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Ethics Corner Article
Dear Ethics Committee:
I recently learned it is very likely my client probably provided the court false and misleading information that is material to the dispute. What are my obligations with respect to these issues? Assuming the matter has been concluded, do I have a duty to correct the record? What are my obligations if the client provides false information related to a transaction as opposed to a litigated matter?
This is the third in a series of corners regarding ethical considerations when withdrawing from representation. The first corner provided an overview of Rule 1.16 and withdrawal for non-payment and/or failure to communicate. The second corner addressed ethical issues that might arise in drafting a motion to withdraw. This corner will address what to consider, and whether withdrawal is permissible or even required, when a lawyer discovers that a client has been lying to them or using their services to perpetuate crime or fraud.
An array of ethical implications may arise for a lawyer who learns that their client has been lying to them depending on the nature and effect of the lie, the nature of the representation, and the stage of representation in which the lawyer discovers the lie. Broadly speaking, a lawyer who discovers that their client has been lying to them may need consider any of the following Rules of Professional Conduct: Rule 1.2 (Scope of Representation); Rule 1.6 (Confidentiality of Information); Rule 1.9 (Duties to Former Clients); Rule 1.16 (Declining or Terminating Representation); Rule 1.18 (Duties to Prospective Clients); Rule 3.3 (Candor Toward the Tribunal); Rule 4.1 (Truthfulness in Statements to Others); and Rule 8.4 (Misconduct).
I. Client Lies Resulting in a Lawyer’s Services Being Used to Perpetrate a Crime or Fraud
Where facts known to a lawyer establish a high probability that a client or prospective client seeks to use the lawyer’s services for criminal or fraudulent activity, the lawyer has a duty to inquire further to avoid advising or assisting such activity. See ABA Formal Opinion 491 (2020). A lawyer is prohibited from engaging or assisting a client in conduct that the lawyer knows is criminal or fraudulent and cannot ignore facts or circumstances that suggest the client intends to use the lawyer’s services for such purposes. See Rule 1.2(d); Rule 8.4(c).
Accordingly, if the discovery of a client’s lie causes a lawyer to know that their services are being used, or have been used, by a client to perpetrate a crime or fraud, the lawyer must withdraw. See Rule 1.16(b)(2), (3); Rule 1.2(d); Rule 1.2 cmt. . Similarly, if the client or prospective client refuses to provide information necessary for the lawyer to assess the legality of the proposed action, the lawyer ordinarily should decline the representation or withdraw under Rule 1.16. See ABA Formal Opinion 491. In some circumstances when the client’s fraudulent or criminal course of action has already begun and is continuing, withdrawal alone might be insufficient, and it may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm any opinion, document, affirmation, or the like. See Rule 1.2 cmt. .
Whether declining representation of a prospective client or withdrawing from representation of a client on this basis, the lawyer must remain acutely aware of their duty to protect confidential information. See Rule 1.6; Rule 1.18(b). The lawyer may be permitted to disclose confidential information in some circumstances, such as where the client’s conduct is reasonably certain to result in death, substantial bodily harm, or substantial injury to the financial interest or property of another, but only to the extent reasonably necessary. See Rule 1.6(b)(1). Before withdrawing or disclosing confidential information, however, the lawyer should consider remedial measures such as reminding the client of the lawyer’s ethical duties and attempting to dissuade the client from engaging in the criminal or fraudulent conduct or to remedy any harm done by already completed conduct. See Rule 1.6 cmt. ; see also, Illinois State Bar Association Opinion No. 20-05; State Bar of Nevada Formal Opinion No. 25.
II. Lie, Crime, or Fraud Discovered after Conclusion of the Representation
Significant difficulty arises in determining a lawyer’s ethical obligations when a lawyer learns of a client’s fraudulent conduct after the representation has concluded. The ABA has opined that when a lawyer learns after conclusion of the representation that a client used their services to perpetrate fraud and knows that the client “avowedly intends to continue to use the lawyer’s work product, this amounts to a de facto continuation of the representation even if the lawyer has ceased to perform any additional work.” See ABA Formal Opinion 93-366 at 6. In such circumstances, the ABA has said that withdrawal is appropriate, and disaffirmance of the work product to the defrauded party may be the only method of making the lawyer’s withdrawal effective, but the lawyer should go no further in disaffirming work product than to state that the lawyer no longer stands behind it. See ABA Formal Opinion 93-366. Additionally, the ABA instructs that disaffirmance of work product to the defrauded should be a last resort, and the lawyer should consider other remedial measures such as disaffirming the work product to the client’s new lawyer. See id.
ABA Formal Opinion 93-366 was issued over a boisterous dissent and has received criticism from scholars. See ABA Formal Opinion 93-366 at 7-10; Geoffrey C. Hazard Jr., Lawyers and Client Fraud: They Still Don’t Get It, 6 Geo. J. Legal Ethics 701 (1992-1993). At least one State Bar Association has taken the position that a lawyer has no obligation to correct a client’s past fraudulent conduct when such conduct becomes known to the lawyer after the representation has concluded and that the lawyer may run afoul of Rule 1.6 if such information is disclosed. See Montana State Bar Association Ethics Opinion 112314. Nevertheless, best practices dictate that the lawyer should explain to the client the repercussions of the client’s fraudulent conduct. Id.
