Can a law firm disclose client names to a bank when pledging its accounts receivable for financing?

Plain-English summary

The committee considered a law firm that wanted to pledge its accounts receivable to obtain bank financing, where the bank insisted on disclosure of the names of the clients whose accounts were being pledged. The committee was of the opinion that RPC 1.6 would impose a burden upon the lawyer to determine that disclosure of the lawyer-client relationship and the status of the client's account receivable were not secrets.

On that basis, the committee was of the opinion that the lawyer would be required to make inquiry of the client before disclosing such information, and to have the client's informed consent to reveal it.

Currency note

This opinion was issued in 1986, before the 2006 revisions to the Washington Rules of Professional Conduct. RPC 1.6 on confidentiality was later renumbered and amended. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a law firm pledge its accounts receivable to a bank if the bank wants the client names?

A: Under this opinion, only after meeting RPC 1.6's requirements. The committee was of the opinion that the lawyer had to determine the lawyer-client relationship and the account status were not secrets, inquire of the client, and obtain the client's informed consent.

Q: What burden did the committee say RPC 1.6 placed on the lawyer?

A: The committee was of the opinion that RPC 1.6 imposed a burden to determine that disclosure of the lawyer-client relationship and the status of the client's account receivable were not secrets.

Q: Could the lawyer disclose the information without asking the client?

A: No. The committee was of the opinion that the lawyer would be required to inquire of the client first and to have the client's informed consent to reveal the information.

Background and rules framework

The opinion applies Washington RPC 1.6 on confidentiality, corresponding to Model Rule 1.6, to a lawyer's disclosure of client names and account status to a bank as part of pledging accounts receivable. The committee treated the lawyer-client relationship and the status of the receivable as potentially protected, requiring the lawyer to confirm they were not secrets and to obtain the client's informed consent before disclosure.

Citations and references

Rules of Professional Conduct:

• Washington RPC 1.6 (confidentiality of information), corresponding to Model Rule 1.6.

See also

• WSBA Ethics Op. 905: a legal services funding contract and client confidences
• WSBA Ethics Op. 1025: a contingent fee in civil forfeiture and confidentiality

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=147

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 1036
Year Issued: 1986
RPC(s): RPC 1.6
Subject: Client confidence or secret; disclosure of client names to bank to obtain financing

The Committee was of the opinion that if a law firm wanted to pledge its accounts receivable to obtain bank financing, and the bank insists upon the disclosure of the names of the clients whose accounts are being pledged, RPC 1.6 would impose a burden upon the lawyer to determine that the disclosure of the lawyer-client relationship and the status of the client's account receivable were not secrets. Therefore the Committee was of the opinion that the lawyer would be required to make inquiry of the client prior to disclosing such information, and have the client's informed consent to reveal such information.