Enron Scandal May Force Reconsideration of New Legal Ethics Rules

The American Bar Association completed work on Tuesday overhauling its code of ethics, a five-year effort that included emotional debates over lawyers' competing loyalties. The group tabled a proposal that would have made it easier for lawyers to tattle on clients involved in shady financial deals, including accounting flimflams. But the Enron mess may soon force the ABA to reopen the issue.

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The Enron case, with its allegations of shady financial deals and accounting cover-ups, could reopen a contentious issue for lawyers — whether they have a greater duty to protect a client or to prevent a crime. The American Bar Association completed work Tuesday overhauling the code of ethics for lawyers, a five-year effort that included emotional debates over lawyers’ competing loyalties. The ABA’s legislature turned back one attempt to reconsider one of the most contentious ethics rules, dealing with when a lawyer may breach a client’s confidence in order to save lives. The proposal would have made it easier for lawyers to tattle on clients involved in shady financial deals, including accounting flimflams. The ABA then went on to endorse the broad package of rules governing everything from the promises lawyers make to clients to procedures for selling a law firm. The Enron debacle, however, may force the ABA to reconsider the most hotly debated revision in the ethics rules. “In light of recent events … going on in the financial area,” the ABA may reopen that issue when its policy-making House of Delegates next meets in August, said E. Norman Veasey, chief justice of the Delaware Supreme Court and a leader of the ABA committee that drafted the proposed rules. In an interview, Veasey declined to link that prediction specifically to Enron, but the reference was clear. “In the current environment there is every reason that would come up in the future,” Veasey said. “There is some feeling that the House made a mistake.” The ABA ethics rules are not law, but are often the basis for state laws and policies on lawyer conduct. In the case of the rule on reporting financial crimes, 41 states have gone further than the ABA is recommending. Lawrence Fox, a Philadelphia lawyer, led the opposition to the financial ethics rule change last year. The ABA made the right decision then, and the Enron case does not change the fact that a lawyer’s first duty is to protect and advise a client, Fox said in an interview. “Lawyers should be free to do their work. That’s the whole purpose of hiring a lawyer.” He called it a “great evil” to equate the responsibilities of lawyers with those of accountants, who are supposed to catch funny bookkeeping. Earlier, the ABA approved another ethics change that critics said will make it easier for prosecutors or government investigators to wheedle information out of people who should get a lawyer’s advice before talking. The ABA modified its ethics code to say that lawyers, including prosecutors, can seek court orders if they want to privately contact someone who has a lawyer. Ordinarily, prosecutors must go through the lawyer, and the suspect may have his lawyer present for any questioning. The new rule could apply in situations such as the Enron investigation, where the government or corporate lawyers may want to talk to someone on the other side without that person’s lawyer present. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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