Attorney-Client Privilege and Financial Disclosure: A New NYC Bar Association Report

Some lawyers abuse or misrepresent the lawyer-client privilege and client confidentiality to protect their own unethical conduct. But no one does it better than elected government officials who also happen to be lawyers, and have the ability to draft ethics laws.

A report by the New York City Bar Association, Reforming New York State's Financial Disclosure Requirements for Attorney-Legislators, which was published in January, could identify only four states -- Washington, California, Alaska, and Louisiana -- that have financial disclosure requirements for elected officials which extend to attorneys. In other words, the other states exclude attorneys from disclosing information about their work and the origins of their livelihood. And in Alaska and Louisiana, disclosure requirements were extended to attorneys only in 2007 and 2008, respectively.

The California Approach
Of these, only the California disclosure law applies to local government officials. The disclosure rule, §87207, says nothing about lawyers. This is left to a regulation, 2 CCR §18740, which provides an exception to disclosure of clients "if disclosure of the person's name would violate a legally recognized privilege under California law."

But it's not up to the lawyer to determine whether a privilege would be violated. A procedure was created whereby the lawyer is required to provide an explanation of the nondisclosure of each client, and it is up to the executive director of the California Fair Political Practices Commission to determine whether a privilege exists under the particular circumstances. If the executive director feels that nondisclosure is justified, the matter goes before the Commission.

In other words, there is a waiver procedure before an independent commission. This is just the way to do it, and it is the way that the NY City Bar recommends for New York State.

In a comment to the California regulation, there is a description of the only privilege protected by law:

A person's name is not ordinarily protected from disclosure by the law of privilege in California. Under current law, for example, a name is protected by the attorney-client privilege only when facts concerning an attorney's representation of an anonymous client are publicly known and those facts, when coupled with disclosure of the client's identity, might expose the client to an official investigation or to civil or criminal liability.

The New York City Recommendation
The NY City Bar would like the waiver to be less narrow than this:

So, for example, when family, criminal, or transactional matters (e.g., a planned hostile take-over) that have not been revealed in the public records are involved, such matters could be shielded from disclosure. In addition, exceptions would be made in the exceptional circumstance where disclosure of the fact of representation itself is privileged, or where disclosure is likely to be embarrassing or detrimental to the client.

Privilege and Confidentiality
But the Bar report also looks at what the attorney-client privilege and client confidentiality actually entail.

Courts have routinely held that the identity of a client does not come within the purview of the attorney-client privilege, because the disclosure of representation does not reveal the substance of any such communications between the attorney and client. Courts have limited the attorney-client privilege to encompass only confidential communications, and have consistently held that, absent special circumstances, client identity and fee arrangements are not considered privileged communications.

And the confidentiality rule, the report says, "permits an attorney to 'reveal or use confidential information…to comply with other law or court order.' Existing law and practice is entirely consistent with a financial-disclosure law that requires attorney-legislators to disclose client identity, fee information and a description of services that we advocate."

An important part of the process, for the NY City Bar, is to have each client sign off on the fact that the lawyer-legislator will be required to disclose his or her representation and the nature of the representation. At the very least, this is the responsible thing to do. It might mean that certain clients will seek counsel elsewhere, but that is one of the sacrifices that people make in order to represent both legal clients and their constituents.

An Example of Misuse of the Privilege
The NY City Bar presents privilege and confidentiality as things that must be balanced against the public interest. But in my experience, lawyers often present them as absolutes. And they often do so not to protect clients, but to protect themselves.

For example, at a public meeting years ago, I spoke about how other towns handled a particular policy. I based what I said on calls to a list of towns represented by my own town's town attorney (the towns were listed on the law firm's website), although that is not how I presented it.

The town attorney said that he had spoken with his clients, and the story was otherwise. This was not a legal issue, simply a factual one. I asked him to identify which towns he had spoken with, but he said he could not, due to the attorney-client privilege, even though these same people had spoken openly to me, thereby waiving their privilege.

The right thing for the town attorney would have been to say to each client that he might be presenting the information given to him at a public meeting, and ask for their permission to do so. Since there was nothing confidential about the nature of the information, the clients would have certainly given their permission. To fail to ask, and then insist the information was privileged, was to effectively prefer one client over the other -- an ethical violation.

But that was not really the problem, I felt. The information presented was not what I had been told by the same towns. As far as I could tell, the privilege was invoked so that it could not be established that there were misrepresentations being made.

Lawyer-legislators, like local government attorneys, should not be permitted to hide behind privilege and confidentiality. The NY City Bar has done a great service in drafting its report. I hope that cities across the country, as well as states that require local disclosure, will take note.

Robert Wechsler
Director of Research-Retired, City Ethics

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