ABA Loosens Attorney-Client Secrecy Rules
Tue Aug 12 14:24:35 2003

ABA Loosens Attorney-Client Secrecy Rules

Monday, August 11, 2003; 10:27 PM

By Gail Appleson, Law Correspondent

SAN FRANCISCO (Reuters) - The American Bar Association on Monday narrowly passed a controversial proposal that will allow lawyers to pierce sacred attorney-client secrecy rules to help stop financial crimes.

In a 218 to 201 vote, the ABA's policy-making body amended its ethics code to allow, but not require, lawyers to breach attorney-client privilege if they believe doing so would stop a client from committing a financial crime or fraud.

Dennis Archer, the ABA's incoming president, urged passage of the amendment.

"This is in the best interest of our profession. It is in the best interest of our country," said Archer, a former mayor of Detroit.

Many lawyers objected to the change, fearing it would severely harm the time-honored duty of lawyers to keep a client's information secret. They also worry that the change could expose lawyers to liability lawsuits.

Among them was president-elect Robert Gray of Richmond, Virginia, who will succeed Archer in August 2004.

"This is not the proper time to bow to threats by those who seek to regulate us," Gray said. "This not a time to take a position that the core values of this profession are subject to compromise."

The group is scheduled to vote on another controversial ethics amendment on Tuesday that applies to lawyers who represent corporate clients. The proposal clarifies "triggers" that would require lawyers to report a corporate officer's conduct to the company's upper management. It also addresses circumstances in which lawyers can reveal information to authorities about their corporate clients.

Similar proposals have been defeated by the House of Delegates in previous years. However, Archer and many other lawyers feel the landscape has changed in the wake of high-profile scandals that have engulfed Enron and other companies.

"The environment we are in is very sobering," said William Ide, a former ABA president from Atlanta. "As officers of the court it is our responsibility to take a hard look at the damages that have been done to people. We need to decide there is more lawyers can do."

Indeed, the ABA's vote will be closely watched by the U.S. Securities and Exchange Commission, which has been charged by Congress with setting standards of professional conduct for in-house and outside attorneys who advise public companies.

Some SEC rules for lawyers went into effect last week, and the agency could adopt more stringent requirements if it is dissatisfied with the ABA's actions.

However, several lawyers spoke out against the proposal, including William Paul, a former ABA president from Oklahoma City, Oklahoma, who said the rule change undermines a system that has worked for some 200 years.

"We need that rule to enable us to do our work," he said, adding that the amendment "asks us to barter away a piece of our professional soul to get some hope for public approval."

Sharon Stern Gerstman of Buffalo, New York, said the recent corporate scandals were not caused by lawyers' inability to reveal confidences and there is "not one shred of evidence" that the rule change would have made a difference.

Instead, she said the ABA is being pressured by "government agencies that want us to make their jobs of learning our clients' secrets easier for them."

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