From left, Shari Klevens and Alanna Clair, of Dentons.

It may seem simple: a client asks its attorney to investigate and provide the client with a legal opinion. Such a task may seem straightforward and one of the most customary services provided by attorneys. However, depending on the circumstances, some unexpected ethical issues may arise even in connection with a seemingly simple or straightforward legal opinion.

In particular, when an attorney is retained to provide an evaluation of a matter, knowing that the evaluation will be shared with third parties, it represents something of a deviation from the normal attorney-client relationship. The risk is that the attorney could be caught between two potentially competing interests in the evaluation: to render an impartial opinion so that the client can benefit from candid advice but also to ensure that the evaluation does not contain any information that will harm the client when shared with third parties.

One common example is when a corporation asks an attorney to investigate conduct involving the corporation’s officers and directors and to provide a report evaluating potential legal issues relating to such conduct. It may be intended that the report will be shared with other parties outside of the client, and thus there may be questions regarding whether any aspects of the investigation remain subject to the attorney-client privilege or the duty of confidentiality.

Moreover, the report may be designated as an “independent” report, which may seem inconsistent with an attorney’s typical role as a “zealous advocate” for their client. Indeed, the attorney’s role when it comes to legal opinions may more accurately be described as a “counselor” to their client. Yet, when the client requests a candid legal opinion and intends to share that opinion with third parties, precautions may need to be taken to advise whether the opinion could have an adverse impact on the client’s interests.

ABA Model Rule 2.3

Recognizing the potential issues created in these circumstances, Model Rule 2.3 of the ABA Model Rules of Professional Conduct addresses an attorney’s preparation of an “Evaluation for Use by Third Persons.” Notably, although the California Supreme Court recently voted to adopt many of the ABA Model Rules (effective Nov. 1), it chose not to adopt Model Rule 2.3.  Nonetheless, Model Rule 2.3 has been adopted in many other jurisdictions and highlights some of the potentially difficult questions that arise when an attorney is asked to provide a legal opinion that will be shared with others.

Model Rule 2.3 provides that “a lawyer may provide an evaluation of a matter affecting a client for the use of someone other than the client if the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer’s relationship with the client.” The rule further states that, where a lawyer “knows or reasonably should know that the evaluation is likely to affect the client’s interests materially and adversely,” the client’s informed consent is required.

When an attorney provides an evaluation or legal opinion that is to be solely relied upon by the client, there usually is no issue with the attorney being candid and forthright regarding the issues being evaluated, including with respect to any weaknesses in the client’s position or potential liability. Indeed, in such circumstances, clients may even expect that their attorneys will provide an objective evaluation of the matter. The traditional example is clients asking their attorneys to assess their likelihood of success in a lawsuit so that the clients may evaluate settlement decisions.

However, the situation may change when the evaluation is to be provided to others outside the attorney-client relationship. There, a candid opinion that is critical of or even adverse to the client’s interests may create headaches for the client and could even require the attorney to obtain informed consent. The comments to Rule 2.3 provide a list of situations where this may become an issue, including an “opinion concerning the title of property rendered at the behest of a vendor for the information of a prospective purchaser, or at the behest of a borrower for the information of a prospective lender,” an opinion regarding the legality of securities, or an opinion provided for a third person, such as the purchaser of a business.

In California, although Rule 2.3 has not been adopted, the rules (both current and as amended) relating to the “organization as client” touch on related issues when attorneys are asked to provide evaluations for corporate clients. California Rule 3-600 and Model Rule 1.13 each address the complex issues that can arise when attorneys are retained by corporations to perform internal investigations. In such circumstances, the exact identity of the client (e.g., the corporation or only its board of directors) can impact whether the evaluation provided by the attorney might have adverse implications for the client.

Confidentiality Concerns

Model Rule 2.3 also addresses confidentiality concerns raised by evaluations or legal opinions: “except as disclosure is required in connection with a report of an evaluation, information relating to the evaluation is otherwise protected by Rule 1.6.” Rule 1.6 concerns an attorney’s duty to “maintain in confidence all information gained in the professional relationship with a client.” In California, Business and Professions Code Section 6068 similarly provides protections for a client’s confidential information.

Accordingly, when retained to provide an evaluation and asked to provide that evaluation to third parties, attorneys may wish to consider the extent to which the evaluation will necessarily include a client’s confidential information. It is helpful to seek clarification from the client if there is any ambiguity as to whether the client in fact authorized the disclosure of confidential information in connection with the evaluation.

By considering issues of confidentiality and risk to the client, attorneys can avoid unintended and unexpected issues that can arise out of preparing a simple legal opinion.

Shari L. Klevens is a partner at Dentons and serves on the firm’s U.S. board of directors. She represents and advises lawyers and insurers on complex claims, is co-chair of Dentons’ global insurance sector team, and is co-author of “California Legal Malpractice Law” (2014). Alanna Clair is a partner at the firm and focuses on professional liability defense. Klevens and Clair are co-authors of “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance.”