The Overlapping Engagement
You are a licensed customs broker. A long-standing client, Meridian Imports, asks you to file entry summaries for three ocean shipments of consumer electronics arriving next week. During intake you learn that Meridian is simultaneously negotiating to acquire a competitor, Halcyon Traders, whose entries you also handle through a separate account manager. Meridian's CFO says, "Since we may soon be one company, share Halcyon's classification history with us so we can plan." You have signed no conflict waiver with either party. Meridian's account represents roughly 40% of your firm's annual revenue; Halcyon's is about 15%. The three entries are time-sensitive and carry a combined duty estimate near $210,000. Your firm has a written policy that client information is confidential absent written authorization.
1. Identify the competing obligations and determine whether you may share Halcyon's classification history with Meridian.
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Two duties collide: confidentiality owed to Halcyon and loyalty/diligence owed to Meridian. The merger is only a negotiation, not a completed transaction, so Halcyon remains a separate client entitled to confidentiality. Sharing its classification history without written authorization would breach that duty and could disadvantage Halcyon in the negotiation. The correct move is to decline the request, explain that you cannot disclose another client's information, and offer Meridian lawful alternatives: public data, its own records, or Halcyon's consent. Revenue concentration does not override the duty. Document the refusal.
2. Meridian hints it may move all its business elsewhere if you refuse. How should you weigh that pressure, and what steps protect both clients and you?
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Business pressure is not a legal justification for breaching confidentiality. You should not let the threat change the analysis. Protective steps: (1) notify both clients in writing of the potential conflict and seek informed consent or a waiver if appropriate; (2) consider whether representing both through a merger creates an impermissible conflict and whether withdrawal from one engagement is needed; (3) segregate files so account managers cannot inadvertently share data; (4) consult your firm's ethics officer or outside counsel. If consent cannot be obtained, you may need to resign from one engagement rather than serve both while conflicted.
3. What documentation and communication should exist before you file the three time-sensitive entries?
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Before filing, create a written record: the client's instructions, the scope of the engagement, the conflict disclosure, and any consent or refusal. Send Meridian a written response declining the data request and restating confidentiality obligations. Confirm in writing that filing the three entries is independent of the merger discussion. Keep the Halcyon file access-restricted. If the conflict is unresolved, document why proceeding with the filings is still permissible (e.g., the filings do not require using Halcyon's information). Retain records per your firm's retention policy.