This opinion addresses how an attorney must treat communications and a legal opinion rendered while serving as inside counsel for a corporation and a successor corporation that the attorney formerly represented (which resulted from a merger). The question is whether an attorney, who has a possible personal cause of action (against his former employer) arising from the matter which was the subject of confidential communications, may use or divulge his knowledge of the matter in asserting his claim(s).
The attorney was corporate counsel for Company A for several years until it merged into Company B on January 31, 1996. He continued to represent the subsidiaries of A, which became the subsidiaries of the newly merged company, and helped transition remaining legal work to the law department of B, which continued to provide legal services to the new corporation. After March 22, 1996, the attorney ceased his employment with the new corporation. During his employment with A, the attorney also served as a vice-president, de facto head of human resources and corporate secretary. In his capacity as corporate secretary, he was the de facto administrator of A's long-term bonus program plan until the date of the merger. That plan was not qualified under ERISA. The attorney was a participant and beneficiary of the plan after the merger. It is with respect to the attorney being a plan beneficiary that gives rise to this opinion.
In late 1995, when it became apparent that B was seeking to acquire A, the attorney approached A's president and shared his concerns regarding the payment of a bonus under the plan. He believed that he was acting as corporate counsel and was concerned that his opinion regarding the plan would be subject to attack because he would benefit from a payment under the plan. The president directed him to hire outside counsel who rendered an informal opinion concerning the plan document to the effect that if after the merger B did not pay a bonus it would likely be found liable if sued by plan participants.
After the merger, the attorney provided certain financial data to B (which remained the name of the now-merged corporation) along with a memorandum detailing his opinion and that he had consulted with outside counsel. However, in March 1996, B's board of directors decided not to make payments because plan goals were not met. The attorney, having left the employ of corporation B, now believes that he has contractual and quasi-contractual causes of action against his former employer and client for its failure to pay a plan benefit and seeks guidance as to how to discharge his legal ethical responsibilities and duties in light of these conflicts.
The inquirer was acting as an attorney for A before the merger and continued to represent the newly formed corporation (still identified as B) post-merger. This is demonstrated by his continuing to represent A's subsidiaries after January 31, 1996, as well as his assisting in the transition of legal work to B's law department during the same time. That he was an attorney who represented A when offering and obtaining the legal opinion in late 1995 regarding the bonus plan was not affected by A being merged into B and his then making a presentation as an attorney to B's management regarding the same matter.
The attorney is governed by RCP 1.9 regarding a conflict of interest involving a former client. The rule holds that the attorney . . . shall not thereafter: (b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit or when the information has become generally known.
The attorney's conflict arises from his representation of the company specifically with respect to the bonus plan issue and his being a participant in that same plan who believes he has been improperly denied benefits. Rule 1.9(a) precludes a lawyer from representing another person in the same or similar matter in which that person's interests are materially adverse to the interest of the former client unless the former client consents after a full disclosure and consultation; . . . Here, there is a conflict between the prior representation and the attorney's own interest as a plan participant. Although he doesn't seek to represent another, he is contemplating bringing a claim involving the same matter in which he represented a client.
At the heart of the protection which Rule 1.9 affords the former client is the preservation of the confidentiality of information covered by RPC 1.6, which specifically states in section (d) that the duty not to reveal information relating to the representation of the client continues after the client-lawyer relationship has ended. The comment states that, A fundamental principle in the client-lawyer relationship is that the lawyer maintain confidentiality of information relating to the representation . . . The confidentiality rule applies not merely to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source . . . A lawyer may not disclose such information except as authorized or required by the Rules of Professional Conduct or other law. Rule 1.6 authorizes permissive disclosure under certain circumstances. Neither (c)(1) nor (2) apply to the instant facts. However, Rule 1.6(c)(3) provides that a lawyer may reveal such information to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client . . . . Thus, Rule 1.6(c)(3) would permit disclosure of information otherwise confidential under Rule 1.6 to establish a claim by a lawyer against his client. Note, however, that such disclosure is permitted only to the extent that the lawyer reasonably believes it to be necessary to establish a claim. Thus, at a minimum, you will need to conduct an analysis of the legal relevance of your opinion and that of outside counsel to your claim before disclosing those opinions in pursuit of your claims against the corporation. Except for the limited circumstances allowing disclosure as described above, you may not disclose it to the other plan participants or anyone else.
The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.