Roundtable Discussion – Part II

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Lawyers regularly deal with issues pertaining to the confidentiality or privilege issues arising from the attorney-client relationship. Wisconsin Law Journal editor, Tony Anderson, met with a panel to discuss those issues, along with some recent court decisions pertaining to confidentiality and privilege. What follows is the second part of that discussion.

Daniel Shneidman, Shneidman Law; Sally Anderson, Wisconsin Lawyers Mutual Insurance Co.; Daniel Blinka, Marquette University Law School; Ralph Cagle, University of Wisconsin Law School; Nathaniel Cade Jr., Michael Best & Friedrich; Raymond Dall’Osto, Gimbel, Reilly, Guerin & Brown

Daniel Blinka: Ray, you know that we have a situation where, under [SCR 20] 1.6(b), you shall not reveal confidential information unless the lawyer reasonably believes the client will commit a crime. The standard hypothetical is the client who tells us, "I am going to go out to kill my estranged wife or someone else."

We deal with that situation. But perhaps the more run-of-the-mill situation is when I’m a criminal defense lawyer and I’m representing somebody who is charged with or being investigated for child sexual assault. I sit down with that client and I say, "Hey, were you messing with these kids?" And my client says to me, "Yeah, you bet I was." And perhaps also gives me a list of children that the police don’t even know about that he has been messing with as well.

We know what that client tells me, the criminal de-fense lawyer, is confidential and that since it deals with past acts there is no latitude for me as a lawyer to make disclosures under any set of circumstances to anyone. By the same token, when you look at the pathology of a child molester, you begin to understand that so much of what they have done in the past foreshadows future conduct. Maybe this client also tells you, "I live in a neighborhood where there are lots of little kids."

Now we have an interesting situation under 1.6(b). Do I have an obligation now to make disclosures?

I would argue under 1.6(b) that in the situation that I just sketched as a criminal defense lawyer the answer is "No." Simply because I might suspect that he might injure or harm other children; but do I reasonably believe that? Do I reasonably know that? I’m not that certain of my instincts in these matters. The disclosure of 1.6(b) is limited to just putting somebody else on notice so that they can prevent a harm from occurring. If the cops are already aware that my client has a problem — good enough.

Raymond Dall’Osto: That is correct. I think we are playing down a very slippery slope. In [the state Supreme Court’s] recent O’Neil decision and the La Crosse case where the lawyers are providing confidences of current clients, who are not anticipating committing a crime of violence or at least the lawyer hasn’t had that indicated to them, clearly in my mind that violates not only the attorney-client privilege and duty of confidentiality, but the client’s 5th and 6th Amendment rights.

Daniel Shneidman: Ray, what if the client tells you he not only has engaged in that conduct in the past, he is guilty of what he’s being charged, he’s out on bail, and he has an appointment this afternoon with a youngster and he’s going to continue? Now I’m talking about 1.6(b).

Dall’Osto: Under the rule as it stands now, if the client indicates that he is intending on committing a crime, which would cause the injury to another, like a sexual assault or a molestation, the reporting rule is clear. You have to do it. Still, if I’m the attorney ever facing that situation, I’m not going to go out and dial the cops immediately. I’m going to want to talk this through with other counsel, whether it’s on the ethics hotline or whatever, because you’re going to be out on very thin ice.

WLJ: Some of the discussion has alluded to a case out of La Crosse where a bar owner was being investigated for having burned down his property. The concern his lawyer had was that the client was going to engage in future criminal activity, conducting fraud against his in-surance carrier. In a realistic situation like that, how do you withdraw from the case and not permit future criminal activity?

Dall’Osto: I, as a business lawyer, would be wrong in breaching that privilege, without the client’s consent. From the newspaper articles I had read on the case, he did not have enough to show that the client was about to commit a crime. But then this runs to the next issue of the 1.6 duty of reporting.

What if it’s an economic crime versus a crime, which is going to result in injury or
death of an individual? We’re moving towards a duty of disclosure in the economic crime area, which is troubling to me.

WLJ: Dan, you’ve talked about this case before. Do you have any thoughts?

Blinka: I think that that case illustrates the problem of the scope of disclosure and timely disclosure. Namely, does 1.6(b) operate as an exception or more accurately as an evisceration of the confidentiality rules and the lawyer-client rules? Or does it simply obligate me to make whatever disclosures are necessary to prevent the fraud from occurring?

I think in the La Crosse case, another way of approaching that issue would have been for the attorney to simply say to the insurance company, once it was ascertained that the policy was being paid out, "I used to represent this guy; I strongly suggest you look real hard at this claim." Period. If they need any more information or whatever, then I’d suggest that they … subpoena me, have me come in and testify. Whatever a court orders me to do, I will comply with.

