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 98-36
Law Firm handles insurance defense litigation. Insurance Company has engaged outside billing auditors to evaluate Law Firm's legal bills. The billing guidelines require Law Firm to furnish detailed descriptions and information for each service performed. Insurance Company has agreed to waive any part of the billing guidelines requiring detailed information about services performed when, in Law Firm's professional judgment, the detailed information would constitute a disclosure of privileged or confidential information, or otherwise interfere with the representation of the insured. In those situations, the generic description would state only that the activity is privileged or confidential without further detail. In applying this set of particular facts to the results reached in Ethics Advisory Opinion 97-22, these questions arise:
Questions:
I. Assuming that Law Firm is permitted to exercise its professional judgment in determining whether information is privileged or confidential and no such information is disclosed by the billing activity descriptions, does the submission of the legal billing statement to an outside auditing service for payment still require the informed consent of the insured?
II. What, if any, of the factual information proposed to be included in the billing statement constitutes "information relating to the representation of a client" as contemplated by Rules1.6 and 1.8 of the Rules of Professional Conduct?
III. If the informed consent of the insured client is required prior to submission of Law Firm's billing statement to the auditing service, does "informed consent" also require the attorney to provide a recommendation or advise the insured as to whether the attorney believes it is in the insured's best interest to consent or withhold consent?
Summary:
The submission of the legal billing statement to an outside auditing service requires the informed consent of the insured, regardless of whether or not Law Firm determines that the information is privileged or confidential or both. Any material which gives information about a named entity constitutes "information relating to the representation of a client." "Informed consent" would not require the attorney to provide a recommendation to the insured.
Opinion:
Rule 1.6(a) states: "a lawyer shall 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...." The Rule does not create a distinction or separate category for "privileged or confidential" information. Consequently, there is no point in having Law Firm engage in such determination. The submission of the legal billing statement to an outside auditing services requires the informed consent of the insured.
In Ethics Advisory Opinion No. 97-22, this committee responded that billing information without question falls within the scope of "information relating to representation of a client." That Opinion described how these bills, in tracking the services performed for the client, will contain details as strategies, potential witnesses, admissions, potential liabilities and any number of other topics.
This committee has considered the phrase "disclosures impliedly authorized" as being narrowly written. The Comment to Rule 1.6 describes that phrase as applying to situations where the disclosures are appropriate in carrying out the representation. The comment also states that the confidentiality rule applies not merely to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source. A lawyer may not disclose such information except as authorized or required by the Rules of Professional Conduct or other law. Opinion 97-22 found that release of billing records to third parties does not fall within the implied authorization of Rule 1.6.
Rules 1.7 and 1.8 describe conflict of interest situations. These Rules would not bar transactions as described above. The attorney must fully consult with the client, but neither of these rules would require the attorney to provide a recommendation to the insured. Restatement of Agency 2nd, Section 381, describes the duty of an agent to use reasonable efforts to give information to his principal which is relevant to affairs entrusted to him. The Comment states that an agent may have a duty to act upon, or to communicate to his principal or to another agent, information which he has received, although not specifically instructed to do so.