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