May 01

Confidentiality Shouldn’t End When the Lawyer Walks Through the Nonprofit’s Doors

Yesterday, the Association of Corporate Counsel (“ACC”) filed an amicus curiae brief requesting that the Pennsylvania Supreme Court uphold the Commonwealth Court’s decision that there is no fiduciary duty for attorneys of nonprofit corporations to report suspected theft or wrongdoing to law enforcement.

The details of the underlying case are murky (the current caption of the case is “Redacted vs. Redacted”) but it arose over allegations that an unnamed nonprofit illegally diverted resources to private entities and that non-profit’s attorney (also not identified) believed that she had a fiduciary duty to report the suspected illegal activities to the Attorney General. But the Commonwealth Court disagreed and held that the public’s interest had sufficient protections from the parens patriae power of the state. Parens patriae refers to “the ancient powers of guardianship over persons under disability and of protectorship of the public interest which originally were held by the Crown of England as the ‘father of the country,’ and which as part of the common law devolved upon the states and federal government.” In re Pruner’s Estate, 136 A.2d 107, 109 (1957) (internal citations omitted).

The ACC agreed with the lower court, and argued that “[p]ermitting attorneys for non-profit organizations – whether organized for charitable or other public purposes – to disclose information about their clients at will would violate the fundamental duty of loyalty owed by counsel, thereby eroding the attorney-client relationship that is integral to the administration of justice in our society.” We agree, and hope the Pennsylvania Supreme Court affirms this decision.



Leave a Reply