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New York’s legal ethics body has issued a significant advisory opinion cautioning attorneys against filing qui tam False Claims Act lawsuits against former clients, marking an important development in legal ethics jurisprudence.
The ethics guidance, released yesterday, specifically addresses the ethical implications of attorneys acting as relators—individuals who bring lawsuits on behalf of the government—in cases targeting their former clients. According to the opinion, such actions would generally constitute an ethical violation in most circumstances.
At the heart of the advisory is the concern that attorneys might improperly leverage confidential information obtained during a professional relationship for personal gain in subsequent litigation. The ethics committee emphasized that attorneys have a continuing duty of loyalty to former clients that extends beyond the termination of representation.
“Using information gained during representation to later bring claims against former clients represents a serious breach of professional ethics,” the opinion states. “The attorney-client relationship is built on trust and confidentiality, which must be protected even after representation ends.”
The False Claims Act, originally enacted during the Civil War era and significantly amended in 1986, allows private individuals to file lawsuits alleging fraud against government programs on behalf of the government. These “whistleblowers,” or relators, can receive between 15% and 30% of any recovery, creating potentially significant financial incentives.
Legal ethics experts note that this guidance addresses a growing area of concern in qui tam litigation. In recent years, there has been an uptick in attorneys serving as relators in False Claims Act cases, particularly in healthcare and defense contracting sectors, where specialized knowledge of regulatory compliance is valuable.
“This opinion provides much-needed clarity in an area where the ethical boundaries have sometimes been blurred,” said Elizabeth Johnson, professor of legal ethics at Columbia Law School. “Attorneys who possess insider information about potential fraud face complex ethical considerations that extend beyond ordinary whistleblower scenarios.”
The opinion does acknowledge limited exceptions where such representation might be permissible, such as when the information used is entirely in the public domain or when specific client consent has been properly obtained. However, these exceptions are narrowly construed, reflecting the strong presumption against such actions.
For healthcare and government contractors—industries frequently targeted by False Claims Act litigation—the guidance provides some measure of reassurance that their legal communications remain protected from being weaponized in later proceedings by former counsel.
Defense attorneys specializing in False Claims Act litigation have welcomed the guidance. “Companies share sensitive compliance information with their attorneys with the understanding that this disclosure won’t later be used against them,” noted Richard Martinez, a partner at Wilson & Hancock specializing in government contracts litigation. “This opinion reinforces those expectations.”
The advisory comes amid record-setting False Claims Act recoveries, with the Department of Justice securing over $5.6 billion in settlements and judgments in the last fiscal year alone. Whistleblower-initiated cases accounted for approximately 75% of those recoveries.
The opinion also addresses the potential conflicts between attorney-client privilege and public policy interests in exposing fraud against government programs. While acknowledging the importance of combating fraud, the ethics committee ultimately determined that the fundamental principles of client confidentiality and loyalty must take precedence for members of the bar.
Legal ethics committees in several other states, including California, Texas, and Illinois, are reportedly considering similar guidance, potentially creating a nationwide consensus on this ethical question.
Attorneys who violate these ethical guidelines could face professional discipline, including reprimands, suspension, or even disbarment in severe cases, depending on the jurisdiction and specific circumstances.
The full ethics opinion provides detailed analysis of the applicable Rules of Professional Conduct, particularly those concerning confidentiality, conflicts of interest, and duties to former clients, offering a roadmap for attorneys navigating these complex ethical waters.
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8 Comments
The ethics guidance provides much-needed clarity on this issue. It’s a strong statement that the legal profession values integrity and confidentiality over short-term financial incentives.
This ruling upholds the core principles of the attorney-client relationship. Attorneys must resist the temptation to misuse confidential information, even if it means forgoing a potential whistleblower lawsuit.
This is an important ruling by the NY Bar Association. Attorneys must uphold the duty of loyalty to former clients, even after representation ends. Using confidential info for personal gain through litigation is unethical.
This is a complex issue, but the Bar Association’s stance makes sense. Attorneys should not be able to exploit privileged information, even if it could lead to a lucrative False Claims Act lawsuit.
The ethics guidance highlights the delicate balance between an attorney’s obligations to both current and former clients. Protecting client confidentiality is paramount, even if it means forgoing potential legal action.
Agreed. The attorney-client relationship is built on trust, which must be preserved. This ruling reinforces the high ethical standards expected of the legal profession.
While the potential for financial gain through whistleblower lawsuits is understandable, the ethical considerations outlined here seem to take precedence. Attorneys must put their former clients’ interests first.
Exactly. The duty of loyalty extends beyond the end of representation. Attorneys cannot simply cast that aside for personal benefit, no matter how tempting the opportunity.