Need Asset Protection? Lawyer Up!

An asset protection lawyer is crucial to any successful plan for protecting assets from judgments in California.  The success or failure of an asset protection plan often turns on the client’s motives for establishing the plan and the laws concerning attorney-client privilege may play a key role in determining the outcome of a case.

Confidentiality for Asset Protection Planning

This issue arises in asset protection cases when individuals engage in planning or discussions about protecting assets with a non-attorney, not protected by the attorney-client privilege. In litigation concerning the matter, the non-attorney planner may be subpoenaed to testify under oath concerning all matters and discussions with or about the client.  The testimony of the non-attorney, together with records, communications, emails, messages, written notes, and other documents must be provided as required by law. Judges enforce testimony and the production of records with stiff fines and jail time for contempt of court.  Regardless of the quality of the documentation in any asset protection plan, subpoenaed testimony and records from a non-attorney document preparer, creates some level of risk that the asset protection plan will fail.

Attorneys Must Keep Client Information Secret

California law (and most other states) prohibit this result. Confidential information between a lawyer and client is privileged and not subject to discovery by a third party. Section 6068 of the Business & Professions Code states: “It is the duty of an attorney….(e) To maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” (Emphasis added.) This duty of secrecy includes all information learned during the professional relationship that the client has requested to be inviolate or is likely to be detrimental to the client if disclosed.  The Rules of the California State Bar reiterate this secrecy obligation and attorneys are subject to legal action and loss of their professional license for violation of this rule.   (See Rule 3-100 Confidential Information of a Client) Narrow exceptions include permitting but not requiring a lawyer to reveal confidential information to the extent that the lawyer reasonably believes the disclosure is necessary to prevent a criminal act that the lawyer reasonably believes is likely to result in death of, or substantial bodily harm to, an individual.

The attorney-client privilege is the broadest guarantee of confidentiality for legal matters relating to asset protection.  Discussions with CPA’s, tax preparers and other non-attorneys produce records and other evidence which is subject to disclosure in depositions and court testimony and will likely impact the outcome of the case.