair of the California State Bar’s Standing Committee on Professional Responsibility and Conduct and is the Co-Chair of the Orange County Bar Association’s (OCBA) Professionalism and Ethics Committee. He also is a member of the Board of Directors of the OCBA and the Vice President of the Orange County Chapter of the Association of Business Trial Lawyers (ABTL). He can be reached at sgarner@morganlewis.com.