BAR ASSOCIATION OF NASSAU COUNTY
COMMITTEE ON PROFESSIONAL ETHICS

Opinion No. 2000-1

(Inquiry No. 663 )

Topic:
Attorney’s duty, even after resigning from representing client, to disavow untrue or fraudulent pleadings or other representations upon which the court or other persons may rely.

Digest:
(1) An attorney, after resigning from clients’ representation, is not required to reveal to the court or other persons information showing that clients perpetrated fraud if such information is protected as clients’ confidence or secret.

(2) Nevertheless, an attorney, even after resigning from clients’ representation, must disavow previously certified pleadings or representations after clients disclose information indicating that such pleadings or representations on which the court or other persons may rely are false.

Code Provisions:
DR 2-11O(C)(1)(b)
EC 4-1, 4-7
DR 4-101 (A), (B)(1), (C)
EC 5-1
EC 7-1
DR 7-102(A)(7), (B)(1)

Facts Presented:
The Inquiring Attorney represented clients in obtaining appointment as coadministrators of two estates as the decedents’ heirs. Nine months after the clients were issued letters of administration, the Inquiring Attorney learned from one of the co-administrators that an additional heir might exist. This information, if substantiated, would require amendment of the petitions seeking appointment of the co-administrators. The Inquiring Attorney discussed the implications of the new information with the clients and advised them that the court should be notified immediately of the possibility of another heir. The clients, however, refused to permit notification of the court because they then said the information was “rumor and speculation.”

The Inquiring Attorney consulted a member of this Committee for guidance. The Committee member advised the Inquiring Attorney of the ethical duty to disclose if the Inquiring Attorney believed that the information clearly established more than rumor or speculation. However, he also cautioned that the Inquiring Attorney would be under a duty to maintain confidentiality of the clients’ confidences or secrets, particularly if the Inquiring Attorney resigned or was dismissed from representing the co-administrators. If the Inquiring Attorney notified the court over the objection of the co-administrators, when the Inquiring Attorney no longer represented the estates, the Inquiring Attorney could be liable for any damages that disclosure caused.

The Inquiring Attorney again consulted with the co-administrators, reiterating the necessity of disclosure. The co-administrators adamantly refused to notify the court and expressed dissatisfaction with the Inquiring Attorney’s position. They requested that the Inquiring Attorney resign from the case or be dismissed. Seeing no alternative, the Inquiring Attorney resigned from representing the co-administrators.

Inquiry:
(1) Is the Inquiring Attorney under a continuing duty, following resignation from representing clients, co-administrators of an estate, to advise the court of confidential or secret information obtained from them concerning the possible existence of another heir?

(2) Is the Inquiring Attorney under a continuing duty to withdraw an opinion or representation certified by the attorney as not materially false after receiving confidential information from the clients indicating that a pleading or other statement to be relied on by the court or other persons is inaccurate or fraudulent?

Determination:
(1) No, not unless required by court order, law, or court rule.

(2) Yes, but in withdrawing a certification the attorney may not reveal the client’s confidences or secrets, except to the extent implicit in such withdrawal of a pleading or other statement or part thereof that may be relied upon by the court or other persons.

Analysis:
This inquiry involves two competing duties owed by the lawyer or law firm to clients and the courts. The first duty, embodied in Disciplinary Rule (DR) 4-IOI(B)(I), is to safeguard the confidences and secrets of the client. A lawyer’s duty to preserve the confidences and secrets of a client is a vital part of the fiduciary relationship between the lawyer and client. The preservation of confidences and secrets promotes open communication between the attorney and the client, facilitates effective representation and encourages people to seek legal assistance at the early stages of a legal problem. See EC 4-1; see also NCB A Op. 98-1.

The second duty prohibits a lawyer from counseling or assisting “the client in conduct that the lawyer knows to be illegal or fraudulent.” DR 7-102(A)(7). This duty permits a lawyer to withdraw from representing a client who may implicate the lawyer in fraudulent or criminal activities. See DR 2-11 O(C)(I )(b). Under some circumstances, this duty requires a lawyer to disclose any crime or fraud perpetrated by a client during the course of the representation. See DR 7- I02(B)(I). These two duties potentially conflict where the lawyer learns of a client’s fraudulent misrepresentations through disclosure by the client that fall within the definition of a “confidence” or “secret” in DR 4-101(A).

