ALL LAWYERS ARE AWARE OF the duty of confidentiality. It is one of the most fundamental and important duties that lawyers owe to their clients. Another fundamental duty is the duty to avoid conflicts of interest (for a discussion about conflicts of interest, see China Business Law Journal, volume 1 issue 4: Cases, matters and conflicts of interest). What is the legal source of the duty of confidentiality and what are its boundaries – in particular, when are lawyers permitted or required to disclose confidential information? This column examines these questions in relation to common law jurisdictions and China.
COMMON LAW JURISDICTIONS
The policy rationale for imposing a duty of confidentiality on lawyers is easy to understand: clients would not be willing to share confidential information if they were not confident that their lawyers would protect confidentiality. Similar duties arise on the part of doctors and banks.
Without a duty of confidentiality on the part of lawyers, the right of citizens to have access to confidential legal advice would be compromised. This is of particular importance in the context of legal professional privilege, which refers to the right of a client to prevent the disclosure of legal advice and legal communications, whether during the course of legal proceedings or otherwise, except where privilege is expressly overridden by the law or by a court order (for a discussion about legal professional privilege, see China Business Law Journal, volume 4 issue 9: Privilege).
Legal professional privilege is a subset of the duty of confidentiality, with two important differences. First, unlike the standard duty of confidentiality, privilege is not based on a contractual, equitable or professional duty to clients. Instead, it is based on public policy; namely, the need to ensure that the confidentiality of legal advice is maintained, and to achieve full and frank communication between a lawyer and a client. Because legal privilege depends on confidentiality, it follows that it becomes ineffective if confidentiality is lost.
Second, if confidential information does not constitute privileged information, it enjoys a lower level of protection and must be disclosed in court proceedings and pursuant to the statutory and other legal requirements concerning the disclosure of information.
In common law jurisdictions such as England and Hong Kong, there are several sources of the lawyer’s duty of confidentiality. First, the duty is codified within the professional rules to which lawyers are subject. The professional rules provide that lawyers (including in-house lawyers) and their staff must not disclose confidential information given to them by a client or a third party in respect of a client’s affairs, except where disclosure is required by applicable laws or regulations, where disclosure is made with the client’s consent, and where disclosure is otherwise permitted by the professional rules.
The rules in many jurisdictions recognize that a duty of confidentiality may arise even before a lawyer is instructed by a client, and that it extends to prospective clients as well as actual clients. In addition, the duty of confidentiality continues despite the end of the lawyer’s engagement, and even after the death of the client. For example, under the professional rules in jurisdictions such as England, the content of a will on the death of a client must not be disclosed unless consent has been provided by the executor or personal representative of the deceased client.
Under English law, the two main sources of the lawyer’s duty of confidentiality are contract law and equity. Under contract law, a lawyer acts as an agent of the client and is subject to an implied obligation to maintain the confidentiality of information provided by the client.
Under the principles of equity (for a discussion about equity, see China Business Law Journal, volume 3 issue 5: Law or equity), a duty of confidence arises where confidential information is shared with a person in circumstances in which it would be unfair for that person to disclose the information to others.
According to the law of equity, if the person discloses the information in an unauthorized manner and causes harm, the person who originally provided the information may take an action for breach of confidence. It is this principle that provides the basis for the lawyer’s duty of confidentiality to continue even after the contractual relationship has finished.
It is also said that the duty of confidence arises out of the duty of loyalty that lawyers owe to their clients, and is part of the broader fiduciary duties that are recognized by equity (for a discussion about fiduciary duties, see China Business Law Journal, volume 3 issue 1: Duty or obligation).
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A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at law.asia.