BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS

Opinion No. 1998-12

(Inquiry No. )

Topics:
Duty when confronted with information raising a substantial question as to the fitness of another attorney to practice law – – bringing fraud to the attention of a tribunal.
Digest:
An attorney who has information indicating the possibility of an adversary attorney being involved in perpetrating a fraud upon a court must make a determination whether the attorney has knowledge sufficient to require reporting of such information, and if so, when and how to make such report.
Code Provisions:
EC 1-1
EC 1-5
EC 7-1
DR 1-102(A)(4)
DR 1-103(A)
DR 7-102(A)(4), (5), (6), (7), (B)(2)
DR 7-104(A)(1)
DR 7-105
Facts Presented:
During a contested Child Support proceeding, the Inquiring Attorney learned from an investigator who independently communicated with the adversary attorney’s client that the client was working (refinishing floors) off-the-books, and gave the name of the adversary attorney as his reference. Yet, the adversary attorney has submitted and notarized papers to the court representing that the client is injured and cannot work or pay more than the statutory minimum amount of child support.
Inquiry:
What are the ethical obligations of an Inquiring Attorney under the Code of Professional Responsibility upon receiving information independently obtained by an investigator about a fraud perpetrated by an adversary and possibly by his attorney in a pending matter before a tribunal?
Determination:
The information presented may indicate not only the possibility of a fraud upon a tribunal, and thus conduct in violation of DR 7-102(A) (4),(5),(6), or (7), and may raise a substantial question as to the fitness of another attorney, but also the possibility of the adversary attorney’s client’s intention to commit violations of state and federal laws that may carry criminal penalties. The Inquiring Attorney has obligations regarding such a matter under the Code. However, it is also a tactical matter within the discretion of the Inquiring Attorney as to how and when to act on this information. One option that is supported by both the Code of Civility and Ethical Consideration 1-5 would be to first confront the adversary attorney to verify any assumption regarding the adversary attorney’s own awareness or participation in such conduct, and provide him or her with the chance to pursue adequate corrective measures necessary to rectify any misrepresentation made. If the adversary attorney will not act to correct any inaccuracies or misrepresentation made or endorsed by the attorney to the court, then under several provisions of the Code the Inquiring Attorney is obligated to inform either the court or a disciplinary authority. Another option within the discretion of the Inquiring Attorney, if he or she determines it to be in the best interest of his or her client, would be to bring out such facts in the course of cross-examination, where the duty to report to the tribunal would also be satisfied.
Analysis:
This inquiry raises serious issues relevant to the integrity of the legal profession where an attorney may knowingly have participated in perpetrating a fraud upon a court. Under the Code, the Committee notes that there is an affirmative responsibility on all attorneys to protect the integrity, of the profession. This is consistent with the Inquiring Attorney’s duty’s to the Court, to the legal profession and to the public, and is further supported by the recently enacted Code of Civility adopted by New York. Yet, the Inquiring Attorney must use discretion to determine whether such course of action is advisable and consistent with pursuing the best interests of the client. It would also fulfill obligations under the Disciplinary Rules to bring out the discovery of facts showing a fraud in the course of discovery, cross-examination or otherwise during a litigated proceeding.

A necessary matter for consideration identified in the inquiry is that the Inquiring Attomey has learned from an investigator who communicated directly with a represented party, calling the party after he had done surveillance upon his activities. This involves DR 7-104(A)(1) which states: “During the course of the representation of a client a lawyer shall not. . . communicate or cause another to communicate on the subject of the representation with a party the lawyer knows to be represented by a lawyer in that matter unless the lawyer has the prior consent of the lawyer representing such other party or is authorized by law to do so.” Here, however, the Inquiring attorney did not cause the investigator to communicate with the represented party. Instead, the investigator made the communication without the advance knowledge of the Inquiring Attorney, who subsequently learned of the communication when the investigator apprised him of the results of his investigation. Had the Inquiring Attorney assigned the investigator to communicate with the represented party, this would violate DR 7-104. Here DR 7-104 does not appear to apply because the information was obtained unilaterally by the investigator, without any intentional communication initiated by, or on behalf of the Inquiring Attorney. Nevertheless, attorneys should heed the provisions of DR 7-104(A), “During the course of the representation of a client . . . [not to communicate or cause another to communicate on the subject of the representation with a party the lawyer knows to be represented by a lawyer in that matter ” without that lawyer’s consent. (Emphasis added.)

While the information as presented appear to reasonably point in the director of a possible fraud, the Inquiring Attorney still does not know whether the adversary attorney (1) employed the client in the recent past, (2) is aware of an ongoing use of the attorney’s name by the client as a work reference; and (3) knows that this employment was “off-the-books,” which may have implications for violations of child support obligations. The Inquiring Attorney ought to bear in mind EC 1-5 which sets forth: “A lawyer should maintain high standards of professional conduct and should encourage other lawyers to do likewise.” This ethical consideration suggests that the Inquiring Attorney attempt to verify or disprove any assumptions by confronting the adversary attorney.

