Tell the employee to obtain independent counsel first before sharing any information with you.

I am in litigation and a former employee of a defendant’s corporation walked into my office one day and indicated they had incriminating material. What am I to do?

Samuel C. Stretton.

If an employee of a defendant corporation walks into one’s office when litigation is ongoing, the best thing to do is not to speak to them, at least initially. The starting point is Rule 4.2 of the Rules of Professional Conduct. That rule very clearly states a lawyer cannot communicate about the subject of representation with a person the lawyer knows to be represented by another lawyer in the matter unless there is consent. Reading the comments to the rule, it clearly indicates that also applies to employees of the corporation who can bind the corporation. Comment 7 to Rule 4.2 states as follows: “In a case of a represented organization, this rule prohibits communication with a constituent of the organization who supervises, directs or regularly consults with the organization’s lawyer concerning the matter or who has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for the purpose of the civil or criminal case.”

The same comment (Comment 7) indicates that the consent of the organization is not required if the person no longer works for the company. Obviously, if that person has their own counsel, then the lawyer still has to talk to the attorney and obtain consent before speaking to the former employee.

Therefore, at least in Pennsylvania, there is a distinction made between employees of a corporation and former employees. If an employee who currently works for the corporation that is sued, then if that person was involved in any way, shape or form in the litigation, as noted above, or can bind the corporation, then one cannot speak to them. But, if the person has retired, resigned or left the corporation, then the lawyer can, as long as the person does not have their own personal lawyer.

But, the inquiry does not necessarily stop there. Rule 4.3 speaks about dealing with unrepresented persons, and the main point in that rule is to tell the unrepresented person just to retain new counsel. No other advice should be given. Rule 4.4 talks about respect for the rights of a third person and one cannot embarrass, delay or burden a third person or use methods that violate the legal rights of such a person.

To answer the question, if an employee for the corporation comes in, the first question is, who are you and are you still employed by the corporation? Even if an attorney could talk to the employee under Rule 4.2, the attorney must also be aware of Rule 4.3 and Rule 4.4. A violation of these rules can result in a suspension depending on the seriousness of the violation. Usually, if it is a first offense and the lawyer tried his best to act properly, then usually minor discipline or a letter of concern will result.

There can be dangers in speaking with a former employee, in addition to potentially violating the Rules of Conduct. This writer years ago had a case where he was suing a school district for civil rights violations. One day a middle level management employee of the corporation walked into the office and said the corporation was shredding and destroying numerous pertinent documents. The conversation was stopped and a notice of deposition for that person was filed. During the deposition, it was brought out that the person came into the office and there was a brief conversation.

As can be imagined, the other side then filed a motion to disqualify counsel. The federal judge in the Middle District of Pennsylvania denied the motion, but precluded the use of anything that person said. Therefore, there can be civil consequences that could result in a lawyer not being able to continue on the case or result in the lawyer being hampered in trying the case by not being able to refer to certain evidence.

Recently, the Los Angeles County Bar Association issued an Opinion No. 531 dated July 24. The issue in that opinion was when a witness who is an unrepresented former employee of the opposing party presents documents or evidence that showed that the opposing counsel did not provide all relevant discovery. Of course, in Pennsylvania, under the aforementioned comment, if this was a former employee, the lawyer might be OK to talk to them, keeping in mind Rule 4.3 and Rule 4.4. Any lawyer should be aware that some other jurisdictions might take a different position, and in fact, there are court decisions that preclude talking to both current and former employees if they can bind the corporation.

The Los Angeles Bar Association opinion has some important considerations. The opinion first notes that the lawyer must determine whether the former employee is “lawfully in possession of the data.” Obviously, a lawyer cannot engage in or assist others in criminal conduct. The opinion suggests if it is a civil lawyer that is involved then perhaps the civil lawyer might want to call a criminal lawyer for advice.

