Providing opinions can create ethical issues

When thorny issues arise in the corporate setting, the board of directors of a company may turn to an outside attorney to perform an “independent” investigation. Such investigations can be invaluable in helping the corporation gather the relevant facts and understand any associated legal implications. At the same time, there are a number of potential issues to be aware of when performing such investigations.

For example, in some situations, the investigation might relate to the conduct of the directors or officers of the corporation, who may have been the individuals who actually retained the outside attorney on the corporation’s behalf. Even where an investigation is conducted ostensibly for internal purposes, there may be instances where the corporation chooses to publicize the results of the investigation for public relations purposes or to reassure investors. Those factors can create a complicated dynamic for the attorney and might cause some to question whether the results of the investigation are truly “independent.”

To be sure, attorneys provide legal opinions every day in virtually every context imaginable, from legal opinions provided by corporate attorneys while negotiating a deal to a litigator’s evaluation of potential claims and defenses in anticipation of possible litigation. While such opinions may be routine in most circumstances, ethical issues can arise. In particular, there can be gray areas where an attorney is retained by a client to render an opinion to be shared with third parties.

In such situations, an attorney may perceive a tension between the purpose of the representation and the core duties owed by the attorney to the client, including the duties of loyalty and confidentiality. To address those issues, nearly every state has adopted (in some form) Rule 2.3 of the American Bar Association’s Model Rules of Professional Conduct, which specifically governs an “Evaluation for Use by Third Persons.” Notably, despite the fact that California recently brought its Rules of Professional Conduct more in line with the Model Rules, California has not adopted Rule 2.3 to date. Nonetheless, the potential conflicts with other obligations certainly remain present for California attorneys, and thus Model Rule 2.3 can help inform an attorney’s actions when rendering legal opinions for clients.

Model Rule 2.3

When a legal opinion is prepared for the purpose of being provided to others outside the attorney-client relationship, there can be an inclination for the attorney to express her opinions less candidly so as not to harm the client. In recognition of the issues that might arise, Model Rule 2.3 provides that “[a] lawyer may provide an evaluation of a matter affecting a client for the use of someone other than the client if the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer’s relationship with the client.”

The rule further provides that “[w]hen the lawyer knows or reasonably should know that the evaluation is likely to affect the client’s interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent.” Thus, as contemplated by the model, it can be helpful for attorneys to determine whether the client intends for the attorney to share the opinion with others at the outset of the representation and to address any related issues.

There are many contexts in which the issues identified in Rule 2.3 might be implicated. As noted, one example that is especially common today is when corporations retain attorneys to perform internal investigations. Those investigations may serve the primary purpose of advising the corporation, but may also involve reporting the investigation results to shareholders or to regulatory agencies. In such circumstances, the exact identity of the client (e.g., the corporation or only its board of directors) may dictate the proper approach for the attorney.

Balancing Ethical Considerations

The notion that an attorney should act as “zealous advocate” for the client is ingrained in the minds of attorneys. Indeed, the U.S. Supreme Court has recognized that “the private attorney’s role” is to serve “as the client’s confidential adviser and advocate, a loyal representative whose duty it is to present the client’s case in the most favorable possible light.” United States v. Arthur Young & Co., 104 S. Ct. 1495 (1984).

However, when an attorney is retained to provide an evaluation of a matter that will be shared with third parties, it can represent a deviation from the typical attorney-client relationship. It may be that the attorney is caught between two potentially competing interests in the evaluation: to render an impartial opinion so that the client can benefit from candid advice but to also ensure that the evaluation does not contain any information that will harm the client if it is being shared with third parties.

Because of the tensions between the duties owed to the client and the purpose of the evaluation, the Comments to Rule 2.3 caution that “careful analysis of the situation is required.” For example, issues may arise where an attorney is asked by a client to provide an impartial evaluation of a certain aspect of a transaction while at the same time advocating for the client’s interests in negotiating the transaction.

Confidentiality

Rule 2.3 also contains a provision clarifying that, except to the extent disclosure is required in connection with an evaluation, the attorney’s duty to maintain the client’s confidential information remains intact. For California attorneys, that duty includes the obligation “[t]o maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.”

Thus, even though the attorney may not be acting strictly as the client’s advocate when rendering a legal opinion, the same rules of confidentiality apply. In other words, while the attorney may be acting impartially in some respects, the client is still the client when it comes to protecting confidential information. Accordingly, when retained to provide an evaluation, attorneys can take the same precautions with respect to the client’s confidential information and not disclose any such information unless it is necessary for the evaluation (or the client consents).

Despite these concerns, attorneys certainly can provide legal opinions while adhering to their ethical obligations. However, to limit potential risks, it is helpful for attorneys to consider how their ethical obligations can be reconciled with the goals of the representation when being asked to render a legal opinion. 