The advent of cell phones, facsimile (fax) machines and computer E-mail have increased our ability to communicate in the business realm. However, the trade-off for convenience of these methods is a decrease in our ability to maintain a strict level of privacy in our communications.

The possible loss of privacy can have important ramifications for businesses. Such disclosure can result in a breach of the business- client relationship, damage the business by revealing trade secrets or other confidential information or endanger individual jobs.

A Loss of Privacy

Individuals using cell phones may not have a justifiable expectation of privacy. There is no guarantee that conversations are not being picked up, whether intentionally or inadvertently, by another party. While most conversations do not warrant a great deal of privacy, users may forget that this type of communication can be intercepted.

Since fax machines use regular telephone lines for transmission, the main privacy issue arises when faxes are mistakenly directed to the wrong number. Many users do not carefully examine the transmission sheet that confirms the fax number used. Unless the recipient is expecting the fax, it is possible that the mistake may not be immediately discovered.

Finally, with the advent of E-mail, many users assume that the message is directed only to the person that appears on their screen. However, most systems have a back-up program that stores these E-mail messages, even after they have been deleted by the original user. These messages can later be accessed by a systems operator.

The Duty To Maintain Confidentiality

Many businesses, such as banks, accounting firms, law firms and medical providers, have a duty to maintain a certain level of confidentiality regarding their client’s dealings. A breach of this duty can occur when a cell phone is used for an important, otherwise confidential conversation that is overheard. A breach may also occur where a confidential fax is misdirected to an interested party that should not have access to the information. If the client is damaged by the disclosure and the business is responsible for the breach, it could, at the least, lose a client and could possibly be held responsible for any monetary damage that occurred as a result of the disclosure. Many times, however, it is the client who utilized the cell phone or fax. The client should be told that there is no guarantee of the privacy when these mediums are used to communicate.

This issue has come up in the litigation context many times. In one particular case, a temporary office worker inadvertently faxed a confidential document containing a consultant’s advice regarding jury selection and profiles of the individual jurors to the opposing attorney, instead of the client. The firm was notified of the errant fax, and the Judge dismissed the panel. However, the client was prejudiced by the time and effort that was initially spent in gathering the information. Further, the ethical responsibility of notifying the sending party when a confidential fax has been misdirected is not always clear. In this case, while inadvertent, the duty of confidentiality was breached. The use of a fax cover sheet was one reason the opposing attorney felt obligated to notify the court about the errant fax.

Protection of Business Secrets

Some companies, such as manufacturers or businesses that sell a product, have "trade secrets" that are assets of the company. A "trade secret" is defined as information that has economic value. Examples of this would be manufacturing processes or a client list containing information that is not otherwise readily ascertainable by competitors. In order to maintain its "secret" status, however, the company must take strict precautions to maintain the utmost privacy. Data that loses its secrecy through mishandling and carelessness will no longer qualify as a "trade secret" and can be actively used by competitors. Extreme caution must be taken when this type of information is transmitted via fax, E-mail or over a cell phone. Depending upon the importance of the information, hand delivery or an in-person meeting are advisable.

Individual Privacy Concerns

As computers become a vital part of the workforce, more inter and intra-office communication is handled via E-mail. However, individual employees do not always understand that the E-mail transmission is not a private communication. Employees have been fired due to his improper use of communication systems. Employee argue that the company invades privacy by reviewing private E-mail. Courts usually hold that an employee has no expectation of privacy in this type of transmission, that the computer is a business tool and the employer had the right to access the information. Employees, and employers, must be aware of these privacy issues and potential for review and misdirection of this type of communication.

Methods To Safeguard Your Privacy

The best way to maintain the privacy or secrecy of certain communications is to transmit them face to face or by hand delivery with clear instructions regarding the recipient and that the information is "confidential". Conversations over the cell phone may take place to a certain extent, with the response that the conversation will be concluded when a secure line is available. E- mail should never be used to transmit confidential information.

Finally, fax cover sheets containing a confidentiality clause should always be used, even for everyday faxes. This shows the company’s commitment to privacy protection, and can be a determining factor when a judge is ruling on whether the opposing party can use otherwise confidential information from a misdirected fax, or whether sufficient measures have been taken to protect a "trade secret".

With more companies going online to communicate outside of their firm, issues regarding protection from unauthorized entry into computer systems, and the privacy of certain transmissions must be considered. When the means of communication endangers the company or individual interests, the detriment may outweigh the benefit of utilizing the new technology.

Conclusion

Obtaining competent professional advice when forming a new business is a vital element for assuring long-term success. Whether obtaining financial advice from a CPA or obtaining insurance from a knowledgeable agent, qualified advisors can add value. Similarly, a small amount of time and money invested wisely to assure that the new business is operating legally will continue to produce dividends for the life of the business.

©Copyright 2003, Landerholm, Memovich, Lansverk & Whitesides, P.S.