December 23, 1991
A lawyer representing multiple clients in a malpractice case concerning indiscriminate prescription of medications, who learns that one or more of the clients may have in fact engaged in the challenged activity, must withdraw from the representation of all clients.
A lawyer representing multiple clients in a malpractice case concerning indiscriminate prescription of medications, who learns from one client that one or more of the clients may have in fact engaged in the challenged activity in the past, may not disclose that information to the medical regulatory authority or to prosecutors without client consent.
References: MRPC 1.6, 1.7(a), 1.7(b), 3.3; CI-81; Upjohn Co. v. United States, 449 US 383, 101 S Ct 677, 66 L Ed 2d 584 (1981).
A lawyer was retained by an insurance company in a malpractice case to represent doctors A and B and the professional corporation ["P.C."] which employs them. The doctors are allergists, and the malpractice case involves an indiscriminate prescription of medications including valium and barbiturates. Doctors A and B previously owned the corporation and employed C. As a part of an agreement to purchase the corporation, C agreed to retain A and B for a specific period of time; A was scheduled to retire within three months and B within fifteen months.
Doctor C is the sole shareholder of the P.C.; doctors A, B and C have each retained separate counsel for the matter. In the capacity of counsel for the P.C., the lawyer received a letter from C identifying approximately 24 patients C believes are being treated inappropriately by A and B. In one case, the patient apparently had an extended stay in a drug rehabilitation clinic, but after release and resumption of treatment by A and B the patient became cross-addicted to a number of medications. Even though C confronted A and B regarding their practice, C believes A and/or B are continuing to prescribe medications, but are not noting them in the charts and/or not keeping the required copies of the prescriptions in the patients' charts.
After receiving this communication the lawyer notified A, B and the P.C. of the conflict of interest. With the consent of the P.C. the lawyer met with Drs. A and B and the doctors' individual counsel to review the records of the 24 patients identified by C, to determine if the questionable conduct is continuing. The lawyer is satisfied that with regard to the majority of the files the conduct had ceased. With regard to several files the inquiry was not yet complete.
The lawyer asks whether the lawyer has a duty to report A and B to the appropriate state agency and/or prosecutor's office in order to protect the patients.
The lawyer represents A, B and the P.C. wholly owned by C. Prior to taking on the representation of multiple clients a lawyer must determine whether the interests of the clients are directly adverse to other clients the lawyer represents, MRPC 1.7(a), or whether the representation would be materially limited by the lawyer's duties to another, MRPC 1.7(b). In addition, "when representation of multiple clients in a single matter is undertaken, the consultation shall include an explanation of the implications of the common representation and the advantages and risks involved." [MRPC 1.7(b)(2); in accord CI-81] When the lawyer undertook the multiple representation, it appeared that the interests of all clients were similar, i.e., all wished to be exonerated from liability for indiscriminate prescription of medications.
The letter from C created a conflict among the lawyer's clients. In handling the malpractice matter the lawyer could not properly represent the interests of the P.C. without raising the issue of the culpability of A and B. The P.C. would seek to deny liability based upon A's and B's actions beyond the scope of their authority. A and B are likely to deny misconduct. C may be called to testify on behalf of the P.C., against the interests of A and B. The interests of the lawyer's clients are thus "directly adverse" and the lawyer must consider under MRPC 1.7(a)(1) whether a disinterested lawyer could reasonably believe the representation will not be adversely affected. Since we believe a disinterested lawyer could not reasonably believe the representation would not be irreparably affected by the disclosure from C, the lawyer must withdraw from the malpractice case. Consent of the clients does not vitiate the conflict, and MRPC 1.7(a)(2) is not available.
A similar analysis is available under MRPC 1.7(b) which states:
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved." Emphasis added.
The lawyer must make a determination as to whether the continued representation of the P.C. would be materially limited by the lawyer's responsibilities to A and B. If the lawyer determines that the answer to that question is affirmative, then the lawyer shall not continue the representation unless a disinterested lawyer would reasonably believe that the representation of A and B will not be adversely affected by C's disclosure. As concluded above, a disinterested lawyer could not reasonably believe the representation would not be irreparably affected by the disclosure from C, the lawyer must withdraw from the malpractice case. Consent of the clients does not vitiate the conflict, and MRPC 1.7(b)(2) is not available.
The lawyer may not merely withdraw from representation of A and B and continue to represent the P.C.; the lawyer must withdraw from the representation of all parties.
