[ OUR OPINION ]
Make attorneys expose
clients’ white-collar crimesTHE American Bar Association has relaxed its model code of ethics, allowing lawyers to snitch on their clients if they discover criminal wrongdoing. Hawaii and most other states already have stiffer requirements for lawyers to expose their clients' continuing illegality, but we are unaware of any attorney turned whistleblower. States should take it upon themselves after white-collar crimes have been uncovered to determine whether attorneys enabled them to be perpetrated.
THE ISSUE
The American Bar Association has approved ethical standards allowing lawyers to breach the attorney-client privilege to expose crime.
Two years ago, the bar association amended its code to permit a lawyer to breach a client's confidentiality "to prevent reasonably certain death or substantial bodily harm," but even that change drew opposition from members. In San Francisco this week, delegates approved a change that would allow lawyers to breach a client's confidences to prevent or rectify a crime by the client that would cause substantial harm to others or to protect the company from harm caused by an employee's crime.
State judiciaries draw upon the ABA's code in establishing rules for regulating attorney conduct. Hawaii's rule on confidentiality, adopted in 1994, goes far beyond even the latest ABA model, stating, "A lawyer shall reveal information which clearly establishes a criminal or fraudulent act of the client in the furtherance of which the lawyer's services had been used, to the extent reasonably necessary to rectify the consequences of such act, where the act has resulted in substantial injury to the financial interests or property of another." Not "may," as the ABA model reads, but "shall."
That is a tough rule, but only if enforced. Any fraud conviction in Hawaii should trigger an inquiry by the judiciary's Office of Disciplinary Counsel into whether a lawyer's services facilitated the fraud, and whether the attorney was clearly aware of the illegality. For example, investigators should determine whether confidential settlements between the client and fraud victims concealed clear evidence of an ongoing crime that would have alerted future victims if it had been disclosed.
The recent wave of corporate crime in America has put pressure on the ABA to increase lawyers' responsibilities. The Securities and Exchange Commission earlier this year began requiring lawyers to report potential fraud to corporate boards. The Federal Trade Commission is suing law firms to force compliance with a 1999 law on disclosing privacy policies to clients. The Internal Revenue Service is trying to make law firms disclose clients using questionable tax shelters.
People have a justified expectation of a confidential relationship with their attorneys, but that should not extend to using attorneys to commit crimes. Lawyers also have a responsibility as "part of a judicial system charged with upholding the law," as noted in comment accompanying the Hawaii ethical rule requiring disclosure of ongoing criminal activity. The state's judiciary should assure that lawyers meet that responsibility.
