NY Proposes Amendments that Could Provide Guidance on Confidentiality Issues Regarding Law Firm Mergers and Lateral Moves

The New York Bar Association’s rule-drafting committee could possibly provide additional guidance on confidentiality issues. On Dec 23, the N.Y. Bar’s Committee on Standards of Attorney Conduct (“COSAC”) issued drafts for amendments to the New York Rules of Professional Conduct in response to the changes made to the Model Rules of Professional Conduct by the ABA. Regarding confidentiality, COSAC did not recommend the new exception in Model Rule 1.6(b)(7), which permits attorneys to disclose client information in order to detect and resolve conflicts of interest in lateral moves or law firm mergers. However, COSAC concluded that New York attorneys needed additional guidance about restrictions on permissible disclosures during lateral moves or law firm mergers.

There are at least three significant differences between the ABA comments of Model Rule 1.6(b)(7) and the N.Y. proposals. First, the N.Y. Committee’s comments address the duty of confidentiality in the context of lateral moves and mergers, rather than addressing the scope of the exception of confidentiality. Second, the report suggests good practices for when disclosures are permitted in the lateral moves and mergers context under the confidentiality rule. Third, the proposed updates offer guidance on “disclosures of information needed to enable lawyers and law firms to assess the financial and strategic concerns relevant to going forward with a prospective lateral hire or a law firm merger.”

On January 30, the report will be presented to the state bar House of Delegates and voting is expected to take place on March 28.

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