May the lawyer, or is the lawyer required to, report A and B to the medical regulatory authority or to prosecuting authorities? If C's letter was a confidence or secret, the lawyer's disclosure of the information is restricted pursuant to MRPC 1.6, which states:
"(a) 'Confidence' refers to information protected by the client-lawyer privilege under applicable law, and 'secret' refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.
"(b) Except when permitted under paragraph (c), a lawyer shall not knowingly:
"(1) reveal a confidence or secret of a client;
"(2) use a confidence or secret of a client to the disadvantage of the client; or
"(3) use a confidence or secret of a client for the advantage of the lawyer or of a third person, unless the client consents after full disclosure.
"(c) A lawyer may reveal:
"(1) confidences or secrets with the consent of the client or clients affected, but only after full disclosure to them;
"(2) confidences or secrets when permitted or required by these rules, or when required by law or court order;
"(3) confidences and secrets to the extent reasonably necessary to rectify the consequences of a client's illegal or fraudulent act in the furtherance of which the lawyer's services have been used;
"(4) the intention of a client to commit a crime and the information necessary to prevent the crime; and
"(5) confidences or secrets necessary to establish or collect a fee, or to defend the lawyer or the lawyer's employees or associates against an accusation of wrongful conduct." Emphasis added.
The comment to Rule 1.6 states in part:
". . .[T]he lawyer may learn that a client intends prospective conduct that is criminal. Inaction by the lawyer is not a violation of Rule 1.2(c), except in the limited circumstances where failure to act constitutes assisting the client. See comments to Rule 1.2(c). However, the lawyer's knowledge of the client's purpose may enable the lawyer to prevent commission of the prospective crime. If the prospective crime is likely to result in substantial injury, the lawyer may feel a moral obligation to take preventative action. When the threatened injury is grave, such as homicide or serious bodily injury, a lawyer may have an obligation under tort or criminal law to take reasonable preventive measures. Whether the lawyer's concern is based on moral or legal considerations, the interest in preventing the harm may be more compelling than the interest in preserving confidentiality of information relating to the client. As stated in paragraph (c)(4), the lawyer has professional discretion to reveal information in order to prevent a client's criminal act.
". . .
"The lawyer's exercise of discretion requires consideration of such factors as magnitude, proximity, and likelihood of the contemplated wrong; the nature of the lawyer's relationship with the client and with those who might be injured by the client; the lawyer's own involvement in the transaction; and factors that may extenuate the conduct in question. Where practical, the lawyer should seek to persuade the client to take suitable action. In any case, a disclosure adverse to the client's interest should be no greater than the lawyer reasonably believes necessary to the purpose. A lawyer's decision not to make a disclosure permitted by paragraph (c) does not violate this rule." Emphasis added.
The letter from C is clearly at least a "secret" under MRPC 1.6, since it is information gained in the professional relationship the disclosure of which would be embarrassing or would likely be detrimental to clients A and B. The letter is probably also a "confidence" since it is a communication from the P.C. client's sole shareholder, and communicated to the lawyer solely for the purpose of the representation of the P.C. See, Upjohn Co. v. United States, 449 US 383, 101 S Ct 677, 66 L Ed 2d 584 (1981).
Therefore, the lawyer may not disclose the information unless it falls within one of the discretionary exceptions in MRPC 1.6(c). Exceptions which could apply are MRPC 1.6(c)(1), consent of the client, MRPC 1.6(c)(3), to rectify the consequences of an illegal or fraudulent act in the furtherance of which the lawyer's services have been used, and MRPC 1.6(c)(4), the client's intent to commit a crime.
From the facts provided to this Committee there is no suggestion that the lawyer's services are being used to further illegal conduct; therefore MRPC 1.6(c)(3) does not apply. Unless conduct is continuing and violates criminal laws, MRPC 1.6 (c)(4) does not permit disclosure. MRPC 1.6(c)(1) permits disclosure if the client consents. One of the characteristics of multiple representation is that the confidences and secrets of one client may be shared with the other clients, as necessary for the representation. A and B are aware of C's charges, as evidenced by the meeting at which patient files were reviewed. A and B have personal counsel to advise them regarding C's charges. A client may waive the client-lawyer privilege with regard to privileged information provided by that client. If C consents on behalf of the P.C., the lawyer may disclose.
We note that MRPC 3.3 prohibits a lawyer from knowingly "failing to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client." The lawyers for the parties may be required to make disclosures to the tribunal or otherwise correct statements in pleadings or evidence which are contrary to the information which the lawyer gained from C's letter and verified in the consultation session.