Concept
Elements of a Violation
Use of client information to the client's disadvantage (Rule 1.8(b))
Elements of a Violation
Rule 1.8(b) provides that a lawyer shall not use information relating to representation of a client to the client’s disadvantage unless the client gives informed consent, except as the Rules permit or require.1 Three elements follow from that one sentence. The lawyer must have used information relating to the representation, the use must have left the client at a disadvantage, and neither informed consent nor an exception elsewhere in the Rules may take the conduct outside the prohibition. A fact pattern that fails any one of the three does not violate the rule, so a complete answer establishes each element and does not stop at the first questionable thing the lawyer did with the file.
Each element screens out a different kind of conduct. The information element confines the rule to facts that came out of the client’s matter. The use element ties liability to what the lawyer does, so the unavoidable fact of knowing a client’s affairs is not itself a violation. The disadvantage element ties the prohibition to injury, so a lawyer who relies on what a client revealed and leaves the client no worse off is outside it. Informed consent and the exceptions in other Rules operate only on a prohibition these three elements have already triggered, and each receives its own section below.
Information Relating to the Representation
The rule protects “information relating to representation of a client,”2 the same phrase Rule 1.6(a) uses to define confidential information.3 One definition therefore governs both duties: confidentiality bars revealing the information, and Rule 1.8(b) bars using it against the client.
That category reaches well beyond the attorney-client privilege and the work-product doctrine. It covers information the lawyer learned from sources other than the client, observations and facts that are not “communications” for privilege purposes, and documents prepared in the ordinary course of business, which work-product protection would not reach.4 The comments to Rule 1.6 add that the confidentiality label attaches irrespective of the source of the information, irrespective of whether the client asked for privacy, and irrespective of whether disseminating the information would harm the client.5 A lawyer therefore cannot test a fact against the privilege rules, find it unprivileged, and treat it as free to use. The only question is whether the fact relates to the representation.
That scene settles only the first element. Whether the lawyer may act on the plant news, say by buying nearby land before the client’s position is secure, depends on the use and disadvantage elements below. Consent and the exceptions in other Rules do not shrink the category; they come later, as ways out of a prohibition the category has already triggered.
Older materials describe the category in narrower terms. Under former Disciplinary Rule 4-101(A), protection extended only to information the client asked to be held inviolate or that would be embarrassing or likely to be detrimental if revealed, and Rule 1.6(a) sets a more forceful presumption in favor of confidentiality.6 The Model Code’s vocabulary of “confidences” and “secrets” survives in several states, including New York and the District of Columbia, and it appears in older cases; in practice the two formulations are unlikely to differ much.7 A problem that uses those terms is therefore not testing a different rule.
The phrase “relating to the representation” reaches everything the lawyer learns about the client that has even a tangential connection to the objectives of the representation.8 A connection that loose still counts, so the inquiry looks to the information’s tie to the matter and does not ask how sensitive it is. Knowledge that predates the matter and owes nothing to it has no such tie.
The two lawyers differ in where their information came from. The first learned of the plant through the client’s matter; the second held the highway pattern before the matter began. The second lawyer gains no license over the client’s own facts, though. If she learns the client’s parcel locations or plans, those details stay protected, and she may use her general knowledge only without drawing on them.
Use of the Information
Rule 1.8(b) turns on a verb: a lawyer shall not use the information to the client’s disadvantage.10 Use is broader than disclosure. A rule limited to disclosure would let a lawyer keep every secret and still profit from it by buying the adjacent parcel, bidding against the client, or trading on the client’s plan. A lawyer can therefore violate Rule 1.8(b) without telling anyone anything.
The clearest use is acting on the information for the lawyer or for another client. A lawyer who has drafted a client’s purchase offer cannot use that information to submit a better offer on the drafter’s or someone else’s behalf.11 Nothing is revealed: the competing offer reaches the seller from a lawyer who has told nobody about the first client’s file. Yet the lawyer could write the higher number only because of the representation, and the client’s own bid has become the means of beating it. That case shows why the adverse-use prohibition must stand beside the duty not to disclose.
