Attorneys owe their clients certain duties to, among others, preserve confidentiality and remain loyal. While ethical rules governing attorneys’ professional conduct vary across states, attorneys generally may not undertake representation or otherwise participate in activity that would be adverse to their clients’ interests. Yet, in May 2017, a former in-house attorney was awarded almost $8 million in damages in connection with a whistleblower claim against his former employer. See Wadler v. Bio-Rad Laboratories, No. 15-cv-2356 (N.D. Cal. May 10, 2017). The federal government’s increasing reliance on whistleblowers to uncover and prosecute fraud brings an interesting question to the fore: What happens when an attorney uses confidential information to blow the whistle on his or her current or former client? This article reviews recent decisions addressing this issue and examines key considerations governing attorney conduct in whistleblower cases.
Preempted Rules
In December 2016, a California federal district court ruled in Wadler, 212 F. Supp. 3d 829 (N.D. Cal. 2016), that federal common law allows in-house attorneys to use privileged and confidential materials under limited circumstances in support of a whistleblower retaliation claim. The court further held that whistleblower protections under federal laws such as the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) prevail over conflicting state ethical rules governing the scope of attorney-client privilege and confidentiality.
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