BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS
Opinion No. 1994-10
(Inquiry No. )
Attorney’s ethical obligations upon discovering that document provided to the attorney by the attorney’s client and thereafter produced by the attorney to opposing counsel, was altered by the client prior to the document’s provision to the attorney.
An attorney whose client discloses to the attorney that the client, when providing a tax return which has been produced to opposing counsel, “whited out” the names of two imaginary children whom the client had created for deduction purposes, but who left in the deduction amount, is, subject to stated qualification, not required or permitted to report the confidential information to the tribunal or disclose it to anyone, but may be required to withdraw from representation if the alternative would be using perjured testimony or false evidence.
DR 7-102 (A)(4)
DR 7-102 (B)(1)
DR 7-102 (B)(2)
Several months ago inquiring counsel received from inquiring counsel’s client a document purporting to be the client’s most recent tax return. Inquiring counsel forwarded this return to opposing counsel.
Subsequently, as inquiring counsel was preparing a trial brief for the matrimonial litigation, inquiring counsel began examining the tax return in close detail, and couldn’t make sense of certain figures. Inquiring counsel called the client who informed inquiring counsel that the client had created deductions for two imaginary children. Deductions for the same two imaginary children had been taken by the client and the client’s spouse on their prior year’s joint return. When the client originally forwarded copies of the tax return to inquiring counsel, the client “whited out” the names of the imaginary children, but left the deduction amount in. Inquiring counsel’s adversary has now submitted the client’s tax return to the court as part of opposing counsel’s trial brief.
Does inquiring counsel have an ethical obligation to reveal this information to the court or opposing counsel?
No, subject to stated qualifications.
DR 7-102 (B) provides, inter alia, that an attorney is required to disclose to a tribunal fraud committed by a client on the tribunal, unless the information revealing the fraud is protected as a confidence or secret:
“A lawyer who receives information clearly establishing that:
1. The client has, in the course of the representation, perpetrated a fraud upon a person or tribunal shall promptly call upon the client to rectify the same, and if the client refuses or is unable to do so, the lawyer shall reveal the fraud to the affected person or tribunal, except when the information is protected as a confidence or secret.”
The first question to be addressed is whether the client’s alteration of the document, and the provision of it to opposing counsel, constitutes “fraud on the tribunal.” This requirement was discussed generally by the Committee on Professional Responsibility of the Association of the Bar of the City of New York, in a report entitled “The Attorney’s Duties to Report the Misconduct of other Attorneys and to Report Fraud on a Tribunal,” 47 The Record of the Association of the Bar of the City of New York 905 (1992). It was there observed:
“Tribunal” is defined to include “all courts and all other adjudicative bodies,” which includes many administrative agencies. However, the fraud, whether it is perpetuated [sic] on a court or an administrative agency, must be on the tribunal itself, not on opposing counsel or other third persons. There are many instances where wrongful or deceptive acts occur during the adjudicatory process, but where the tribunal itself is not deceived.
“Despite the rule’s plain statement that the reporting requirement is only triggered when fraud is perpetrated on the tribunal, at least one court has not read the language of the rule with exactness. In In re Barrow [294 S.E.2d 785 (S.C. 1982)], an attorney who had knowledge of the alteration of a piece of evidence and of the concealment of photographs that would have revealed the alteration, did not report this knowledge to the court. Despite the fact that the alteration and concealment occurred during pre-trial discovery and that the truth was eventually revealed during discovery, the attorney was charged under DR 7-102(B)(2), among other rules, and publicly reprimanded. A case such as Barrow teaches lawyers who are trying to comport with their ethical obligations that a mere reliance on the language of a disciplinary rule can be fraught with peril; a careful lawyer must consult ethical opinions and case law as well.” Id., pp. 925-926 (footnotes omitted).
