Ethics Advice When Talking With Prospective Clients
ABA FEO 492
You might want to rethink how you handle consultations with prospective clients, in light of a new ABA ethics opinion.
Formal Opinion 492, released in June by the ABA’s Standing Committee on Ethics and Professional Responsibility, provides guidance on Rule 1.18, Duties to Prospective Clients. Specifically, the opinion addresses a lawyer’s responsibility to preserve client confidentiality and avoid conflicts of interest when talking with potential clients.
“[Rule 1.18] governs when a lawyer is limited from accepting a new client whose interests are materially adverse to a former prospective client in the same or a substantially related matter,” according to this ABA press release. “Rule 1.18 prohibits the representation if the prospective client provided the lawyer with information that ‘could be significantly harmful’ to the prospective client in the new matter.”
Under the “significantly harmful” test, there is no requirement “that the harm is certain to occur” in order for there to be a conflict. Instead, the correct standard is whether the information acquired “could be significantly harmful.”
“Such information, according to the opinion, could include views on various settlement issues, the prospective client’s strategic thinking on litigation, sensitive and personal information in a divorce case, knowledge of a settlement position, or the possible terms and structure of a proposed bid by one corporation to purchase another corporation,” reports the ABA Journal.
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“A prospective client is a person who consults a lawyer about the possibility of forming a lawyer-client relationship but then doesn’t form such a relationship,” according to Formal Opinion 492. “The confidentiality duties owed to prospective clients are not as onerous as that owed to existing or former clients.”
But exactly how far can you go when talking with a prospect? How deep can you dive into the facts before a conflict of interest arises?
As guidance, the opinion cites this example from the Restatement of the Law (Third): The Law Governing Lawyers:
“A lawyer meets with a prospective client for an hour about the prospective client’s reasons for filing for divorce and the property interests of the prospective client and his or her spouse. If the prospective client does not hire the lawyer, the lawyer cannot thereafter represent the opposing spouse because the lawyer has acquired ‘significantly harmful information’ within the meaning of Rule 1.18.”
Risk management tip: Warn prospective clients against disclosing detailed information in an initial consultation. The more you’re told, the more likely you’ll receive “significantly harmful information.”
NC Rule of Professional Conduct 1.18: Duties to Prospective Client
(a) A person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.
(b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective client shall not use or reveal that information, except as Rule 1.9 would permit with respect to information of a former client.
(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d).
(d) Representation is permissible if both the affected client and the prospective client have given informed consent, confirmed in writing, or:
(1) the disqualified lawyer is timely screened from any participation in the matter; and
(2) written notice is promptly given to the prospective client.
Jay Reeves is author of The Most Powerful Attorney in the World. He practiced law in North Carolina and South Carolina. Now he writes and speaks at CLEs, keynotes and in-firm presentations on lawyer professionalism and well-being. He runs Your Law Life LLC, a training and consulting company that helps lawyers add purpose, profits and peace of mind to their practices. Contact jay@yourlawlife.com or 919-619-2441.
