Ethics - Confidentiality (4) Flashcards
What is a solicitor’s duty in terms of confidentiality?
Paragraph 6.3 provides:
You [must] keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents.
The requirement to keep confidentiality prevents the solicitor from communicating the information, and also extends to preventing the use or misuse of information.
The duty of confidentiality applies to all information about a client or matter, regardless of the source of that information. Confidentiality attaches to all information provided by the client or a third party in connection with the retainer. Despite the wide ambit of the duty, there will be no duty of confidentiality where the solicitor is being used by the client to perpetrate fraud or another a crime.
The duty of confidentiality is owed to former, as well as existing, clients and it therefore continues after the retainer has been terminated. The duty also continues after the death of the client, whereupon the right to enforce or waive the duty of confidentiality is passed to the client’s (or former client’s) personal representatives.
Paragraph 6.3 is replicated in the SRA Code of Conduct for Firms. All members of a firm, including support staff, owe a duty of confidentiality to clients of the firm. Firms must have in place effective systems to enable risks to client confidentiality to be identified and managed.
Any breach of the duty of confidentiality will be a breach of professional conduct. The solicitor may be disciplined by the SRA, or by the Solicitors Disciplinary Tribunal. In addition, the client (or former client) may sue the solicitor for any breach of this duty.
Can a solicitor disclose information that would ordinarily be confidential if the client’s consent is obtained?
Information which would ordinarily be confidential can be disclosed with the client’s consent. A solicitor should only seek such consent when the disclosure is necessary, and in the client’s best interests. The solicitor must ensure that the client understands exactly what information will be disclosed, when and to whom, and the purpose of the disclosure.
Can a solicitor disclose information if this is required or permitted by law?
A solicitor may also disclose confidential information when disclosure is required or permitted by law.
Examples of circumstances requiring or permitting disclosure are:
(a) pursuant to a statutory requirement, eg to His Majesty’s Revenue and Customs in certain circumstances;
(b) pursuant to a statutory duty, such as in the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) and under the terrorism legislation (see Legal Services);
(c) under a court order, or where a police warrant permits the seizure of confidential documentation;
(d) in some circumstances where a solicitor is acting for a client under a power of attorney or as a court appointed deputy;
(e) in compliance with a notice served by the Legal Ombudsman requiring the production of information/documentation to facilitate the investigation of a complaint.
Which circumstances may justify disclosure?
The SRA gives examples of circumstances which, although still technically amounting to a breach of the duty of confidentiality, may be taken into account as mitigation in the context of disciplinary action. It should be noted that none of them allows for disclosure after the event.
The examples set out in the Guidance are as follows:
(a) Where a client has indicated their intention to commit suicide or serious self- harm. The SRA advises that, in the first instance, the solicitor should consider seeking consent from the client to disclose that information to a third party but, where this is not possible or appropriate, the solicitor may decide to disclose the information to the relevant person or authority without consent in order to protect the client or another person.
(b) Preventing harm to children or vulnerable adults. This covers situations where the child or adult indicates that they are suffering sexual or other abuse, or where the client discloses abuse either by themselves or by another adult against a child or vulnerable adult. Whilst there is no requirement in law to disclose this information, the solicitor may consider that the threat to the person’s life or health is sufficiently serious to justify a breach of the duty of confidentiality.
(c) Preventing the commission of a criminal offence. At common law, if a solicitor is being used by a client to perpetrate a fraud or any other crime, the duty of confidentiality does not arise. In other circumstances, a breach may be mitigated where disclosure is made to the extent that the solicitor believes it necessary to prevent the client or a third party from committing a criminal act that the solicitor believes, on reasonable grounds, is likely to result in serious bodily harm.
What is the duty of disclosure?
When acting for a client on a matter, a solicitor must make the client aware of all information material to the matter of which the solicitor has knowledge.
This is a personal duty, and so the knowledge of the information in question must be that of the individual solicitor, rather than the information being known within the firm as a whole or within the knowledge of another individual in the firm.