Since it is fraud on the tribunal with which the rule is concerned, the document’s submission to the court could potentially bring this situation within the ambit of the rule despite the fact that the client’s spouse — as co-signatory to the prior year’s return containing the same deductions — could presumably not be deceived or misled in any way. Moreover, under the Barrow rule discussed by the City Bar, the fact that the document was provided during discovery would not affect the analysis. However, only the names of the imaginary children were excised from the tax return; the deductions remained, and thus the financial “bottom line” has not been altered in any fashion. It is possible, therefore, that (as in the City Bar’s example of the violation of a court order), this would not constitute fraud, since fraud does contemplate some “materiality” requirement. For instance, in Nassau county opinion #93-41, this Committee observed that such an analysis would govern a determination as to whether the submission to a bankruptcy court of books which did not reflect the “skimming” of cash from the debtor by one of its principals constituted “fraud” upon the bankruptcy tribunal within the contemplation of DR 7-102(B)(2):
“In determining whether the conduct actually constitutes a ‘fraud upon the bankruptcy tribunal,’ the Committee observes that inquiring counsel should scrutinize the court filings themselves in light of the nature of the proceeding (e.g., liquidation or reorganization) to determine whether the filings contain information believed to be false which would affect the ability of creditors to be made whole, and upon which the bankruptcy court would rely. This analysis will be crucial since if the conduct does not constitute ‘fraud upon a tribunal’, there is no obligation to report . .”
In the opinion of this Committee, the altered filings would constitute “fraud upon a tribunal” only if (i) actually placed in evidence before the Court, and (ii) then only if the alterations could be material to the court’s resolution of any issue in dispute.
Even assuming that fraud upon a tribunal has occurred, however, inquiring counsel would be barred from reporting it to the tribunal since inquiring counsel learned of the fraud via privileged communication from the client. As stated by this Committee in Nassau County opinion #93-39:
“In Opinion #44/87 this Committee noted that ‘disclosure is mandated only where the attorney receives information clearly establishing that the client has perpetrated a fraud upon a person or tribunal.’ However, where, as in the case at bar, the information is protected as a confidence or secret (DR 4- 101[A]), the disclosure is not required. obligations of continuing loyalty (DR 7- 101[A]) preclude the inquiring attorney from making a voluntary disclosure.”
In Nassau County Opinion #93-39, this Committee determined that an attorney representing the seller of a restaurant business who had accepted cash at the closing in excess of the purchase price in the contract of sale was not permitted to submit a fraudulent tax return, but also was not required voluntarily to disclose the information to any governmental agencies. See also, Nassau County Opinion #92-17, in which this Committee determined that an attorney must not, on his own initiative, reveal to the court or District Attorney prior to entering into plea negotiations the knowledge (provided in confidence to the attorney but unknown to the District Attorney) of a prior conviction of his client under an alias, despite the fact that the plea negotiation offer received and the sentence imposed would be affected if the court and District Attorney had knowledge of the prior conviction:
“Early ethics opinions cautioned the attorney regarding matters revealed in confidence by criminal defendants. Thus, a lawyer was advised not to reveal the location of stolen property provided through confidential information. NYSBA Op. #405 (17175); and that a lawyer should not reveal information that the client previously committed an undiscovered crime when that was provided by the client during the course of the presentation. NYSBA No. 479 (33-74).
“Accordingly, the inquiring attorney is under a duty not to reveal the client’s prior conviction.”
Accord, Nassau County Opinion #81-4 (determining that an attorney representing a wife in a divorce action could not reveal to a governmental social services department holding a welfare lien against the client the extent of the funds that the client would be receiving from the matrimonial action because “[t]he attorney-client privilege supersedes any right to collect information that a Governmental Agency may have.”).
Although inquiring counsel has not inquired regarding inquiring counsel’s obligations in this regard,, the Committee observed that even if the Internal Revenue Service were considered a “tribunal,” and the filing of the original tax returns were considered fraud upon it, the attorney would not be required or permitted to report the information he has learned for much the same reason as set forth in the above-cited opinions, in addition to the fact that the filing did not occur “in the course of [inquiring counsel’s] representation . . . . ” DR 7-102(B)(2).
This having been said, it is still the case that whatever inquiring counsel’s reporting requirements may be, DR 7-102(A)(4) prohibits the attorney from knowingly using perjured testimony or false evidence. Consequently, inquiring counsel should advise the client of the obligation — absent the assertion of any constitutional or other privilege — to testify truthfully at trial should any question be raised regarding what now appear to be unexplained deductions on the tax return. If the client is not prepared to proceed accordingly, the attorney may be required to withdraw from representation (Nassau County Opinion #93-39), although any withdrawal must be handled in such a way as not to itself disclose client confidences or unduly prejudice the client (Id.)
[Approved by the Executive Subcommittee on 3/15/94; approved by the Full Committee on 3/30/94]