As an entrepreneur and business owner, you may be concerned about disclosing confidential information to an attorney during the initial consultation, before the attorney is retained. Entrepreneurs intuitively know to protect their idea but many do not know when attorney-client privilege and duties of confidentiality trigger.
Information disclosed before an attorney is hired is confidential, and will remain confidential even if the attorney is not hired. In other words, entrepreneurs can generally disclose confidential information to attorneys they are interviewing during initial consultation and after the attorney has agreed to receive the confidential information.. In other words, unsolicited emails or blurting out of confidential information at a cocktail may not always fall under attorney-client privilege.
Entrepreneurs of technology startups and business owners should view the initial consultation more like an interview, feeling out the attorney and making sure his or her qualifications, expertise and personality match your business needs. Intellectual property is the stock in trade of most technology ventures entrepreneurs or tech startup CEOs will be working closely with their intellectual property lawyer on corporation formation matters, trademark, copyright and patent protection, and receiving consultation on various contracts and transactional matters.
The black letter law on this topic is as follows:
“Information protected by Business and Professions Code section 6068(e) is not concerned only with information that a lawyer might learn after a lawyer-client relationship has been established. Information that a lawyer acquires about a client before the relationship is established, but which is relevant to the matter for which the lawyer is retained, is protected under the duty regardless of its source. The duty also applies to information a lawyer acquires during a lawyer-client consultation, whether from the client or the client’s representative, even if a lawyer-client relationship does not result from the consultation. See Rule 1.18. Thus, a lawyer may not reveal information protected by Business and Professions Code section 6068(e) except with the consent of the client or an authorized representative of the client, or as authorized by these Rules or the State. (emphasis added).
Cal. Business & Professions Code, Section 6068
State Bar Rules of Professional Conduct, Rule 3-100
EXCEPTIONS TO ATTORNEY-CLIENT CONFIDENTIALITY FOR TECHNOLOGY STARTUPS
Under California rules of professional conduct governing attorney-client confidentiality, an attorney may, but is not required to, reveal confidential information of a client, but if and only if the attorney reasonably believes the disclosure is necessary to prevent a criminal act that the member reasonably believes is likely to result in death of, or substantial bodily harm to, an individual. As you can imagine this exception almost never triggers in the context of business law, intellectual property discussions, or topics covering protection of trademarks, copyrights, patents or competitive barrier strategy in a business setting. (Rules of Professional Conduct 3-100).
WILL A LAWYER SIGN A CONFIDENTIALITY AGREEMENT BEFORE AN INITIAL CONSULTATION?
Generally no. In most cases, an attorney’s fiduciary duties of confidentiality and loyalty are far greater restraints on disclosure of client’s confidential information than any contract, written confidentiality agreement, or NDA (non-disclosure agreement). Intellectual property lawyers, like other attorneys, are governed by the State Bar Rules of Ethics which specifically speak to protection of a client’s confidential information, even if no attorney-client relationship forms.
As strange as it may sound to some, trust your lawyer. That is not to say one should not completely vet an attorney before hiring or disclosing sensitive business information, including vetting on ethical issues and State Bar disciplinary matters (you can search for California attorneys by name or bar number at www.calbar.ca.gov).
I generally advise clients to be 100% candid with their attorney on legal and business affairs in a technology venture or related startup, and I hold my fiduciary duties of confidentiality and attorney-client privilege with the highest regard, during the initial consultation.
As an attorney of a technology startup developing a social media platform, mobile application, or other innovation in various sectors of the market, I earn my client’s trust, and typically learn vital details of product development specifications, marketing strategy, intellectual property, and competitive barrier strengths (and vulnerabilities). Without this information, I can’t do my job effectively.
Author: David N. Sharifi, Esq. is a Los Angeles based intellectual property attorney and technology startup consultant with focuses in entertainment law, emerging technologies, trademark protection, and “the internet of things”. David was recognized as one of the Top 30 Most Influential Attorneys in Digital Media and E-Commerce Law by the Los Angeles Business Journal in 2014. Office: Ph: 310-751-0181; firstname.lastname@example.org.
Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. All trademarks are the property of L.A. Tech & Media Law Firm or their respective owners. Copyright 2015. All rights reserved.