Asset Protection Lawyer: Duty of Secrecy

When you establish your plan, your asset protection lawyer will generally request details about your financial circumstances.    You will generally be asked by your attorney to describe or document your specific assets and liabilities. This is a prudent approach because asset protection law requires that attorneys make a reasonable determination of a client’s solvency and motives to assess the planning options which are legally permitted and which are most appropriate for the client.

Family circumstances, business plans, tax considerations, cash flow needs, estate planning and financial obligations are also key ingredients of sound asset protection planning. In short, designing a comprehensive plan involves discussions about some of your most private personal and financial information.  The asset protection plan which is designed for you depends largely on the type and amount of assets you own as well as the current and potential liabilities or risks you face.

Protecting Information in Litigation

Since asset protection planning is often intended to protect assets in the event of future litigation, an important consideration is what information and evidence can be used against you in a lawsuit.  In litigation, like most adversarial contests, the advantage is with the side that controls information most effectively.  Although rules of discovery encourage a free flow of information between the parties, in the real world that’s not usually how the game is played and it’s rare when both sides have equal access to the all the relevant facts. This is particularly true in cases turning on what one party knew or thought when an alleged wrong was committed. The reason why the defendant breached a contract or injured another-what the defendant believed- is often crucial to the determination of whether he or she was acting reasonably or with malicious intent. These state of mind cases arise in both criminal and civil matters. A homicide based on the belief that one’s life is endangered is a recognized legal defense to murder. It’s the thought that counts.

Attorney’s Duty of Secrecy

In asset protection cases or any other litigation, each party  attempts to control and limit the information which he is required to provide. Although witnesses and documents can be subpoenaed as evidence, communications between you and your attorney and work product produced by your attorney are privileged and cannot be disclosed or revealed without your consent. This is well known as the attorney–client privilege and it is a bedrock principle of the law (California Evidence Code Sections 940 et seq.) California law provides that it is the duty of an attorney to preserve the secrets of his or her client. (Business and Professions Code Section 6068 (e)). Some exceptions are provided in cases where a client is planning a criminal act or a fraud but in most circumstances all communications are privileged.

Testimony by Non- Attorneys

This  exclusion is applied to non-attorneys in only limited circumstances. Doctor-patient privileges cover certain matters as do therapist-patient, spousal and clergy relationships. Other non-attorneys such as financial planners and tax advisors can be required to produce testimony and documents concerning your personal and financial information. Every communication between you and a non-lawyer is subject to subpoena and testimony.  This amounts to an unlimited treasure trove of discovery for a legal adversary.

Since the outcome of litigation most often depends on the information available to each side, it’s clear that limiting the supply, to the legal extent possible, will enhance the chance of success of any litigation defendant.  In asset protection cases, taking full advantage of the attorney-client privilege maximizes control over evidence disclosure and increases the chances of a favorable result.