Ethics Opinion

Opinion No. 93-2

February 1993

Summary: The mandatory obligation of a lawyer imposed by DR 7-102(B)(1) to disclose fraud committed by a client during the course of representation when the client refuses to rectify it does not apply when the information available to the lawyer does not clearly establish the fraud or when the information is protected as a privileged communication. On the facts of this inquiry, the information does not clearly establish fraud and it is also protected as a privileged communication. Prior opinions of the committee are distinguished on the ground that they all involved situations where the exception for privileged communications might not apply because of the lawyer's knowledge of the client's intention to commit a future crime closely related to the completed fraud.
The lawyer's obligation to keep the confidences and secrets of a client under DR 4-101 is considerably broader than the attorney-client privilege, and it is therefore possible that a lawyer may be required to testify about matters covered by DR 4-101. However, a lawyer subpoenaed to testify should refuse to do so if the lawyer has any doubt about the applicability of the attorney-client privilege until the client consents or until a court rules that the attorney-client privilege is not applicable.
DR 7-104(A)(1), which forbids a lawyer to communicate on the subject of the representation with a party known to be represented by counsel, does not preclude a lawyer from sending to a former client documents relating to the former representation even though the subject matter of the former representation has some relation to the client's current litigation and even though the client's present counsel has instructed the client not to communicate with the lawyer.

Facts: Lawyer represented Client X in a motor vehicle accident case. In the settlement of the action against the tortfeasor, Lawyer made use of a document signed by a witness, Y, that helped establish the amount of damages. At the same time, a statement from a second witness, Z, cast doubt upon the accuracy of some of the facts asserted in the document signed by Y, and "that fact was pointed out during settlement negotiations with the tortfeasor." In any event, that case was settled and funds have been disbursed to X.
There is now an ongoing dispute between X and Z that is being handled for X by other counsel. Lawyer has been contacted by Z's attorney, who asserts that Y now states that his statement was false in part or in whole. That attorney requested Lawyer to disclose certain information relating to his representation of X, but Lawyer refused to do so without X's consent. X's present attorneys do not wish X to talk with Lawyer nor do they authorize Lawyer to release any information.
Z's counsel has again written Lawyer, charging X with fraud. Y has also written Lawyer, alleging that the information contained in his statement was fraudulent and requesting Lawyer to rectify the situation. Lawyer believes that Z expects her to give this information to the tortfeasor's insurance company. Lawyer asserts that she has no way to verify the charge and that any suspicion of fraud committed by X that she may have is overridden by her obligation to preserve X's confidences and secrets. In addition, Lawyer expects to be subpoenaed and she has requested the Committee's advice about her obligations.
Discussion: DR 4-101 of the Disciplinary Rules prohibits a lawyer from knowingly revealing a confidence or secret unless one of the stated exceptions contained in DR 4-101(C) applies. The exception contained in DR 4-101(C)(2) refers to the requirements of other disciplinary rules. This inquiry concerns an allegation that Lawyer's former client committed fraud in connection with a matter that is now closed. The relevant disciplinary rule is DR 7-102(B).
It 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 tribunal, except where the information is protected as a privileged communication.
We have written a number of opinions in recent years in which we have advised that in certain situations this provision, in our view, imposes a mandatory obligation upon a lawyer to reveal the commission of fraud. See our Opinions 89-1, 91-4, and 91-6. (Opinion 91-4 discussed the disagreement between our committee and Bar Counsel on this issue. See also 20 Mass. Lawyers' Weekly 2107 (June 22, 1992) for a statement of the views of Bar Counsel.) But DR 7-102(B)(1) imposes a strict requirement for triggering the obligation and, in addition, contains an exception. The strict requirement is that the information received by the lawyer must "clearly establish [ ]" that client fraud was committed during the course of representation and the exception is for "privileged communications." Both limitations on the operation of the rule are implicated in the present inquiry.
Lawyer's statement of facts indicates that the predicate for operation of DR 7-102(B)(1) does not exist, that is, that Lawyer does not have information "clearly establishing" the commission of fraud by X. To the extent that there was some discrepancy between the statements of Y and Z, that information was revealed in the tort settlement. Y now claims that his statement was "fraudulent," without specifying the details or saying who committed the fraud. That claim falls far short of "clearly establishing" fraud by X in the prior matter in which Lawyer represented him. Even if we were to assume that Lawyer has some responsibility to inquire of X about the claim, there seems no way for Lawyer to do so since X's present counsel has cut off communication between X and Lawyer.
Moreover, there is likely a second reason why there is no obligation for Lawyer to make disclosure under the provisions of DR 7-102(B)(1), viz., that the exception for privileged communications applies. Lawyer received information about possible commission of fraud from two sources, Y and Z on the one hand, and X on the other. If Lawyer had concluded that she had information "clearly establishing" X's fraud during the course of past representation, she would have had to use both sources of information to reach that decision. Any deduction about X's state of mind would almost certainly have had to have been based on information from X. We need not sketch, in this inquiry, the outer bounds of the definition of "privileged communications" and decide whether the information from Y and Z falls within that category. Any information about X's state of mind would appear to be a "confidence" of X and hence to be a "privileged communication." Therefore the exception to DR 7-102(B)(1) would also seem to apply to this inquiry if for some reason the facts are such that they clearly establish the commission of past fraud.
It is true that this committee has advised in the above cited opinions that there are situations when the exception for privileged communications does not apply. All those opinions, however, involved situations in which the exception might be negated by the lawyer's knowledge of the client's intention to commit a future crime closely related to the completed fraud. The statement of facts contained in this inquiry, however, indicates that at the time the lawyer might have learned of the client fraud, she did not possess knowledge of any intent on the part of X to commit any future crime. If the information clearly established fraud, it established fraud completed in the past, and the exception would therefore be applicable. There is therefore neither a mandatory obligation to reveal any fraud under DR 7-102(B)(1) nor discretion to reveal any future crime under DR 4-101(C)(3).
A subpoena to testify in litigation would raise different issues. The evidentiary attorney-client privilege is narrower than the lawyer's obligation of confidentiality contained in DR 4-101. The latter covers not only information covered by the attorney-client privilege, which is defined as "confidences" in DR 4-101(A), but also the additional information defined as "secrets" in the same rule. If Lawyer has any doubt about the applicability of the attorney-client privilege to any question that is asked of her, it is her obligation to assert the privilege unless X has waived it or a court has determined that it is not applicable.
A final inquiry is whether Lawyer may forward to X (instead of to X's present counsel) the letters she has received from Y and from Z's counsel. We believe that DR 7-104(A)(1), which prohibits unconsented communication with a party represented by counsel, is not a bar to the lawyer's sending the letters directly to her former client X, even if the letters have some relevance to X's current litigation. DR 7-104(A)'s heading, "Communication with One of Adverse Interest," makes it apparent that the rule does not deal with the situation of a lawyer who wishes to send material to a former client that deals with the subject of the former representation. The fact that X's present lawyers do not wish him to talk with Lawyer does not preclude Lawyer from sending these documents to X.

Permission to publish granted by the Board of Delegates on January 29, 1993. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.