The requirement to disclose all information material to the client’s matter of which the solicitor is personally aware is subject to a number of exceptions:
(a) the disclosure of the information is prohibited by legal restrictions imposed in the interests of national security or the prevention of crime;
(b) the client gives informed consent, given or evidenced in writing, to the information not being disclosed to them;
(c) the solicitor has reason to believe that serious physical or mental injury will be caused to the client or another if the information is disclosed to the client; or
(d) the information is contained in a privileged document that the solicitor has knowledge of only because it has been mistakenly disclosed.
The last of these exceptions takes account of the fact that due to the volume of information which passes between solicitors on a daily basis, occasionally mistakes may be made and information destined for a third party may be inadvertently disclosed to a solicitor. For example, a solicitor acting for one party in a matter may misaddress correspondence destined for their client to the solicitor acting for the other party. In this case, immediately on becoming aware of the error, the receiving solicitor must return the papers to the originating solicitor without reading them or otherwise making use of the information contained therein.
What is the confidentiality rule?
A solicitor must not act for a client in a matter where that client has a) an interest adverse to the interest of another current or former client for whom b) confidential information which is material to that matter is held unless either of the exceptions set out in the Code is met.
b) Confidential information held by the solicitor must be ‘material’
This term is not further explained in the Code of Conduct for Solicitors, but is likely to encompass information which is relevant to the client’s matter and of more than inconsequential interest to the client.
The question of whether the information is ‘material’ relates to the client to whom the duty of disclosure concerning the information is owed.
a) Adverse interests
Adversity relates to the relationship between the two respective clients, namely the client for whom the solicitor is considering acting and a current or former client for whom the solicitor holds confidential information.
The relationship can be said to be adverse where the client to whom the solicitor owes the duty of confidentiality is, or is likely to become, an opposing party in a matter to the client who is owed the duty of disclosure. This would include a situation where the clients litigate against each other, are involved in mediation, or even if the clients are on opposing sides of a negotiation.
However, there is an argument for saying that the concept of an adverse interest should be interpreted in a wider sense, that is, in relation to a particular matter, whether the one client would want to receive the information because it is potentially of value to them, and whether the other client would want that information to remain confidential.
Under what exceptions would it be possible to act for a client in a matter where that client has an interest adverse to the interest of another current or former client for whom confidential information is held which is material to that matter?
If either of the following exceptions are met:
a) effective measures have been taken which result in there being no real risk of disclosure of the confidential information; or
b) the current or former client whose information is held has given informed consent, given or evidenced in writing, to the solicitor acting, including to any measures taken to protect their information.
In practice, it is more likely that these exceptions will apply where the client to whom the duty of confidentiality is owed is a former client.
a) Effective measures
The measures must be such as to result in there being ‘no real risk’ of confidential information being accidentally or inadvertently disclosed. High bar.
From a practical point of view, it will be difficult for an individual solicitor to put protective measures in place. This exception is more likely to be relevant at a firm level taking steps to prevent confidential information, given by a client to one part of a firm, from being made available to another part of the same firm.
Effective measures would include information barriers, which are practical steps taken to ensure that confidential information cannot pass from one client to another client.
Practical arrangements such as physical separation within the building of those acting for each client, information being encrypted and password protected and separate servers may protect information in larger firms; this may not be appropriate for smaller firms.
b) Informed consent
To come within this exception, in broad terms, the client(s) must consent after having understood and considered the risks and rewards involved in the situation. The onus is on the solicitor to ensure that the client understands the issues.
One of the difficulties with seeking such consent is that it is often not possible to disclose sufficient information about the identity and business of the other client without breaching that other client’s confidentiality.
It would be for the solicitor to decide in each case whether it would be able to provide sufficient information for the client to be able to give ‘informed consent’.
‘Informed consent’ is more likely to be appropriate for ‘sophisticated clients’, such as large companies with in- house legal advisers or other expertise, who would be able to assess the risks of giving their consent based on the information provided.
How is the duty of confidentiality vs disclosure balanced?
