Rule 1.8(b) and Its Purpose

Adverse Use of Client Information

Rule 1.8(b) and Its Purpose

Rule 1.8(b) of the Model Rules of Professional Conduct states that a lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent, except as permitted or required by these Rules.¹ The sentence holds one prohibition and two escape routes. The prohibition bars a lawyer from putting what the lawyer learned in a matter to work in a way that leaves the client worse off. The first escape route is the client’s informed consent. The second is the closing clause, which defers to other Rules that permit or require particular uses of information. Later sections treat each route separately. A court opinion that reproduces the rule quotes the same language.²

A reader might expect to find this rule beside Rule 1.6, since it protects the same body of information. The drafters placed it among the conflict rules instead, and the reason lies in where the danger comes from. Conflict rules keep lawyers out of positions where there is a significant risk that they will compromise a duty owed to a client, whether the pressure comes from another client relationship or from the lawyer’s own interests.³ A client’s plans, finances, and weaknesses can be worth money to someone, and the lawyer who holds them is best placed to collect. When the lawyer’s gain is the client’s loss, loyalty is under its heaviest strain, so the temptation to turn the information against the client is a personal-interest conflict as much as a confidentiality problem. The general conflict prohibition pairs the two concerns in the same way. It guarantees the lawyer’s undivided loyalty, and it ensures that confidential information is not disclosed or used against one client to the advantage of another client, a third person, or the lawyer.⁴

The rule also protects the working relationship itself. Counsel can be effective only when the client discloses fully and frankly the private information the representation requires, and the ethics rules bind lawyers not to disclose that information in a manner adverse to clients’ interests so that clients will do so.⁵ A lawyer who was free to exploit what clients reveal would give careful clients a reason to hold back, and the lawyer would then advise on an incomplete picture. The prohibition removes that reason for holding back.

Rule 1.8(b) overlaps two other rules, and the overlap shapes how to answer an exam question. Rule 1.6(a) defines the protected information as all “information relating to the representation of a client.” That reaches well beyond privileged communications: it includes information learned from sources other than the client, observations and facts that are not “communications,” and documents prepared in the ordinary course of business. The lawyer’s duties prohibit both disclosure and adverse use of it.⁶ Rule 1.7(a)(2), for its part, already treats a personal interest that would materially limit the representation as a conflict. Rule 1.8 is not redundant with that general standard, because it reminds lawyers of the situations in which personal-interest conflicts tend to arise and sometimes sets consent or disclosure requirements that differ from the general rule’s.⁷ Adverse use of client information is one of those named situations. A lawyer who turns client information against the client therefore violates Rule 1.8(b) by its own text, and the analysis does not have to be built up from the general material-limitation standard.

The standard illustration involves a lawyer who represents Company A, which is quietly planning to acquire Company B. Company A wants the plan kept secret because news of it would push up Company B’s stock price. The same lawyer also represents Investor, a wealthy individual. If the lawyer tips off Investor so that Investor can buy Company B stock before the bid is announced, the lawyer has used Company A’s information for another person’s gain and has exposed Company A to the very price run-up it feared.⁸ Whatever federal securities law may say about the trade, the tip violates the duty the lawyer owes Company A under Rule 1.8(b). The same facts also reveal information relating to Company A’s representation to someone outside it, which engages the confidentiality duty, so a complete answer discusses Rule 1.6 and Rule 1.8(b) together.

Both scenes involve the same information and the same lawyer, and the rule attaches only to the scene in which the lawyer acts on the information. Knowing a client’s secrets is an unavoidable part of the job and harmless in itself. The contrast also shows what Rule 1.8(b) adds to Rule 1.6. A lawyer who quietly acts on client information without telling anyone has revealed nothing for the confidentiality rule to catch, yet has still used it.

The rest of this chapter takes the rule apart in the order an exam answer would. It covers the elements of a violation, the informed-consent route, the exceptions found in other Rules, the reach of the same prohibition to former and prospective clients, and its imputation to every lawyer in the firm.