The New Hampshire Rules of Professional Conduct do not provide clear guidance on this issue. While comment  to Rule 1.6 of the ABA Model Rules provides that a lawyer may disclose confidential information pursuant Rule 1.6(b)(3) to the extent reasonably necessary to enable the affected person to prevent or mitigate reasonably certain losses as a result of a client’s past fraud that was learned of by the lawyer after conclusion of the representation, New Hampshire’s iteration of Rule 1.6(b)(3) is less permissive than that of the ABA Model Rules.
New Hampshire’s version of Rule 1.6 permits disclosure of confidential information only to “prevent reasonably certain death or substantial bodily harm or to prevent the client from committing a criminal act” that is “likely to result in a substantial injury to the financial interest or property of another.” See 1.6(b)(1) (emphasis added). Thus, according to the language of the rule, if a client’s past fraudulent or criminal conduct is reasonably certain to result in death or substantial bodily injury, the lawyer may disclose confidential information to prevent that outcome, even if the conduct is learned of after the representation has concluded. Conversely, since fraudulent conduct that is already completed cannot be prevented from being committed, a lawyer may not disclose confidential information relating to a client’s completed fraud that is likely to result in a substantial injury to the financial interest or property of another.
At bottom, a lawyer who learns that a client has used their services to perpetrate a crime or fraud after representation of the client has concluded must be cognizant of the continuing duty of confidentiality to former clients under Rule 1.9(c) and closely consult Rule 1.6. Since the New Hampshire Rules of Professional Conduct do not expressly permit a lawyer to disclose information relating to a client’s criminal or fraudulent conduct after the representation has concluded, lawyers should err on the side of protecting a client’s confidential information.
III. Litigation and Transactional Contexts
Which Rules a lawyer should consult to determine their ethical obligations to correct misstatements or conduct that is criminal or fraudulent depends in part on whether the lawyer is representing their client in the context of litigation or transactional work.
In the litigation context, a lawyer shall not knowingly “make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.” See Rule 3.3(a)(1). If the lawyer’s client has offered material evidence and the lawyer comes to know of its falsity, “the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal.” See Rule 3.3(a)(3). The same is true if the lawyer represents a client in an adjudicative proceeding and knows that the client intends to engage, is engaging, or has engaged in criminal or fraudulent conduct. See Rule 3.3(b).
Reasonable remedial measures that should be taken prior to disclosure to the tribunal include remonstrating with the client confidentially, advising the client of the lawyer’s duty of candor to the tribunal, and seeking the client’s cooperation with respect to withdrawal or correction of the false statements or evidence. See Rule 3.3 cmt. . These duties “continue to the conclusion of the proceeding and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.” Comment  to Rule 3.3 establishes that a proceeding has concluded within the meaning of the Rule when a final judgment in the proceeding has been affirmed on appeal or the time for appellate review has passed.
In the transactional context, a lawyer is prohibited from making a false statement of material fact or law to a third person. See Rule 4.1(a). A lawyer shall not knowingly “fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. See Rule 4.1(b) (emphasis added). Thus, a lawyer must consult Rule 1.6 before disclosing a client’s misrepresentation to another in the transactional context. It should be noted that Rule 1.2(d) applies “whether or not the defrauded party is a party to the transaction. Hence, a lawyer must not participate in a transaction to effectuate criminal or fraudulent avoidance of tax liability.” Rule 1.2(d) cmt. .
Comment  to Rule 4.1 states that “[o]rdinarily, a lawyer can avoid assisting a client’s crime or fraud by withdrawing from the representation.” In some circumstances, it may be necessary for the lawyer to disaffirm work product, and, in extreme cases, substantive law may require a lawyer to disclose information relating to the representation to avoid being deemed to have assisted the client’s crime or fraud. See Rule 4.1 cmt. . “If the lawyer can avoid assisting a client’s crime or fraud only by disclosing this information, then under paragraph (b) the lawyer is required to do so, unless the disclosure is prohibited by Rule 1.6.” Id.
There are significant differences between New Hampshire’s version of Rule 1.6(b) and the ABA Model version. Briefly stated, the New Hampshire rule places greater restrictions on an attorney’s discretion to disclose confidential information than does the ABA Model Rule. As Rule 4.1(b) incorporates Rule 1.6, this suggests that the scope of disclosure required under Rule 4.1(b) is significantly narrower than permitted by the ABA Model Rule.
As always, lawyers should closely consult Rules 1.6 and 4.1 before making any disclosure of confidential client information.
This Ethics Corner Article was submitted for publication to the NHBA Board of Governors at its March 17, 2022, Meeting. The Ethics Committee provides general guidance on the New Hampshire Rules of Professional Conduct and publishes brief commentaries in the Bar News and other NHBA media outlets. New Hampshire lawyers may contact the Committee for confidential and informal guidance on their own prospective conduct or to suggest topics for Ethics Corner commentaries by emailing: Robin E. Knippers at firstname.lastname@example.org.