Shneidman: Had the destruction of the property been the equivalent of a backyard barn or a … place for tools, we’d be talking $5,000 or $10,000. As I read the rule, the business lawyer or the lawyer learning about the future crime or fraud has to determine in his or her mind that this is going to result in substantial injury. So it’s not just a future crime or a future fraud. It’s got to be a substantial injury, or substantial bodily harm, or death.

Ralph Cagle: But in this case … he had told the lawyer he had committed the arson. … He filed a $500,000 insurance claim. … He was going to commit the crime of theft by filing a claim under false pretenses. Now, is your position that $500,000 is enough to be substantial?

Shneidman: No. I’m saying it’s dangerous to use this case as a simple statement that any future crime or fraud must be reported. Because I think in Wisconsin what the Supreme Court did is narrowly draft the disclosure rule that you have to go through all these hoops before you’re allowed to disclose or you’re required to disclose.

Cagle: But it comes down to the problem — how does the lawyer decide?

Shneidman: On the hotline. Ralph, if you got the call on the hotline, "I’ve just learned my client says they’re going to burn down the toolshed … and then file insurance and it’s worth $7,000. What would you say?

Cagle: The $7,000 toolshed case is probably a harder case. And the $700 toolshed case may be even harder.

Shneidman: Okay. Let’s take the domestic relations case. What if the husband or the spouse says, I’m going to go out and break all the glass in her car. I’m going to cut her tires. Is that the same duty as [him heading out] with the gun fully loaded?

Nathaniel Cade Jr.: Dan raises, I think, the heart of the problem. Because if you actually read 1.6(b), it talks about, "is likely to result in death or substantial bodily harm or in substantial injury to the financial interest or property of another." So, the question is, is $500,000 for an insurance company substantial injury to the financial interest?

Sally Anderson: I will tell you that it is.

Dall’Osto: Yeah. Let’s look at federal bank fraud and a vice president who was embezzling over a number of years. The amount of loss is $1 million or more, that will trigger an automatic bump-up. That’s considered, under the sentencing guidelines, a substantial injury.

I am more of a Monroe Freedman purist — that [confidentiality] is absolute. I am like the priest. I’ll go to prison before I will disclose these confidences.

Cade: I think it’s good that it’s vague because it should be up to each lawyer for them to make the determination of what they believe is a substantial injury. I might have viewed the $500,000, if it’s a very large insurance company, yes, it’s a fraud; yes, it’s an injury; but I don’t believe it’s a substantial injury. Then I would have withdrawn, written a memo to the file and been done with it. But other people … could say … this was a substantial injury and I have to reveal it. I think that is where all this is going to turn, not on the dollar amount, but what on the attorney actually believed.

Blinka: I don’t think it’s as simple as saying that it’s all going to be subjective and up to the individual lawyer. Because 1.6(b) is whether a lawyer reasonably believes.

So we have the problem of the reasonable lawyer.

Cade: It’s reasonable lawyer but there are several variations. One is a reasonable lawyer in Wisconsin. Now you’ve got a big city practice versus small town practice.

You’ve got the age of the lawyer, so you’ve got experience level. You’ve
got the sophistication of the practice. Is it the reasonable, objective, everyday lawyer? How do you define that? … You’ve got to put yourself in that particular lawyer’s shoes and determine on an objective standard what they determined subjectively was appropriate.

Dall’Osto: As a criminal defense lawyer, I am very troubled by this continued erosion. I defend many lawyers in ethics matters. But the O’Neil case, I think, sends the wrong message, that you get off with a reprimand for doing this. Where are the teeth in this rule, and especially in a situation where you have a current representation?

Shneidman: When you said you’re disappointed, would you rather see him more severely —

Dall’Osto: Sanctioned. Absolutely.

WLJ: Just to bring us up to speed real quick, in [In the Matter of Disciplinary Proceedings Against James Paul] O’Neil, the Supreme Court reprimanded an attorney who had represented a husband in a divorce. The man’s wife was found dead. Prosecutors app-roached the attorney and asked him if he had any information that was relevant to their investigation, and he spoke with them. The court ended up subpoenaing information. And the Supreme Court came down with a reprimand, which was the only disciplinary action that was taken against the attorney for speaking.

Cade: And a fine.

WLJ: Yes. A fine for the cost of the investigation.

Dall’Osto: It was close timing — on May 6th, the lawyer was retained in the divorce. May 12th, client advises his wife is dead. May 14th, police, doing their work, as they should, approach the lawyer. By May 18th, the lawyer has not only talked about the case, but shown them records, allowed his secretary to be talked with about the signing of some paperwork. That blew up the guy’s potential alibi and caused them to prosecute.

