What are the disclosure obligations of a non-profit legal services organization to its donors?
The ABC Agency is a nonprofit organization that provides legal services to low-income individuals and employs attorneys to provide those services. ABC is funded by donations from other organizations, including a large annual contribution from the XYZ Foundation. XYZ monitors the use of its donations by the organizations receiving them and requires its recipients to provide information regarding the use of these funds. It also conducts onsite visits of its donation recipients.
During an onsite visit of ABC, XYZ asked to see randomly selected client files to confirm that donated funds are being properly utilized. ABC’s attorneys objected based on attorney-client privilege and their confidentiality obligations.
Both sides are interested in a compromise that honors their respective obligations. According to a recent Ethics Opinion, which of the following is accurate?
A. ABC cannot provide any client information despite the terms of the grant.
B. ABC can provide general information if steps have been taken to preserve the confidentiality of the identity of individual clients.
C. ABC can provide access to client files if the client agrees in advance, after consultation, to a standard provision in the client agreement that information can be disclosed to funders.
D. ABC can provide access to client files if the client consents after the request has been made and after consultation with counsel.
E. ABC can provide access to client files if that access was required in the grant restrictions, and the grantor agrees in advance, in writing, to keep the information confidential.
F. B, C or D
G. B or D
Rule 1.05 of the Texas Disciplinary Rules of Professional Conduct states:
(a) Confidential information includes both privileged information and unprivileged client information . . . Unprivileged client information means all information relating to a client or furnished by the client, other than privileged information, acquired by the lawyer during the course of or by reason of the representation of the client.
(b) Except as permitted by paragraphs (c) and (d), or as required by paragraphs (e), and (f), a lawyer shall not knowingly:
(1) Reveal confidential information of a client or a former client to:
(i) a person that the client has instructed is not to receive the information; or
(ii) anyone else, other than the client, the clients representatives, or the members, associates, or employees of the lawyers law firm.
These obligations pertain to all lawyers, regardless of the entity in which they practice. So what happens when a legal non-profit solicits grants from organizations that contractually require disclosure of confidential client information to perform their due diligence?
In Ethics Opinion 695 (2022) the Professional Ethics Committee for the State Bar of Texas was asked whether an organization like ABC could solve this issue by having each client agree, in advance and after consultation during the intake process, to allow that organization to reveal confidential information to the funding entity. The Opinion basically found that the proper solution was to structure the disclosure of information such that the monitoring responsibilities of the grantor and the confidentiality obligations of the legal services grantee could both be honored:
Legal services agencies may disclose general information to funding organizations and monitors if the information does not reveal the identity of clients or other information that might harm or disadvantage a client if disclosed. For example, an agency may provide basic eligibility information in an anonymous format (e.g., linked to unique client identification codes rather than client names), on an aggregated basis, or by some other method that does not disclose client identity or associate a specific client with specific eligibility information.
The Opinion cites the Professional Ethics Committee for the State Bar of Michigan’s analysis in considering the same issue in Mich. Ethics Opinion RI-210 (1994):
. . . The tension here is then between the governing bodies [’] “need to know” and the lawyer's duty of confidentiality. An appropriate balance between these competing concerns is obtained by granting access to certain kinds of basic statistical data concerning the operations of the program. For example, statistical data may be compiled regarding matters such as numbers of clients served, numbers of cases processed, kinds of cases processed, time spent on cases, etc. In addition, limited information regarding the handling of specific matters may be disclosed, provided that the client is in no way identified or identifiable from such limited disclosure.
As for whether client consent under Rule 1.05 could ever be effective when given in advance of the client representation, the Opinion is decidedly skeptical:
[a]although the issue of effective consent normally presents a fact question that depends on the circumstances, consent obtained during an intake process is likely ineffective because a lawyer cannot provide meaningful consultation regarding the consequences of consent before knowing the particular facts and legal issues involved in the proposed representation of the client.
However, the Opinion did acknowledge that such information could be disclosed after the request was made by a funding organization and when the client consents after consultation in accordance with Rule 1.05(c)(2).
The correct answer is G.