ETHICS OPINION 446-1956 CONFIDENTIAL COMMUNICATION

NUMBER 446

QUESTION.

A lawyer was associated with a law firm until July 1, 1955. The law firm represented a stock brokerage firm and a corporation. He did some work for the brokerage firm and the corporation, assigned to him by the law firm.

 

In April or May 1955, Mr. X bought stock in the corporation based upon some statements made to him by the stockbroker. The law firm was not consulted in connection with the sale of the stock or in connection with representations made.

 

In August 1955, Mr. X discovered something that led him to believe that the statements made by the broker were improper. He retained counsel in Massachusetts where he lived, to contact the broker and get an adjustment or refund. That attorney wrote to the broker who in turn turned the letter over to the law firm that the inquiring attorney was formerly connected with. Some correspondence followed but led nowhere.

 

Said attorney’s first knowledge of the facts came from Mr. X who consulted him only a few weeks ago.

 

Would it be proper for him to represent Mr. X?

ANSWER.

The canons involved are Nos. 6 and 37.

There is a presumption that the inquiring attorney has imputed knowledge arising out of communications received by the firm as to; (a) information which might be relevant to the issues in the present matter; (b) information on any matter for the proposed defendant or the corporation which bears a substantial relation to the present matter; and (c) any interest of the proposed defendant or the corporation in matters other than the contemplated litigation which would be adversely affected by the employment of the inquiring attorney in the present matter and with respect to which confidence had been reposed in the firm.

 

Only because the inquiring attorney has severed his relations with the firm, may he rebut the above presumtion of imputed knowledge. However, he should not accept the case unless he can fully rebut each phase of the presumtion and clearly show that during the period of his employment he did not personally acquire any confidential information which might be relevant to the issues in the present matter or as to any interest of the brokerage firm or the corporation with respect to which confidence had been reposed in the law firm and which might be adversely affected by in the present matter, and also that he did not actually come in contact with material substantially related to the present controversy or to any other such interest which might be so adversely affected.

 

A second aspect of the matter, moreover, is important, i.e., the knowledge of facts acquired during his employment which might be used for purposes of examination and other conduct of the case. This aspect must be regarded from the point of view of both the proposed plaintiff and the proposed defendant. Professional duty to the proposed defendant requires that the inquiring attorney should not use in his examination of witnesses or conduct of the case any information acquired by such attorney under conditions imposing confidence whether or not it is directly or indirectly connected with the substantive facts of the litigation. On the other hand, professional duty to the proposed plaintiff requires that his lawyer employ all available information on such examination and in the conduct of the case. Therefore, he should not accept the case unless he also feels assured that there will not be any likelihood of a conflict between these duties at any time during his representation of the plaintiff.

 

In any event, the inquiring attorney must disclose to Mr. X the fact of his previous employment by the law firm and that, while he was in its employ, such firm represented both the brokerage firm and the corporation.

 

Dated : June 22, 1956.