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At first, the news from Chicago seemed to be that the American Bar Association would adopt proposals to permit lawyers unilaterally to disclose clients’ confidences where the lawyers suspect financial crime or fraud. With all due respect to the well-respected individuals who made the proposals, they would have undermined clients, lawyers, and the American legal system. Understand that these proposals were but the latest resurrection of an initiative first advanced in the early 1980s by the ABA’s Kutak Commission, which also sought to confer discretion upon lawyers to violate core principles of confidentiality to disclose client misconduct. That proposition was defeated. It was renewed, in substance, in 1991 and again went down to defeat — prompting a 1993 blast (in the Georgetown Journal of Legal Ethics) from redoubtable ethics guru, University of Pennsylvania law Professor Geoffrey Hazard Jr., that “the bar does not understand what it is doing.” Then the ABA’s Ethics 2000 Commission breathed life into it yet again, proposing it with only a single dissenting vote — by commission maverick Lawrence J. Fox of Philadelphia’s Drinker Biddle & Reath. The New York Times made much of the fact that the ABA House of Delegates did accept another change to Rule 1.6 of the Model Rules of Professional Conduct: a mild relaxation of the client confidentiality rule if necessary to prevent “reasonably certain” death or substantial bodily harm — rather than, as heretofore, “imminent” death or substantial bodily harm. But there was, in fact, no real opposition to that idea. It was the rewriting of Rule 1.6 Subsections (b)(2) and (3) that generated loud criticism. And last week the proposed (b)(2) was defeated by a vote of 255 to 151. The proposed (b)(3) was then withdrawn before a vote. There’s been some talk of reintroducing the changes at the ABA’s midyear meeting next February. The better decision would be to let them die. Leading the opposition to Subsections (b)(2) and (3) once again was the American College of Trial Lawyers, a 5,000-member, invitation-only group. Meeting in March, the college’s Board of Regents endorsed a report of its Legal Ethics Committee on the issue. That report was made available to bar leaders across the country. Copies were sent to every member of the ABA House of Delegates with a letter from ACTL President Earl Silbert, a partner in the Washington, D.C., office of Piper Marbury Rudnick & Wolfe, urging rejection of the proposed changes to (b)(2) and (3). While the ACTL recognizes the work of the Ethics 2000 Commission, Silbert wrote, it respectfully opposes the “threatened and unwarranted erosion of the confidentiality of attorney-client communications.” The ACTL also sent a formidable team to speak in opposition to the idea, headed up by Benjamin Hill III of Tampa, Fla.’s Hill, Ward & Henderson and former ABA President William Paul of Oklahoma City’s Crowe & Dunlevy. BYE-BYE, SECRETS What the fuss was all about was language that would have given lawyers discretion under Subsection (b)(2) to “prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another,” and discretion under Subsection (b)(3) to “prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud.” A minor qualification in each case is that the client must have used or be using the lawyer’s services in furtherance of his actions. “Substantial injury” is not defined. Neither are “financial interests” or “property.” And the judgment as to when a crime or fraud has been, is being, or will be committed is left entirely up to the lawyer himself. Proponents argued that the substantive law is trending toward increased imposition of civil liability on lawyers who do not disclose client fraud. The changes to Rule 1.6, they said, would merely conform the ethics code to “reality.” But the contention is ill-premised. As the ACTL monograph states, liability for fraud, absent a special duty to disclose, is not to be predicated on mere silence or inaction. In other words, the mere fact of not exposing a client’s fraud will not subject a lawyer to any increased risk of liability. Thus, the proposed changes purport to solve a problem that does not, in fact, exist. At the same time, the proposed changes do not address the very real threat of claims for breach of confidentiality by the unhappy client. Since the judgment as to what constitutes fraud and substantial injury, as well as the extent of appropriate disclosure, are left up to the lawyer, there would likely be many disgruntled — and not a few ill-used — clients. More fundamentally, the altered Rule 1.6 would have undercut the very justification for maintaining client confidences: Only with complete knowledge of all relevant facts can a lawyer give valid legal advice. If the client has reason to fear disclosure, she may limit the information she provides, thus compromising the lawyer’s ability to give good advice and endangering the whole notion of legal consultation. It was also put forward in support of the proposals that 25 of 51 jurisdictions and the Restatement of Law Governing Lawyers (2000) have already enacted provisions that permit disclosure to prevent any crime regardless of consequences. Despite this, said supporters, the world hasn’t come to an end. That argument, the ACTL said, is overstated. There are 26 other jurisdictions that do not permit disclosure to prevent any crime. Only 10 of those permit disclosure to prevent a fraud likely to result in substantial financial injury, and only 13 of all 51 jurisdictions permit disclosure to rectify the consequences of a fraud in which the lawyer’s services were used. “This hardly seems a mandate,” says the ACTL monograph. BEDROCK PRINCIPLE Client confidentiality is a bedrock prerequisite to the zeal in legal representation that is a central precept of the Anglo-American lawyer’s credo. Clients must have confidence that their lawyers are representing their interests, not the interests of all mankind. Or, as Silbert’s letter puts it, “The understandable theoretical desire to create broad public protection cannot always be perfectly reconciled with the very real duties of confidentiality and loyalty. These duties are at the very heart of the attorney-client relationship.” It would be a mistake to think that this issue is a slam-dunk proposition either way. Ideas that spark passionate debate never are. E. Norman Veasey, chair of the Ethics 2000 Commission (and chief justice of Delaware), is himself a judicial fellow of the ACTL. Veasey feels very strongly that the arguments in favor of the proposed rule changes outweigh the ACTL’s concerns. Still, those good arguments are not enough to overthrow a principle of long standing. The Ethics 2000 Commission’s proposals, well-intentioned as they were, would have seriously compromised the attorney’s duty of undivided loyalty to the client. Unilateral disclosure would, as Silbert argued in his letter, “place lawyers in an untenable dilemma between their fiduciary duty to protect client confidences and secrets and the proposed authorization to act as whistleblowers against their clients.” In the end, encouraging lawyers to betray their clients would have served to deepen, rather than alleviate, the mistrust and disrespect in which some hold our profession. James P. Schaller, a partner at Washington, D.C.’s Jackson & Campbell, is a former chair of the D.C. Court of Appeals’ Committee on Unauthorized Practice and a member of the Board of Regents of the American College of Trial Lawyers. He can be reached at [email protected]

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