11.06.03. Prevent, Mitigate, or Rectify Substantial Injury to the Financial Interests or Property of Another that is Reasonably Certain to Result or has Resulted from the Client’s Commission of a Crime or Fraud

A lawyer may disclose client confidential information to “prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud” where the client “has used the lawyer’s services” to further the crime/fraud (Rule 1.6(b)(3)).  Take note how this exception is different than that set out in (b)(2).  In that exception, the lawyer is taking steps to prevent the harm, whereas under (b)(3) the lawyer can reveal confidential information where the harm has already been done.  The goal here is to allow a lawyer to act even after the crime/fraud has been committed but while there is still an opportunity for the third-party to seek to recoup losses they have suffered.[1]

Lamar Lawyer represents Henry Husband in a divorce matter.  After the matter had been litigated, it resulted in a divorce decree and the signing of a property settlement agreement between Husband and Wendy Wife.  The agreement called for the periodic payment of alimony by Husband.  After the agreement was signed, Lawyer found out that Husband had concealed $600,000 in assets and had lied about his finances.  Lawyer had relied on Husband’s representations regarding his assets and income in preparing and filing documents with the court.  These additional assets would entitle Wife to additional amounts in alimony.  May Lawyer ethically reveal this information to Wife’s attorney and the court? [paraphrased from: http://www.americanbar.org/publications/gpsolo_ereport/2011/december_2011/ethics_confidentiality.html]

Yes.  First, this is information that ordinarily would have to be kept in confidence – because it clearly “relat[es] to the representation.”  However, Rule 1.6(b)(3) would allow the lawyer to disclose the information because this is a fraud by the client that resulted in substantial injury to the financial interests of Wife and Husband used Lawyer’s services to commit the fraud.

One additional point to make about this hypothetical.  You may find it odd that a lawyer in this situation could choose not to disclose this information and act ethically.  However, there is another rule that could require the lawyer to disclose this information.  Rule 3.3 deals with a lawyer’s duty of candor to the court.  Subsection (a)(3) provides that if a lawyer learns that he has submitted false evidence to the court, the lawyer “shall take remedial measures including, if necessary, disclosure to the tribunal.”[2]  Therefore, the lawyer could be required to correct the record with the court even if he is not required to disclose it under the confidentiality rule.  You will find that the rules often work together in this manner.

[1] ABA Rule 1.6, Comment [8].

[2] ABA Rule 3.3(a)(3) (emphasis added).