Use also covers acting for a third person’s benefit, and the lawyer need not gain anything personally. Suppose the lawyer for Company A tips Investor about A’s takeover plans so that Investor can buy stock in Company B and profit. Apart from any question of federal insider-trading law, that tip violates the duty the lawyer owes Company A under Rule 1.8(b).12 The drafter above profits personally, while the tipper profits only Investor, and the rule reaches both. A rule confined to the lawyer’s own gain would let a lawyer hand the same advantage to a friend, a relative, or a favored client.
Securities law frames such conduct through a different test. After setbacks in Chiarella and Dirks, the SEC advanced the misappropriation theory under Rule 10b-5, and it did not confine the theory to tender offers, although many misappropriation decisions involve takeovers.13 In United States v. O'Hagan, a lawyer’s trading on confidential client information raised the question whether he violated § 10(b). Whether such trading is securities fraud depends on federal law, and the ethics question stands apart: a lawyer who trades or tips on client information may violate Rule 1.8(b) whether or not the securities laws apply.14 Whether the trading also left the client worse off is the separate disadvantage element, taken up next.
Where does knowing become using? A problem that tests the line will give the lawyer the information and vary only what she does with it.
Had the second client wanted the same building, and had the lawyer set that bid just above $2.1 million, the identical knowledge would have become the basis for her conduct and the use element would be met. The difference lies entirely in whether the information shaped an action. A lawyer cannot unlearn what a client has told her, so the rule attaches to conduct that depends on the information: buying, bidding, trading, or tipping. An exam answer should name the specific act that put the information to work, because a lawyer who merely holds it has not yet violated this element.
Disadvantage to the Client
The third element looks at effect. Rule 1.8(b) bars use “to the disadvantage of the client,”16 so a use that leaves the client no worse off falls outside the rule even when the lawyer used protected information. On its face the text prohibits adverse use and does not prohibit every use that benefits the lawyer. In practice that distinction rarely helps a lawyer, because a gain from a client’s information usually has a counterpart on the client’s side: an opportunity the client would otherwise have had, or a higher cost or added risk for the client’s own plan. When a lawyer profits from client information, look for the client’s matching loss or exposure and argue the disadvantage element on that footing. A lawyer who wants to keep the gain needs the client’s informed consent, which is taken up below.
The client lost nothing she had planned to acquire, and the element is still met. The lawyer’s profit exists only because of the client’s development, and the purchase exposes that development to rising costs and competition. A use that enlarges the client’s exposure leaves the client at a disadvantage before any harm materializes, so a completed loss is not required.
A lawyer charged with adverse use often argues that the use did not cause the harm, and Dunagan shows how little that argument accomplishes. In Florida Bar v. Dunagan, Dunagan argued that the information in his letter addressed only who had the right to sole possession of a business’s premises, and that his former client, Paula Leucht, was arrested for disorderly conduct, not trespassing, so the letters did not cause her arrest.17 The court disagreed. The evidence supported the referee’s finding that the letters contributed, at least to some degree, to her arrest and forcible removal from the premises.18 The use must contribute to the client’s disadvantage; it need not be the sole cause. A sole-cause test would excuse nearly every lawyer, because harm to a client usually passes through other decision makers such as police, courts, and counterparties. Dunagan applied Florida’s former-client rule, 4-1.9(b), which uses the parallel formula of using information relating to the representation of a former client to the former client’s disadvantage.19
The element also has a negative pole, because a lawyer can use client information and leave the client better off.
The information and use elements are met in that scene, and the disadvantage element is not. The client gave the lawyer the bottom-line price so that the lawyer could negotiate with it, so nothing in the use turned the information against its owner. Compare the lawyer who bought the neighboring parcel: both acted on client information, and only the one whose action exposed the client to cost or risk crossed the line.
The same element sits at the center of a critique of O'Hagan, where the question was whether trading on confidential client information violated § 10(b). The critique asks whether a lawyer’s use of confidential client information for insider-trading purposes always operates to the client’s disadvantage. If it does not, and if the Model Rule accurately states the lawyer’s fiduciary obligation, then O’Hagan did not violate § 10(b); the critique adds that the majority never inquired into the nature of O’Hagan’s duties, if any, to Grand Met.20 The lesson for an exam is that disadvantage is a real element that does real work. Identify the specific way a trade or tip exposes the client, such as added cost or competition for the target’s shares, and do not assume it.