Assuming the adversary attorney is not aware that the papers submitted to the court contain factual inaccuracies, then he should correct any misrepresentation that is now established or may wish to withdraw from the representation. The adversary attorney should work through his or her own responsibilities as governed by the Code, noting in particular that DR 4-101 (C)(3) may permit the adversary attorney to reveal the client’s secrets to prevent what may constitute the future commission of crimes with regard to the Internal Revenue Code, Worker’s Compensation regulations and federal law governing child support obligations. If the adversary attorney is willing and able to pursue the necessary corrective measures, the matter may be resolved without further action on the part of the Inquiring Attorney.

If the adversary attorney will not take the steps necessary to correct a knowing misrepresentation, the Inquiring Attorney has no choice but to bring the matter to the attention of a proper authority in accord with DR 1-103(A) or DR 7-102(B). DR 1-103(A) states: “A lawyer possessing knowledge, (1) not protected as a confidence or secret … of a violation, of DR 1-102 that raises a substantial question as to another lawyer’s honesty, trustworthiness or fitness in other respects as a lawyer shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation.” DR 1-102(A)(4) defines it as misconduct whenever lawyers “engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.” Thus, the identified conduct here appears to trigger the reporting requirement under DR 1-103(A). See Bar Association of Nassau County (“BANC”) Opinions ## 92-29, 93-34, 93-41.

While DR 1-103 leaves the Inquiring Attorney the option to report the conduct of an adversary attorney either to the court or in this county, the grievance committee, DR 7-102(B)(2) calls upon the Inquiring Attorney to act in his own capacity as an officer of the court, as it states: “A lawyer who receives information clearly establishing that … a person other than the client has perpetrated a fraud upon a tribunal shall promptly reveal the fraud to the tribunal.” Where the adversary attorney has for any reason failed to take steps to correct a fraudulent misrepresentation, the Inquiring attorney must take steps to inform the court, which at the same time acts to protect the integrity of the legal profession. Yet it should be clarified that both DR 1-103 and DR 7-102 have been determined to leave attorneys some discretion whether they believe there is sufficient knowledge as to fraudulent conduct that triggers a reporting obligation, as opposed to a mere suspicion of misconduct, that triggers only an optional mandate to report on such conduct. See BANC ## 93-41 and 93-34, which examine this question in further detail.

Furthermore, DR 7-102(A) provides, inter alia, that an attorney shall not: (4) “knowingly use perjured testimony or false evidence”; (5) “knowingly make a false statement of law or fact”; (6) “participate in the creation or preservation of evidence when the lawyer knows or it is obvious that the evidence is false”; and (7) “counsel or assist the client in conduct that the lawyer knows to be illegal or fraudulent.” In this context, the adversary attorney’s conduct implies a fraud not just upon the court but also upon society at large, when the attorney knowingly allows a client to violate tax law, worker’s compensation regulations, and child support laws. In this situation, because of the seriousness stemming from the adversary attorney’s apparent awareness of a client’s actions, the Inquiring Attorney may choose to act in his capacity as an officer of the court in order to protect the integrity of the legal profession by reporting the knowing perpetration of fraud to a tribunal or disciplinary authority under DR 1-103. However, there is no compulsion on the Inquiring Attorney to choose to make this report to the disciplinary authority.

In the course of confronting the adversary attorney and discussing how to rectify this problem, the Inquiring Attorney may obtain a beneficial offer of settlement of the underlying dispute. As to the propriety of using such information, EC 7-1 requires that: “The duty of a lawyer, both to the client and to the legal system, is to represent the client zealously within the bounds of the law, which includes Disciplinary Rules and enforceable professional regulations.” The Inquiring Attorney may thus use the acquired information for the benefit of his or her client, while still being careful to observe DR 7-105, which sets another boundary on such discussions with the adversary attorney: “A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter.” Threatening to file a grievance has been construed to constitute the same violation as to threaten to file criminal charges. People v. Harper, 75 N.Y.2cl 313, 552 N.Y.S.2d 900 (1990). Thus, the Inquiring Attorney may communicate with the adversary attorney about the information and the necessity of correcting any misrepresentation which has been made. An actual threat to file a grievance if the adversary attorney would not offer a better settlement would, however, violate DR 7-105. The Inquiring Attorney has both the right and obligation to use the information however he or she deems most helpful and permissible in the attorney’s professional judgment.

[Approved by the Exec. Subcomm. 10/20/98; Approved by the Full Committee 10/28 /98.]