Ethics Opinions

Opinion No. 76-17

Summary: An attorney appointed to represent a criminal defendant found by the court to be indigent, who learns from his client that the client is not indigent, must promptly call upon the client to rectify the fraud by reporting it to the court. If the client refuses to do so, the lawyer must either reveal the fraud to the court, or notify the court that he or she is willing to continue to represent the client without compensation from public or restricted funds. In no event may the lawyer accept a fee from the client, as a private retainer, without the approval of the court after full disclosure.

Facts: Attorney A was asked by the court to represent a defendant pronounced indigent by the court. A entered the case as assigned counsel and was granted a continuance of the case for its preparation. Upon conference with defendant client C, A was informed by C that C was married with one child, was fully employed as a welder at $6.75 an hour, and had $1600 in his savings account. A told C that in his (A's) opinion C was not entitled to assigned counsel as an indigent, and that C should so report it to the court. C refused to do so and offered A $100 if A would represent him. A refused the offer and told C he would withdraw as counsel. The next day A requested his withdrawal from the court, without giving a reason for his withdrawal.
Attorney A (who is in private practice) asks whether he should have reported the information as to the criminal defendant's assets and earnings to the court.

Discussion: DR 4-101(C) provides: "A lawyer may reveal ... (2) Confidences or secrets when permitted under Disciplinary Rules or required by law or court order. (3) The intention of his client to commit a crime and the information necessary to prevent the crime."
DR 7-102(B) further provides:
A lawyer who receives information clearly establishing that: (1) His client has, in the course of representation, perpetrated a fraud upon a person or tribunal shall promptly call upon his client to rectify the same, and if his client refuses or is unable to do so, he shall reveal the fraud to the affected person or to the tribunal.
In our opinion the lawyer's information as to his client's assets and earnings "clearly established" that his client had committed a fraud upon the court. The court, in its determination of indigency, must act upon the basis of information provided by the defendant and the probation officers as to defendant's assets and earnings. While the determination of indigence is for the court and there appears to be no definite and clear-cut standard as to what financial condition constitutes indigency (the inability to afford one's own private counsel), the court's decision as to indigence, and its appointment of an attorney to represent a defendant, was done by a court order. The defendant here must have concealed, or failed to reveal, his assets and earnings, in order to secure the court order in question.
If the defendant made affirmative representations under oath before the attorney learned the true facts, his knowledge came after the commission of the perjury, and did not amount to knowledge of "the intention of his client to commit a crime" which the attorney was free (but not required) to disclose under DR 4-101(C)(3) above, even though it was a confidence or secret of his client.
But this fraud was a continuing fraud, which would not come to fruition until the lawyer presented his bill to the county or other governmental agency for compensation as a private assigned counsel. Its fruition would involve the lawyer himself, since it was the lawyer who would submit the bill and receive payment for services to which the defendant was not entitled. The fraud was thus to be completed "in the course of the representation," and the lawyer had a duty to reveal it to the affected tribunal where (as here) the client refused to rectify it, under the express terms of DR 7-102(B)(1) discussed above.
The ABA in 1974 adopted an amendment to DR 7-102(B)(1) which would abolish the lawyer's duty to reveal the fraud "when the information is protected as a privileged communication." This amendment has not been adopted in Rule 3:22, although the MBA Board of Delegates voted on June 3, 1976, to recommend its adoption to the Supreme Judicial Court. Even under this amendment, however, the client's communication as to assets and earnings would not be "privileged communication" where it would involve the lawyer as a party to a continuing fraud, to be consummated only through the cooperation of the lawyer. In a real sense, both would be "co-conspirators" if the lawyer intended to obtain the unmerited compensation for his representation. Under these circumstances, such a communication by a client to his lawyer is not "privileged." See 8 Wigmore, Evidence (3d ed. 1940) S2310, quoting from Mathews v. Hoagland, 48 N.J. Eq. 455 at 469, 21 A. 1054 (1891).
Even if the defendant thought that he was indigent, and made no conscious representations to the court, when he learned from his attorney that he was not indigent, he owed a duty to the court to disclose the new information to the court, whom he knows to be still acting on the basis of the original statement. See Prosser on Torts (3d ed. 1964) p. 711, and Restatement of Torts S551(2).
In all of these cases, if the lawyer continues the representation, intending to be compensated from public funds, he is assisting his client "in conduct that the lawyer knows to be illegal or fraudulent" in violation of DR 7-102(A)(7).
Therefore it is our conclusion that unless the client "rectifies" the fraud by disclosing the true facts to the court, the lawyer must either reveal the fraud to the court, or notify the court that he or she is willing to continue to represent the defendant without compensation. Clearly an offer to withdraw by the attorney, whether accepted by the court or not, does not fully "rectify" the fraud.
A subsidiary question is also involved in this inquiry. May the lawyer accept the $100 offered him by the client to continue the representation? From our analysis above, it follows a fortiori that the lawyer may not ethically accept both the $100 from the defendant (which indeed may have been intended to induce the lawyer not to reveal the fraud) and the compensation as assigned counsel.
Nor do we believe the lawyer is free to accept the client's $100, and agree to continue as his retained counsel, and to waive any claim to a fee as assigned counsel. In some courts, we are informed, there now exist specific rules prohibiting court-appointed attorneys from soliciting fees from their clients, and in these courts it would of course be unethical to do so, except with the approval of the court after full disclosure.
Even in the absence of any such rule, however, we believe that for a lawyer to use a court appointment as counsel to a defendant believed to be indigent, as a means of securing a fee from the client as his privately retained counsel, without the approval of the court after full disclosure, would be an improper use of the court appointment system for his private profit, in violation of DR 2-103(D)(1).
As noted in the facts, the lawyer involved in the present inquiry was a private practitioner. If a lawyer employed by a legal aid office or public defender office and paid from public funds, or from private funds restricted to the defense of "indigent criminal defendants," had been involved, we believe that many of the same considerations would be involved, if the appointment of the lawyer had been made by the court after a finding of indigence fraudulently obtained by the client. But of course the private lawyer's option, to notify the court that he is willing to continue to represent his client without compensation from public funds, or private funds restricted to the defense of "indigent criminal defendants," would not be available if the lawyer employed by the legal aid office or public defender office were on regular salary or otherwise compensated from such funds for his continued services.


Permission to publish granted by the Board of Delegates, 1976. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.
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