There will be circumstances in which a solicitor’s duty of confidentiality conflicts with their duty to disclose. Typically, this will arise when a solicitor holds confidential information for a former client which the solicitor would ordinarily be obliged to disclose to a new client.
In such circumstances the solicitor could not act in the best interests of the new client without breaching their duty of confidentiality to the former client.
The SRA says that the fact that a solicitor cannot meet their obligations to the new client because of their obligation to the former client will be no defence to a breach.
Consequently, the Guidance is that the solicitor must not act for the new client in the absence of informed consent from the new client to the information not being disclosed to them.
By analogy the same principle should apply to solicitors generally given the need to act in the client’s best interests.
One situation in which the duties of confidentiality and disclosure may conflict is where a solicitor is acting for both the borrower and lender on a mortgage taken out to fund a purchase in a residential conveyancing transaction and there is a suggestion of mortgage fraud.
Mortgage fraud may be committed in many ways; for example, the borrower overstating their income in order to obtain a higher mortgage or one joint buyer forging the other’s signature. A problem will arise if the solicitor has any information about the transaction that the lender would consider relevant to granting the loan, but the borrower does not want the solicitor to disclose it to the lender.
There is an obligation to disclose all relevant information to the lender client, but the solicitor also has a duty of confidentiality to the borrower client.
Accordingly, the solicitor must seek consent from the borrower to disclose the information to the lender, but if that consent is not given the solicitor must refuse to continue to act for the borrower and the lender. (The solicitor may also have obligations under the Proceeds of Crime Act 2002). Although, if there is a strong prima facie case that the borrower is using the solicitor to further a fraud or other criminal purpose, the solicitor will cease to owe a duty of confidentiality in any event.
What is professional embarassment?
Even where the general prohibition in Paragraph 6.5 does not apply or one of the exceptions can be relied upon, thus allowing a solicitor or a firm to act for two clients, a solicitor might still be obliged to refuse to act on the grounds of professional embarrassment. A solicitor should decline to act where the information which cannot be disclosed to the client would cause severe embarrassment if the fact that the solicitor had agreed to act in those circumstances ever came out. A solicitor should also consider the Principles, such as whether the solicitor will be able to act in the best interests of the client in question, and public trust in the legal profession.
How does the obligation of confidentiality intersect with the issue of legal professional privilege?
The obligation of confidentiality is distinct from the issue of legal professional privilege. Whilst confidentiality prevents a solicitor from disclosing any information relating to a client, legal professional privilege allows a solicitor to withhold specific information which the solicitor would otherwise be required to disclose, for example in court proceedings. Privilege can only be waived by the client.
Legal professional privilege applies to information which is passed between a solicitor and a client, whether written or oral, directly or indirectly. The rationale behind this right to withhold information, even from the court, is similar to the rationale for the obligation of confidentiality – it exists to enable a client to speak to the solicitor without worrying that the information passed over might be disclosed at a later date. However, there are limitations in place to prevent legal professional privilege being used as a cloak to hide information which a client does not wish a court to see.
Legal advice privilege applies only to information passed between the client and a solicitor acting in the capacity of a solicitor. In other words, the communication must relate to the request for, or the provision of, advice to the client by the solicitor. If documents are sent to or from an independent third party, even if they are created for the purpose of obtaining legal advice, they will not be covered by this privilege, and therefore simply ‘copying in’ a solicitor will not mean the information can be withheld. If the communication is made for the purpose of committing a fraud or a crime, it will not attract privilege.
Clients and solicitors may also claim litigation privilege in respect of documents created for the sole or dominant purpose of litigation or other adversarial proceedings which have already commenced or are contemplated. This privilege also extends to communications between a solicitor and third parties. A related issue which also arises in the case of litigation is that anything said by a solicitor whilst speaking in court as an advocate is privileged.
Therefore the solicitor cannot be sued for defamation in such circumstances.
Like the duty of confidentiality, privilege continues beyond the death of a client.
Data subjects’ rights under the data protection regime do not take precedence over legal professional privilege or client confidentiality when it comes to transparency.
