LEO: Attorney-Client Relationship - LE Op. 1172
Attorney-Client Relationship - Confidentiality - In-House Counsel:
Using Information Gained During the Regular Course of
Business for Attorney's Benefit.
April 19, 1990
You advise that you were employed in the Patent Legal Department of
Corporation A between November 1, 1984, and June 8, 1988. Early in 1987,
your employer asked you to investigate a possible Competitor who was
engaged in a franchising effort and whose published F.T.C. Franchise
Offering Circular referred to a pending patent application the existence
of which concerned your employer. You contacted Competitor, represented
yourself to be a patent attorney for an unidentified third party, and as a
result obtained information regarding their patent information which you
then reported to your employer.
You are no longer employed at Corporation A, and you were contacted by
Competitor once the patent application had been issued to inquire whether
your third party client had any interest in obtaining one of its
franchises. You reported that your client was no longer interested but
that you personally were interested.
You wish to know whether it would be ethically improper under Canon 4,
DR:4-101(B)(3) to obtain a franchise of Competitor; or, would pursuing
that course of action constitute using a confidence and/or secret of your
former employer Corporation A to your advantage.
Disciplinary Rule 4-101(B)(3) provides that a lawyer shall not knowingly
use a confidence or secret of his client for the advantage of himself or a
third person, unless the client consents after full disclosure. Under
Canon 4 of the Virginia Code of Professional Responsibility a "confidence"
refers to information protected by the attorney/client privilege under
applicable law, and "secret" is defined as information gained in the
professional relationship that the client requested be held in confidence
as disclosure would cause embarassment or would likely be detrimental to
the client. The Committee believes that at the time you obtained the
information from Competitor regarding their patent application, you were
acting under the direction of your employer and as such your obligation
was to advise your employer of your investigation. It appears the
relationship between attorney-client could not exist (See Part Six,
subsection (A) of § 1 of the Virginia Code of Professional Responsibility);
therefore, any information obtained in the course of your employment as
agent for employer would not be protected under the definition of a "
confidence" or "secret" as reflected in DR:4-101.
Under the limited facts of your inquiry, the Committee would opine that
it would not be a violation of Canon 4, or DR:4-101(B)(3), for an
attorney/employee, who in the course of his employment and acting on
behalf of his regular employer gained information on which he will rely in
part, to pursue obtaining a franchise of Competitor. The Committee further
opines that since the attorney-client relationship had not been
established, the propriety of obtaining one's regular employer's consent
to acquire a franchise would be irrelevant.
Committee Opinion December 19, 1988
LE Op. 1172 found that it would not be improper for a patent attorney,
previously employed in the legal department of a corporation, to secure a
franchise for himself from a competitor of his former employer when he had
originally obtained information regarding the franchise for use by his
corporate employer. The basis for the Opinion's conclusion was the nature
of the receipt of the information and not the relationship between the
attorney and his corporate employer. Since the information was received
from the corporate employer's competitor who was not the attorney's client,
use of that information was not precluded by DR:4-101 since no attorney-
client relationship existed between the patent attorney and the
franchisor/competitor of patent attorney's former employer.
VSB Standing Committee on Legal Ethics April 19, 1990