Yet the lawyer in that case did not consult with the client, did not obtain a waiver. He should have done that.

Anderson: I have a question about this, because I didn’t realize this until reading the decision. But his mother came in with him for the only appointment he ever had with that lawyer. What does that do?

Blinka: It’s a privilege buster.

Cade: That assumes Mom was involved. That Mom wasn’t in the waiting room, but she just showed up with him. We don’t get that from the opinion. And we know that he didn’t tell the lawyer, "I’m going to kill her." The reason the lawyer talked to the police is because he thought everything was amicable; they were going to be nice to each other.

The bigger issue is the police. I have a problem with the police showing up and saying, "Do you mind if we talk with you, do you have notes?" And the lawyer saying, "Sure," instead of saying, "Do you have a court order?" or maybe "I should call my client."

Dall’Osto: I think lawyers when faced with an issue that has even the smell of this — let alone the actuality — you can’t make a snap judgment. You’ve got to hold on it.

You’ve got to consult with other people outside of your office, maybe within too, maybe the ethics hotline. They can plug you in to people who have dealt with this issue. It’s like very long division here, like we used to have in math in the ’50s and ’60s. It takes time to get to the answer.

Cagle: In the La Crosse case, the lawyer did call the ethics hotline and he did get advice. And he followed the advice explicitly, except he went a little further. And that’s where it broke down.

I’m familiar with the case because I’m an expert witness in the case. His client had told him that he had intended to commit a crime. And he told the client he couldn’t do that. The lawyer specifically told the client that, if he does that, he has a duty to report it; now, go home and think about it. The client went, and he never came back.

Then the client went and did what he said he was going to do. The lawyer called the ethics hotline and got advice on it. Now, you can blame lawyers for not being careful. But the lawyer in that case — and I was one of the witnesses who was critical of him — I think he did everything that he could do up until that point.

The problem was that, when he decided to act, I think he just went over the edge. He immediately called the prosecutor, and I think that was his mistake. …

The question really was in that case, what were the steps reasonably necessary to prevent the crime. … This isn’t about lawyers ratting out their clients. This is about the Supreme Court imposing a responsibility on lawyers in certain cases to prevent their clients from committing crimes when there’s reason to believe they’re going to commit them. I don’t think that’s inhere
ntly an irrational responsibility to place on lawyers who have a public duty. It’s a limited responsibility.

Cade: Let’s not forget in light of all this, we also have Ethics 2000. Ralph and I are both on the [State Bar] commission looking at this. There are some potential changes for prospective clients.

I did bring copies of Rule 4.4, which had proposed changes. It’s called, "Respect the Rights of Third Persons." And that deals with the inadvertent disclosure of documents. The one that is probably the bigger one is (b), which is a new rule. "A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender."

This is interesting because … it legitimizes what most lawyers have in their fax cover sheet or something in their e-mail saying, if you are not the intended party, you are to destroy this copy or mail it back to me at this address or you’re to contact the sender. Under this rule, it would now essentially codify the obligation to let the other side know they sent you documents.

This happens frequently. I get documents sometimes where … they may be having a conversation with my client. And they’ll turn around and e-mail me or CC me as part of the entire process. I can’t always tell whether their attorney is in on it. So the first thing you do is you call up their lawyer and say, "Hey your client is e-mailing me or calling me."

If this is adopted by the Commission and then ultimately the Supreme Court, you would have a duty to let the other side know you received this document inadvertently. Then you would have a duty to destroy it or get it back into their hands.

Blinka: Well, you know, I think this is all wishful thinking. I don’t think it clears up anything. My view of it is if somebody sends me an e-mail and it has my e-mail address, that wasn’t inadvertent. They put my e-mail address in. I didn’t do that. Maybe you regret doing it. Maybe it was a mistake. Maybe you’d like to have it back.

But when I look at something that has a fax page with my number on it or an e-mail with my address on it, from my perspective I don’t view that as being inadvertently sent.

Cade: The rule does not have in it that the lawyer who reads the inadvertent disclosure is somehow disqualified. And I think the nice thing about this is all it says is you have a duty to return the document or a duty to let the other side know. It doesn’t say or doesn’t rise to the level of: now that there’s an inadvertent disclosure, you’re now off the case. … All it says is you’ve got to turn it back over.

Blinka: Turn what over?

Cade: A fax. If you get a fax, you send back what you have. You can’t make copies and say, here you go.

Shneidman: Wait a minute. Making copies is a different issue. There’s also a subset of that. Do you tell your client?

	Related Article Roundtable Discussion – Part I

Anderson: Right. I think this proposed new ABA rule is simply … an example of the fact that the committee rewriting these rules for the ABA couldn’t decide what the duty ought to be at the end if I receive something.

