2002 Lane Reports

When Lawyers Need to Reveal Their Clients' Secrets

Tuesday, January 1, 2002
by Marc J. Lane

The American Bar Association's governing body recently met in Chicago and blundered badly. The House of Delegates decisively rejected a proposed ethics rule which would have permitted a lawyer to blow the whistle on a client who plans to use the lawyer's services to perpetrate a fraud.

The 225-to-151 vote killed a provision in a proposed overhaul of the Association's code of professional conduct. And, once the delegates announced their lopsided, but wrongheaded vote, leaders of the reform effort had no choice but to withdraw a companion provision, which would have carved out an important exception to the attorney-client privilege to mitigate a financial loss resulting from a client's fraud.

Everyone agrees that preserving client confidences is indispensable to the fair administration of justice. If a client is afraid to tell his lawyer all he needs to know, the lawyer can't possibly represent his interests as vigorously as he should or mount the most effective defense.

But a client who is out to hurt people forfeits his right to secrecy. And a lawyer should have a right to speak out when he thinks his client is about to commit a crime, lest he become an unwilling accomplice.

Fortunately, the ABA's rules aren't binding on lawyers. Their conduct is regulated by the states. And 41 U.S. jurisdictions, Illinois among them, have already adopted a common-sense fraud exception to the attorney-client privilege. The Illinois rule - - the right rule, I'm persuaded - - lets lawyers here turn their clients in if they believe they're about to commit a crime.

But states are likely to pay deference to the ABA's ethics rules when they enact new laws and issue new rules controlling lawyers' conduct. And since crooks can easily exploit their victims across state lines, one more-or-less uniform standard - - policing all lawyers and protecting all the rest of us - - is really what's needed.

Opponents of the fraud exception talk a good game. They express concern that the whistle might be blown too often because lawyers can misunderstand their clients' intent. They fear that clients won't trust their lawyers as much as they should and might withhold the information lawyers need to do their jobs. And they predict that lawyers might have less opportunity than ever to talk their clients into doing the right thing.

But too much of the House of Delegates' decision was driven by self-interest and self-defense. The ABA sees the ban against disclosing confidential information as a shield which protects lawyers from claims that they should have taken steps to safeguard the public from their clients' fraud. And the ABA isn't eager to impose new duties on lawyers, particularly duties that might open them up to more lawsuits.

But lawyers are public citizens. And their responsibility to the public won't tolerate their standing silent when their talents and judgment are misused to commit fraud. The ABA's commission that drafted the 281-page ethics proposal is considering resubmitting it when the Association meets again next month. Let's hope that it does, and urge the ABA's membership to get behind real ethics reform.


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The Lane Report is a publication of The Law Offices of Marc J. Lane, a Professional Corporation. We attempt to highlight and discuss areas of general interest that may result in planning opportunities. Nothing contained in The Lane Report should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein. Copyright, 2003 by The Law Offices of Marc J. Lane, A Professional Corporation. Reproduction, in whole or in part, is forbidden without prior written permission.

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