Although lawyers regularly conduct investigations into clients’ affairs and provide evaluations to their clients, their audience for such work is usually the client only. Thus, attorneys called upon to provide an evaluation of their client to a third party may find themselves in an unfamiliar position. When a client asks an attorney to divulge information to a third party that may otherwise be privileged, attorneys may have questions about their role and whether making such disclosures could ultimately harm the client and their relationship.

Take the example of a law firm retained by a client corporation’s board of directors to review the company’s operations. If the client intends for the results to be shared with third parties, that may impact whether the attorney feels comfortable sharing with third parties any unsavory or less than positive information uncovered during the investigation. This scenario also raises the issue of what information gleaned during the attorney’s investigation will be considered privileged, and if the attorney has any duties to the entities receiving the information.

Attorneys facing this issue may find it helpful to consult Rule 2.02 of the Texas Disciplinary Rules of Professional Conduct. That rule provides: “A lawyer shall not undertake an evaluation of a matter affecting a client for the use of someone other than the client unless: (a) the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer’s relationship with the client; and (b) the client consents after consultation.” Tex. Disciplinary R. Prof’l Conduct 2.02.

The Basics of Rule 2.02

Given the requirements of Rule 2.02, attorneys may find it helpful to establish at the beginning of the representation whether the client intends for the attorney to share any evaluation or work product with a third party. If so, an attorney can consider whether Rule 2.02 is implicated.

Attorneys are permitted to conduct evaluations at the client’s direction but “for the primary purpose of establishing information for the benefit of third parties.” According to Comment 1 to Rule 2.02, common examples of these arrangements include an opinion on the title of a property to be provided to the purchaser, or an evaluation about a client business to be provided to the purchaser.

The rule may also be implicated when an attorney serves as an investigator and where it is anticipated that the results of the attorney’s investigation will be shared with others, in which case “the identify of the client is critical” because only the client has a confidential relationship with the lawyer. Tex. Disciplinary R. Prof’l Conduct 2.02, cmt. 4. Thus most lawyers conducting these sorts of investigations can make clear to non-clients (such as contacts in the investigation) that there is no attorney-client relationship and that duties such as loyalty and confidentiality are not applicable.

Duty of Confidentiality Likely Remains to Clients

Texas Rule 1.05 governs an attorney’s obligation of client confidentiality. Although intentional disclosure of a report or analysis to a third party may expose confidential information to third parties, attorneys can still take care to preserve confidentiality for other information and aspects of the relationship.

Be Aware of Potential Negligent Misrepresentation Claims

Attorneys that provide evaluations about their clients to third parties could face claims from those third parties that rely on the attorneys’ evaluations. Indeed, in McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787 (Tex. 1999), the Supreme Court of Texas held that non-clients can sue attorneys for negligent misrepresentation as defined in Restatement (Second) of Torts § 552, even if those attorneys have no legal malpractice liability to non-clients. In McCamish, the Court identified the requirements of Rule 2.02 and warned that, “a lawyer should not allow a client to make this decision [of providing an opinion to a third party] without advising the client about the potential impact such an evaluation may have on the scope of the attorney-client privilege.” Id. at 793.

The McCamish Court also provided two steps attorneys can take to “avoid or minimize risk of liability to a non client,” which are to set forth “limitations as to whom the representation is directed and who should rely on it” or “disclaimers as to the scope and accuracy of the factual investigation or assumptions forming the basis of the representation itself.” Id. at 794. Thus, many attorneys preparing evaluations for third parties will include disclaimers or other notices in the text.

Other Considerations

When an attorney is retained to provide an evaluation of a matter that will be shared with third parties, there is a risk that the attorney may be caught between two potentially competing interests in the evaluation. On one hand, the attorney will likely aim to render an impartial opinion so that the client can benefit from candid advice, but the attorney may also be concerned whether the evaluation contains any information that will harm the client if shared with third parties. For example, as noted in the comments to Rule 2.02, if an attorney is defending a client against charges of fraud, it could be a disservice to the client to perform an evaluation regarding that transaction for consumption by others.

If there is no such conflict, the comments provide that “a lawyer should advise the client of the implications of the evaluation, particularly the lawyer’s responsibilities to third persons and the duty to disseminate the findings.” Tex. Disciplinary R. Prof’l Conduct 2.02, cmt. 5.

In light of these concerns, attorneys may in some cases limit the information they provide in the shared report. Most attorneys in that situation will consider describing that limitation in the report to reduce the likelihood of a misunderstanding.

By being aware of the ethical implications of providing an analysis on a client’s behalf to others, attorneys can help serve their client’s interests and reduce their own risks.

Shari L. Klevens is a partner at Dentons and serves on the firm’s US Board of Directors. She represents and advises lawyers and insurers on complex claims and is co-chair of Dentons’ global insurance sector team.  Alanna Clair is a partner at Dentons and focuses on professional liability defense.  Shari and Alanna are co-authors of “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance.”