Dall’Osto: Let’s say you’re in a criminal case where you’re defending and you have not only your ethical duties but you have your Constitutional duties, the 5th and 6th Amendment and 14th Amendment duties, which Monroe Freedman says trump everything else. Your client’s right. And you get something that helps, and you can use this at trial. This rule would make it a requirement that you have to disclose it. I’m troubled by it as well.

Shneidman: In addition to [SCR 20] 1.6 on confidentiality, the first comment to the 1.7 conflict system says the lawyer has a duty of loyalty. So when you get this information innocently, I would say … you have a fiduciary duty to your client to tell him. … I received something that wasn’t intended for me. I received an e-mail and the contents of the e-mail or the attachment to the e-mail, it had these documents which appear to be something for the adverse party. I think that’s a core responsibility.

Cade: Dan, I disagree in the sense that under this proposed Rule 4.4, you have a duty to notify the sender. The comment says, "in order for them to take protective measures." So, for example, if there’s something that was an inadvertent disclosure and shouldn’t be out there, you let the court decide. The problem I have is turning around and literally reading it to my client or letting them know what it says. …

You let the court decide rather than saying, "I don’t think it’s inadvertent; I’m going to use it; I’m going to circulate it and fax it to everybody." I think you’ll get into more trouble that way.

WLJ: I want to give everyone a moment for any final thoughts on things that attorneys need to keep in mind as they approach these issues.

Shneidman: Lawyers have to understand that the lawyer-client relationship starts with something other than with a retainer agreement or a fee. Those have nothing to do with the lawyer-client relationship and the duty of confidentiality.

Blinka: I think the watch word for lawyers is, don’t assume that there’s anything straightforward about this area of confidences. My advice would be that, before you disclose something to third parties, whether that be you’re going to put it into a pleading or whether you’re going to call somebody and make a disclosure: take a deep breath, look at the rules and think long and hard about what you’re doing. Because one of the issues here we haven’t even touched upon is the legal malpractice aspect of all of this where, if you do make a disclosure without the client’s authorization, our Wisconsin law recognizes a cause of action.

Anderson: My thought on this is that both the O’Neil case and the La Crosse case were situations where you had transactional lawyers, basically desk lawyers who don’t get to court who are suddenly faced with a criminal situation. Those of us who have done that kind of work don’t think in terms of the police and the criminal court and those kinds of risks and responsibilities. I think it’s a wake-up call to all of us as lawyers, including the office lawyers, to say, "You have to remember this. This isn’t something that you can speed past. Take your time with it." I thought Ray said that really well earlier. There are times when you just can’t act now. You’ve got to think about it. You’ve got to research it. And you’ve got to deal with it.

Dall’Osto: DDDA — Don’t Decide to Disclose Alone. Like Sally just said and what Dan said, not only research it, but you’ve got to consult. Go to a prosecutor, go to a law enforcement agent, go to the SEC. How many people have read Sarbanes-Oxley? How many people have read many of the opinions on these very, very thorny issues?

Don’t do it alone. The La Crosse lawyer was correct in going to the ethics hotline. It may not give you the hundred-percent answer, but that’s the process you have to follow. You’ve got to work through the problem, and you can’t do it alone. You’ll be blinded by your own client’s interests and by your own involvement in the case. Your firm will be too. There are resources out there, so utilize them.

Cagle: I think that’s awfully good advice. But it occurs to me there are a couple things to think about. One is, my experience is that when the lawyers deal with these issues, they are complicated. They’re not just legally complicated. They’re morally complicated. I think lawyers inevitably have to make these decisions based on what the law is and in some cases, other considerations, both in terms of disclosing and not disclosing.

It occurs to me that the reason why we have confidentiality is not just a functional reason, so clients are freer to speak to their lawyers. I think there are Constitutional reasons, as Ray points out. I think there’s something fundamentally moral about the notion that people’s privacy is something that the legal system should protect.
I think that’s an issue where there’s going to be a lot of discussion as soon as the Ethics 2000 Commission deals with this.

Cade: The piece of advice I would give lawyers is perhaps the most simplistic. That would be to actually take the time and read the [disciplinary] decisions of the court when they come down. There are not a lot. If OLR has made a decision or if the Supreme Court has upheld and OLR made their own recommendation, there’s only a few in a given week. They’re not difficult to read. …

You have a duty under the Wisconsin Rules of Profes-sional Conduct not only to do things ethically. You have a duty to be competent. How can you be competent to know what is or is not a violation or fact pattern … if you don’t read to find out what people are getting in trouble for and how to stay on the correct side of the rules of ethics?