Though this Committee does not resolve questions oflaw, the legality of a client’s conduct frequently determines the appropriate course of action for the lawyer because a lawyer’s obligations to a client must be exercised “within the bounds of the law.” See EC 5-1, 7-1; DR 7-102; N.Y. State Ops. ## 562 (1984), 681 (1996). The lawyer has discretion to determine whether a client’s actions are criminal, or if the client is using the lawyer’s services to perpetrate a fraud on the tribunal. See N. Y. County Op. # 686 (1991); EC 4-7. EC 4-7 provides that such professional discretion “requires consideration of a wide range of factors and should not be subject to reexamination~” Factors that a lawyer should consider when deciding to disclose a client’s confidence or secret to prevent the commission of a crime or fraud on the tribunal include the seriousness of the potential injury, the likelihood that the crime or fraud will occur, the absence of another way to prevent the prospective injury, the extent to which the client has tried to involve the lawyer in the enterprise, the circumstances under which the lawyer acquired the information, and any other aggravating or extenuating circumstances. See EC 4-7.

Here, the client’s persistence in concealing the possible existence of another heir may clearly establish fraud as defined in the Code, and therefore the Inquiring Attorney’s participation in such fraud may violate DR 7-102(A)(7). The New York Code of Professional Responsibility defines “fraud” as conduct that contains “an element of scienter, deceit, intent to mislead, or knowingfailure to correct misrepresentations which can be reasonably expected to induce detrimental reliance by another.” 22 N.Y.C.R.R. §1200.1(i) (Definitions) (emphasis added). The clients may continue fraudulently to lead the Surrogate’s Court to believe that the pleading is accurate. As a result of the misrepresentation, the court is likely to accept the false pleadings without the additional heir receiving proper notification of the administration of the estate, and thereby deprive a statutory distributee of a share of the estate. The clients, also distributees of the estate who stand to benefit financially from the exclusion of an additional heir, have knowingly refused to correct the misrepresentations made to the court and upon which the court may reasonably be expected to rely.

DR 7-102(B)(I) governs a lawyer’s conduct where the lawyer has learned that a client has perpetrated a fraud on the tribunal or other persons. The provision requires that the lawyer “promptly call upon the client to rectify” the misrepresentation. In the event the client refuses, “the lawyer shall reveal the fraud to the affected person or tribunal, except when the information is protected as a confidence or secret.” DR 7-102(B)(1) (emphasis added). The application of DR 7- 1 02(B)(1), requiring a lawyer to disclose a client’s fraud to an affected person or the tribunal, therefore, hinges on whether the lawyer’s knowledge of the fraud is “protected as a confidence or secret.” DR 4-10 1 (A) states that ”’confidence’ refers to information protected by the attorney-client privilege under applicable law, and ‘secret’ refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.” In New York, “[t]he attorney-client privilege extends only to confidential communications made to an attorney for the purposes of obtaining legal advice.” See Hoopes v. Carota, 74 N.Y.2d 716, 717, 543 N.E.2d 73, 73, 544 N.Y.S.2d 808,809 (1989); see also Priestv. Hennessy, 51 N.Y.2d 62,69,409 N.E.2d 983,986,431

N.Y.S.2d 511,514 (1980); N.Y. State Op. # 681 (1996); NCBA Op. 98-1. Therefore, though this Committee does not opine on such questions oflaw, if the client revealed the possible existence of an additional heir to the Inquiring Attorney with an expectation of confidentiality, the information would most probably be considered a “confidence.” The definition of a “secret” is substantially broader. If the lawyer obtained the information about the additional heir from the client or a source other than the clients, and the information is embarrassing to the clients, detrimental to their interests, or they have requested that the information be kept secret, then such information is termed a secret. Here, the information would most likely be characterized as both a “confidence” and a “secret.”

“Even though the relevant information is a confidence or a secret within the meaning of DR 4-101 (A), the information may nonetheless not be ‘protected’ from disclosure if it is excepted under DR 4-101(C).” N.Y. State Op. # 681 (1996); see also N.Y. County Op. # 686 (1991). DR 4-101(C) provides five permissive, not mandatory, exceptions to the confidentiality rule of DR 4-101 (A). The first four exceptions, which are not obviously applicable to this inquiry, include instances where (1) the client consents to disclosure; (2) the attorney is required to disclose under the Disciplinary Rules, a law, or a court order; (3) the client intends to commit a crime and the lawyer can prevent it through disclosure; and (4) the lawyer needs to disclose a confidence or secret in order to collect the lawyer’s fee or to defend the lawyer from a malpractice suit. See NCBA Op. 98-11. In that last cited opinion, we opined that when the exception in DR 4-10 1 (C)(4) applies, then the Code permits the lawyer to disclose a client’s fraud to the extent necessary to protect the lawyer from the client’s claim of wrongful conduct.

