Opinion 91-31
(December 1991)

A bank has requested a security interest in your firm's accounts receivables to secure an outstanding loan your firm has with the bank. The proposed Security Agreement would require your Firm on default, to reveal the names and addresses of its clients, so that the bank could collect the receivables. The bank has agreed to enter into a Confidentiality Agreement with your Firm covering the identity of the Firm's clients.

You have asked whether it is permissible for your Firm to reveal the names and addresses of its clients under the circumstances, and if so, whether there are special provisions which should be included in the proposed Confidentiality Agreement.

Rule 1.6(a) of the Rules of Professional Conduct provides that:

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 and except as stated in paragraphs (b) and (c).

The exceptions provided in Rule 1.6(c) permit a lawyer to reveal such (confidential) information to the extent that the lawyer reasonable believes necessary:

(1) to prevent the client from committing a criminal act...;

(2) to prevent or rectify the consequences of a client's criminal or fraudulent act...; or

(3) to establish a claim or a defense on behalf of the lawyer in a controversy between the lawyer and the client ....

Past Professional Guidance opinions, the last being No. 87-12, indicate that in situations comparable to yours, you must first obtain the permission of your clients, preferably in writing, before you may disclose the names and addresses of your clients to your bank. Should your clients refuse to give such permission you are obligated to protect their request for confidentiality, and cannot reveal information that can be linked specifically to them.1

Under the circumstances you present, this Committee believes that you must obtain consent after consultation with your client before you may disclose a client's identity. Absent consent, there is no basis for finding implied authorization as provided by Section (A) of Rule 1.6, nor is there a basis for asserting an exception under Section (C) of said Rule.

In November, 1986, an opinion was issued by the Pennsylvania Bar Association Committee on Legal Ethics and Professional Responsibility (No.86-144). That opinion cited DR 4-101(B) (1) in stating that an attorney may not reveal the identity of his/her client without the consent of the client. The matter involved an audit by Trustees of a prepaid legal services plan. That Committee proposed alternatives which would not require the consent of the client. Specifically, the Committee indicated that the provider of legal services could redact, or edit, the files to eliminate names and any other material which might bear on the identities of the clients. Alternatively, it indicated that the Trustees could retain an auditor, who would be bound under an Agreement of Confidentiality, and who would report to the Trustees on the nature and amount of services provided without disclosure of the names or addresses of the clients.

The alternatives suggested by the Pennsylvania Bar Association Committee on Legal Ethics and Professional Responsibility were not adopted by this Committee in its Opinion 87-12, nor has this Committee adopted those alternatives to date. At this time the Committee is not is not willing to amend its past position to include such an alternative whereby client information may be given to an auditor who would sign a confidentiality agreement.

Accordingly, the Committee believes that your Firm must obtain consent, (i.e., a release) from each client before you may disclose his/her/its name and address to your bank. Absent such consent, you may not disclose the identity of your clients in providing the extent of your accounts receivable.2

Notes

  1. The Committee recognizes that Professional Guidance Opinion 87-12 was governed by the Code of Professional Responsibility rather than the Rules of Professional Conduct (effective April 1, 1988). Disciplinary Rule (DR) 4-101(B)(1) was explicit in prohibiting an attorney from revealing the identity of his/her client. While Rule 1.6(A) of the Rules of Professional Conduct no longer contains such specific prohibition, the Committee believes there was no change intended by the Supreme Court of Pennsylvania which would permit disclosure of the client's identity.

  2. The Committee did not address the propriety of pledging a firm's accounts receivables. Members of the Committee acknowledged Rule 1.7(b) of the Rules of Professional Conduct, which under certain circumstances might preclude an assignment on conflict of interest grounds.

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.