UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER鈥橲 CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 98-23
Attorney represented client in a real estate closing. The client-buyer purchased the property as a cash transaction without a mortgage lender. Client-buyer gave attorney checks which attorney deposited into attorney's trust account.
Subsequently, the IRS Criminal Investigations Division requested attorney provide it with copies of the closing documents and the client's checks. People present at the closing have seen the closing statement, but only the attorney has seen the client's checks.
QUESTIONS:
1. Would releasing the documents to the IRS breach attorney's duty of confidentiality to client?
2. Does attorney's duty of confidentiality extend to all closing documents or only to those not seen by third parties at the closing?
SUMMARY:
Attorney may not disclose any documents to the IRS without client's permission or pursuant to a Court Order.
OPINION:
The confidentiality of attorney-client communications is governed by SCRPC 1.6. An attorney may not "...reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation...." Two other exceptions, one dealing with prospective criminal acts and one with defenses on the lawyer's behalf, are enumerated in the rule. The comments to the rule also acknowledge that final court orders and provisions in SCRPC 2.2, 2.3, 3.3, and 4.1 allow, or require, certain disclosures. The comment regarding "disclosures impliedly authorized" is narrowly written. Lawyers must keep "inviolate" client confidences; such is a fundamental part of the relationship. SCRPC 1.6, Comment. The ethical duty of confidentiality is broader than the evidentiary privilege, Robert M. Wilcox, South Carolina Legal Ethics, Section 6 (91黑料爆料 CLE Division 1996), and continues after the representation has concluded. Rule 1.6, comment.
The attorney-client relationship is based upon the fundamental principle that all information communicated in confidence by the client or relating to the representation of a client is confidential. According to this principle, Rule 1.6 (a) provides that a lawyer shall not reveal information of client representation unless: 1) the client consents after onsultation or 2) the client impliedly authorized disclosure so the representation may be carried out. Rule 1.6 (b)(1) and Rule 1.6(b)(2) create exceptions to the general rule by identifying two circumstances which a lawyer may reveal information about his client.
Some of our prior opinions concerning the release of client information may be helpful. In Adv. Op 89-03, the Committee opined that a real estate lawyer who is also an agent for a title insurance company, may not, pursuant to the company's audit, disclose information from its real estate files without the express, informed consent of the client (unless the information was already released to the insurer to obtain the insurance). Other opinions include: a lawyer who is a party to a lawsuit may not, in response to discovery requests, identify former clients or the work done for them, without the informed consent of each client (unless under court order) (Adv. Op. 90-14); a lawyer cannot reveal client confidences to a person holding the client's power of attorney, unless the client is incompetent or consents (Adv. Op. 93-04); preparing legal memoranda for insurance company's agents requires informed consent (Adv. Op. 90-09); a lawyer may not reveal a client's address, if the address was communicated in confidence, absent a court ruling (Adv. Op. 94-30); a lawyer, who discovers that the former client committed a crime during representation, may not disclose that fact without informed consent (Adv. Op. 90-30); a lawyer may not perform a credit check on a client if doing so reveals the person's status as a client; similarly, a lawyer may not report a nonpaying client to a credit bureau and may tell a collection agency only information necessary to the collection of the legal fee (Adv. Op. 94-11).
The attorney has several options in this situation.
1. Attorney should inform the client of the third party inquiry. Attorney may reveal the information if Client gives permission after informed disclosure.
2. If client refuses to grant his consent to disclose the requested information, the attorney must not reveal the information. The attorney may inform IRS that, in good faith, he ethically can not comply with its request without a court order.
3. Should the IRS bring an action against attorney or serve attorney with a subpoena, the attorney should inform client of the Court action and may inform the client that the attorney may be obligated to reveal the information if required by court order.