The fifth exception of DR 4-101(C) definitely applies to this inquiry. DR 4-101(C)(5) permits a lawyer to reveal” [c ]onfidences or secrets to the extent implicit in withdrawing a written or oral opinion or representation previously given by a lawyer and believed by the lawyer to be relied upon by a third person where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.” Here, the lawyer participated by apparently drafting, certifying and filing a petition and other papers containing representations that all “presumptive [statutory] distributees” were served. See SCP A § 1003. These representations would be relied on by the court and others affected by the estate’s distribution.
SCPA Official Form A-1, ¶ # 6, prescribes that a petitioner list all surviving distributees and verify this list as true, and that the petitioner’s attorney must sign and certify the pleading as not known to be false.1 To avoid assisting the clients in fraudulent conduct and violating DR 7-102(A)(7), the lawyer may, under DR 7-1 02(B)( 1) withdraw from endorsing those parts of pleadings or other filed papers that the lawyer previously submitted to the court and that the lawyer subsequently knows are not true and are still being relied upon by the court and other persons. Here, the allegations of the original petition are not accurate and the lawyer is required to withdraw certification of them to prevent the court and other persons from continuing to rely upon them. Since DR 4-101(C)(5) permits withdrawal of the attorney’s certification of materially false information that is still relied on by the court or other persons, it is not “protected” under the exception of DR 7-102(B)(I) and A lawyer may be legally sanctioned for failing to withdraw statements filed in court that the lawyer knows to be false. Section 130-1.1(a)(l) of the OCA Chief Administrator’s Rules on Costs and Sanctions for Frivolous Conduct authorizes the courts to sanction or award costs against any party or attorney in a civil action or proceeding for engaging in frivolous conduct. Section 130-1.1-a (a) and (b) require that an attorney representing a party in litigation in the New York courts must sign all pleadings, written motions, and any other papers submitted to the court, certifying that to the best of the attorney’s knowledge, information and belief, formed after reasonable inquiry, that the assertions therein are not frivolous. Frivolous conduct is defined to include, inter alia, assertions of “material factual statements that are false.” 22 N.Y.C.R.R. §130-1.1 (c)(3) (1999). These rules further provide:

In determining whether the conduct undertaken was frivolous, the court shall consider, among other issues the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counselor the party.

22 N. Y.C. R.R. § 130-1.1 (c) (1999) (emphasis added). This rule is not an ethical rule, but a court rule that is equally as binding on lawyers.

Although we do not usually opine on questions of law or interpret court rules, these rules are intertwined with the Disciplinary Rules upon which we do opine. For example, the exception set forth in DR 4-101 (C)(2) permitting disclosure of confidences or secrets as required “by law or court order” would encompass these legally binding court rules. Therefore, if as a matter of law a lawyer has a continuing duty to withdraw certification of a pleading under these court rules, then that disclosure is not forbidden and may be required “by law” under both DR 4-101(C)(2) and DR 7-102(B)(I) and by the court rule itself.

Therefore the attorney has a duty to disclose the falsity of the information to the extent required under DR 7-102(B)(1).

Though the lawyer is not permitted or required to reveal the client’s secrets and confidences regarding the additional heir, the lawyer is required to “implicitly” disavow a false pleading. When revealing the secrets and confidences of a client, “disclosure adverse to the client’s interests should be no greater than the lawyer reasonably believes necessary to the purpose.” EC 4-7. By disavowing any prior misrepresentations, the lawyer will alert both the court and other persons to the existence of a potential problem, without unnecessarily revealing the client’s confidences or secrets. If the court inquires and orders the attorney to disclose the information, even though given as a confidence or secret, the attorney may comply truthfully without violating DR 4-101 (B).

For the reasons stated above, the Inquiring Attorney is required to disavow any misrepresentations on which the tribunal or other persons are relying in order to fulfill the ethical obligation to refrain from assisting a client in fraudulent conduct.

[Approved in substance by the Full Committee on June 28, 2000; approved in form by the Executive Subcommittee on July _,2000.]