Inadvertent Disclosure: The Evolution of an Ethics Rule

Most attorneys are familiar with the ethical rules that govern our professional conduct to some degree. Most attorneys, however, don’t pay much attention to the processes that create ethical rules. There may be some tendency to take these rules for granted, to assume that they reflect such ancient verities that they must have always been around in some form.  In fact, written ethical rules for the legal profession are less than 200 years old and far from reflecting eternal truths, they have often changed with the times as the norms of the profession change. In California, they are in process of what might well be a very radical change.

The evolution of the rule on an attorney’s duty when he or she receives an inadvertent disclosure of confidential information is an interesting example of the evolution of a completely new professional rule in California.

Its history begins 25 years ago as American Bar Association (ABA) Formal Ethics Opinion in 92–368, requiring notice of the receipt of inadvertently disclosed privileged documents. It came of age in California with a case, State Compensation Insurance Fund v. WPS, Inc. (1999) 70 Cal. App. 4th 644 (State Fund). Outside counsel for the State Fund inadvertently sent internal documents containing privileged attorney-client communications to counsel for WPS. Counsel for WPS gave some of the privileged documents to an expert witness, who passed those documents to another lawyer who was adverse to the State Fund in a different matter. Counsel for WPS refused to return the privileged documents after demand. The trial court found that conduct to be in bad faith, unethical and imposed monetary sanctions against the company and its attorneys under Code Civ. Proc., § 128.5.

The trial court leaned heavily in its analysis on formal opinion 92–368, which it seemed to regard as binding on the offending lawyer. But the appellate court in State Fund reversed the order of sanctions because the ABA Model Rules of Professional Conduct discussed in the opinion are not the law in California. We have our Rules of Professional Conduct that do not address inadvertent disclosure (at least not yet).

Then the appellate court did something remarkable. After vacating the sanction, it turned around and articulated the rationale of ABA formal opinion 92-368 as a judicial rule, reasoning that it was probable that similar circumstances will reoccur in the future. “When a lawyer who receives materials that obviously appear to be subject to an attorney-client privilege or otherwise clearly appear to be confidential and privileged and where it is reasonably apparent that the materials were provided or made available through inadvertence, the lawyer receiving such materials should refrain from examining the materials any more than is essential to ascertain if the materials are privileged, and shall immediately notify the sender that he or she possesses material that appears to be privileged. The parties may then proceed to resolve the situation by agreement or may resort to the court for guidance with the benefit of protective orders and other judicial intervention as may be justified.” State Fund, at 656.

The next big step in the evolution of the rule occurred with Rico v. Mitsubishi (2007) 42 Cal.4th 807. There, defendants in civil litigation moved to disqualify plaintiffs’ attorneys and experts, based on attorneys’ clandestine use of confidential and privileged defense document, obtained inadvertently, during depositions of defense experts. The trial court affirmed the disqualification, as did the court of appeal. The California Supreme Court accepted review, in hindsight for the clear purpose of making the State Fund rule binding on all California lawyers.  And so it did by affirming the disqualification based on State Fund.

The most recent application of the inadvertent disclosure rule in a published decision is McDermott, Will & Emery v. Superior Court (Hausman) (2017) 10 Cal.App.5th 1083 (petition for review denied). The appellate court upheld disqualification of a law firm that had received an email between attorney and client that had been forwarded to the client’s smartphone at least three times before falling into the law firm’s hands. The decision is an example of the heightened dangers of inadvertent disclosure in the use of digital technology which makes it cheap and easy — too easy sometimes — to move information.

The last step in the evolution of the inadvertent disclosure rule is imminent. The California Supreme Court is considering a wholly revised set of Rules of Professional Conduct based on the ABA Model Rules. Included is new proposed California Rule 4.4:

Where it is reasonably apparent to a lawyer who receives a writing relating to the lawyer’s representation of a client that the writing was inadvertently sent or produced, and the lawyer knows or reasonably should know that the writing is privileged or subject to the work product doctrine, the lawyer shall: (a) refrain from examining the writing any more than is necessary to determine that it is privileged or subject to the work product doctrine, and (b) promptly notify the sender.

Comment 1 to the proposed new rule cites to Rico v. Mitsubishi and states that the lawyer should return the writing to the sender, seek to reach agreement with the sender regarding the disposition of the writing, or seek guidance from a tribunal.

So the inadvertent disclosure rule is set to come full circle, from its birth in a long-ago ABA ethics opinion to maturity as a California ethics rule enforceable by professional discipline.