I SUSPECT THAT MOST lawyers who have children have, at one time or another, been asked this question: "If your client tells you that he’s done something bad, why shouldn’t you report him to the police?"

That question, whether asked by a child or by an adult, and the answer it seems to beg, have a childlike simplicity. Lawyers are servants of the justice system, protectors of the rule of law, so why shouldn’t they bring "bad people" to justice whenever the opportunity to do so presents itself? Why should lawyers, of all people, let their clients get away with murder (or even some lesser offense)?

But I suspect that you, as I, would quickly answer, "No, I shouldn’t report him to the police." Perhaps you would explain that the rules of professional ethics to which lawyers are subject preclude you from going to the police. Or, if your child is especially patient and precocious, you would go on to explain the policy foundations for the longstanding professional duty to maintain client confidences, and for the attorney-client privilege, which supports that duty.

You might tell your child, or other questioner, that if your client had reason to believe that you would "report him to the police," then he never would have confided in you in the first place. And, had he never confided in you, then not only would you have learned nothing "bad" to report, you would have had no opportunity either to give him sound legal advice or to counsel him to "straighten up" and, henceforth, do the right thing.

Easier to Appreciate than Explain

I must confess that, for me, the societal value of protection of client confidences, and of promotion of the relationship of trust and confidence between lawyer and client that derives from it, is much easier to appreciate in practice than to explain to others—children or adults—who do not practice law.

I am a corporate lawyer, and I value as an essential tool of my trade the ability to establish a relationship of trust and confidence with those who are responsible for governing business enterprises that I represent. My best days, the days on which I feel that I have well and faithfully served both my clients and the public good, are when I have been able to persuade my corporate clients to "do the right thing," whether through knowledge of the law, through sweet reason, through moral suasion, or just through infusing them with a healthy fear of the consequences of doing the wrong thing.

My ideal for a corporate lawyer is one who serves as the "conscience of the enterprise," and I suspect that those of you who practice in other areas of the law feel your greatest satisfaction when you, too, have served as a "conscience" for your clients. The role of "conscience," I believe, is totally dependent upon that relationship of trust and confidence.

A New Role for Lawyers?

I have been deeply concerned by recent developments that would impose a different role on corporate lawyers, and other developments that would impose that different role on lawyers practicing in other areas.

One recent development is the adoption by the Securities and Exchange Commission (SEC) of new federal ethics rules applicable to lawyers "appearing and practicing before the Commission in any way in the representation of [public companies]." (Note that the SEC’s rather expansive reading of this phrase picks up many lawyers who would never characterize themselves as securities lawyers.) These new rules are being adopted under the authority of Section 307 of the Sarbanes-Oxley Act, the legislation enacted in the wake of the Enron and other corporate scandals.

Section 307 requires the SEC to issue rules of professional conduct "including a rule" requiring what is called "up-the-ladder" reporting. In other words, a lawyer who becomes aware of certain material misconduct such as securities law violations and breaches of fiduciary duty within the corporate organization is required to report it "up the ladder" to the corporation’s general counsel or CEO and, if they do not "appropriately respond," then to the audit committee or other committee of independent directors, or to the full board of directors.

This requirement is generally consistent with state ethics rules, which recognize that a lawyer’s duty to a corporation is to the organization itself, acting through its duly authorized constituents, and not to the constituents (officers, directors, employees and shareholders) in their own right. Consequently, reporting misconduct "up-the-ladder" within the client organization until it is dealt with appropriately - if necessary, even to the organization’s highest authority (normally, its board of directors) - not only makes sense, but reflects what I believe to be the practice among corporate lawyers and the requirements of Rule 1.13.

But, in its proposed rules, the SEC went much further. (Is it surprising to anyone that a government agency given broad statutory authority to regulate would broadly exercise that authority?) Even though not required to do so, it proposed a rule to the effect that, if the lawyer is not satisfied that the board of directors has appropriately dealt with the matter, the lawyer is obliged to withdraw from the representation and then to notify the SEC that the lawyer has withdrawn for "professional reasons."

This is referred to as "noisy withdrawal." It is, of course, tantamount to a requirement that if the lawyer learns from the client that it may have "done something bad," and the lawyer isn’t satisfied that the client has dealt with it appropriately (even if the client in good faith disagrees with the lawyer), the lawyer must report it to the "police."

The Debate Over "Noisy Withdrawal"

Not surprisingly, the proposal drew fire from the securities bar, and from the practicing bar in general. It found its support mainly from nonlawyers who expressed their belief that lawyers should assume the role of policing Corporate America, as well as support from some law professors who have long sought a "policing" role for lawyers.

In the wake of the corporate scandals of 2002, it is only natural that lawyer conduct should be in the spotlight of the reform movement - although the SEC’s own recent study of its enforcement activities over the 1998-2001 period showed that, of 1,596 charges against securities professionals for aiding and abetting securities law violations, only 48 involved lawyers and almost all involved activities that were themselves primary violations. In other words, there’s not much evidence that lawyers, acting as lawyers and not as principals are out there helping their clients violate securities laws.

Not the First Time, Nor the Last

This is not the first time, nor do I expect it to be the last time, that well-meaning people have sought to recruit lawyers to serve in the role of policeman with respect to their clients. Whenever the Model Rules of Professional Conduct, or the actual rules in each jurisdiction, are reconsidered, there is always an effort afoot to limit the circumstances when a lawyer is precluded from disclosing confidential information evidencing client misconduct, and to expand the circumstances in which "reporting it to the police" is not only permitted but required.

Family law specialists are aware of repeated legislative efforts to require report ing of even the most circumstantial evidence of child abuse by their clients. There is, I think, a childlike simplicity in the argument that lawyers are in the best position to see that wrongdoers are brought to justice because wrongdoers tend to confess their wrongdoings to their lawyers. This is also not the only current effort to impose new federal regulation on the attorney-client relationship. I also see it in the FTC’s efforts to define lawyers as "financial institutions" and their clients as "customers" for purposes of the Gramm-Leach-Bliley Act, in similar interpretations of the USA PATRIOT Act, in application of the new HIPAA (Health Insurance Portability and Accountability Act of 1996) health care privacy procedures to lawyers and in proposed provisions of the pending bankruptcy reform legislation that would require bankruptcy lawyers to become auditors for their client’s finances and to advertise themselves as "debt relief agencies."

The Choice

There is, of course, room for a vigorous and informed public policy debate over whether lawyers should be in the business of policing their client’s conduct and bringing them to justice. But I think the burden of persuasion in that debate is on those who would tamper with the time-honored relationship of trust and confidence between lawyer and client that enables the lawyer to serve in the role of conscience to his or her clients - a role that, in my opinion, serves society well.

I just don’t think that a lawyer - at least a lawyer acting as counselor and adviser - can be both conscience and policeman. Ultimately, society must choose between the two roles.

My view is that this choice is being made now, in little increments, affecting some of us today and some of us tomorrow. I believe that it is vitally important that we lawyers, especially practicing lawyers who spend every day within that complex relationship between lawyer and client, give careful thought to the big issues involved in that relationship.

And, once we’ve given it careful thought, we should let other people know what we think about our proper role - whether those people be the SEC, our legislators, our neighbors, or even our own children.

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