The next issue the opinion suggests is that the lawyer should look at whether the information is privileged or subject to a claim of work product. The lawyer obviously cannot access privileged material and work product material. The opinion notes that the lawyer may be ethically obligated to give notice to the other side or to the person who has the privilege at issue.

The opinion then suggests a lawyer cannot suggest they are disinterested. Perhaps the best advice is that in Rule 4.3, tell the person to get a lawyer. This would be the best and only advice that should be given. A lawyer can always file a notice of deposition later and try to find out what the person has after they have their own counsel.

The opinion also notes a lawyer still must reasonably consult with their own client under Rule 1.4 of the Rules of Professional Conduct. The discussion would include the significance of the material and consequences, etc. The opinion concludes as follows: “When a lawyer is offered access by a former employee of the opposing party to evidence a reasonably prudent lawyer would suspect contains protected or privileged information, the ethical risk and potential adverse consequences of taking possession or reviewing the material are significant.”

The opinion is an interesting read and is not very long, but sets forth the concerns that every lawyer should have if confronted with the employee or former employee of a corporate defendant in ongoing litigation. The lawyer should document the file about the thought process in deciding what to do. There can be very unfortunate results if a lawyer does not check whether the employee is represented or not, doesn’t check if the matters are privileged or work product, and doesn’t check if the matters have been obtained through criminal conduct. If a lawyer just jumps into it with both feet, that lawyer could end up at a later time with loss of license or even a criminal conviction. There is a limit to zealousness in representing a client. Every lawyer has to remember that the law is a profession and the Rules of Ethics are very strong. Although clearly, everyone wants to get information that would help a client, the Rules of Ethics do not allow that under circumstances such as this, at least without carefully reviewing what can be said and what can’t be said. The best practice in this circumstance would be to suggest the employee obtain independent counsel and then come back after they talk to independent counsel.

The client must be given the right to seek independent counsel and it must be given to the client in writing.

I am the lawyer and I missed a statute of limitations on a very minor suit. The value is probably about $2,000. I called the client, told him I missed it, and offered them $3,000 to settle the case. The client agreed and I gave the client a release. Can I do so?

The answer is no, one cannot. This is a subject that comes up often and there have been several articles over the years on this matter, but lawyers keep making the same mistake. The rule at issue is Rule 1.8(h) of the Rules of Professional Conduct. That is the special conflict of interest rule. That rule states as follows:  “A lawyer shall not settle a claim or a potential claim for such liability with an unrepresented client or a former client unless that person is advised in writing of the desirability of seeking, and is given a reasonable opportunity to seek the advice of independent legal counsel in connection therewith.”

The reason for this rule is to prevent a conflict of interest. Perhaps the offer the lawyer is making is an excellent offer. But, at times it may not be. It is important to give the client the advice to at least to go and seek independent counsel. If the client chooses to not seek other counsel and wants to settle, then the wise lawyer would get a letter from that client in writing stating that the client waives any conflict, waives the right to seek independent counsel and wants to resolve the matter.

The danger of settling a case with the client without advising the client to seek independent counsel is that the client could change their mind and sue the lawyer. Courts will not usually uphold these kinds of settlements when Rule 1.8(h) has been violated and no notice to seek independent counsel has been given.

Although the lawyer may be attempting to do the right thing, the client has to come first. The lawyer has to advise the client to review and seek independent counsel. As noted, if the client chooses not to do so and waives it (and the waiver should be in writing), then the lawyer can resolve the matter. But, to resolve it without such advice and a waiver, could create future problems for the lawyer, not only in later litigation, but even more importantly, professional discipline. Violating this rule, depending on the circumstances, could result in substantial discipline. That discipline would depend on whether or not the lawyer was taking advantage of the client, whether the lawyer had misled the client and if the lawyer had prior discipline.

Therefore, it is commendable that a lawyer wants to be honest about a mistake and settle with a client. But, it is not how one does it. That is the difference between a business and profession. The client must be given the right to seek independent counsel and it must be given to the client in writing.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.