When does a lawyer have to ask questions before helping a client with a transaction that might be a crime or fraud?

Plain-English summary

The opinion addresses a lawyer's duty under Model Rule 1.2(d), which provides that a lawyer "shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent," in transactional and other non-litigation settings. It focuses on when the lawyer must inquire further before proceeding. The opinion identifies two situations: where facts already known to the lawyer amount to actual knowledge of criminal or fraudulent activity, and where known facts show a high probability of it.

On the knowledge standard, the opinion relies on Rule 1.0(f), under which "know[]" means actual knowledge but "[a] person's knowledge may be inferred from circumstances." It concludes that where facts indicate a high probability that a client seeks to use the lawyer's services for crime or fraud, a conscious, deliberate failure to inquire amounts to knowing assistance: "[f]ailure to make a reasonable inquiry is willful blindness punishable under the actual knowledge standard of the Rule." The opinion grounds this in the criminal-law willful-blindness doctrine, observing that "[s]ubstantial authority confirms that a lawyer may not ignore the obvious," while noting this is not a freestanding duty to scrutinize every client.

The opinion frames the duty to inquire as flowing not only from Rule 1.2(d) but also from competence (Rule 1.1, which requires inquiry into the factual and legal elements), diligence (Rule 1.3), and communication (Rule 1.4(a)(5) and (b)). For an organizational client, Rule 1.13 often requires clarifying who is authorized to act and what is in the entity's best interests, which commonly calls for further inquiry. The honesty rules in Rule 8.4(b) and (c) reinforce the point where governing law makes a less-than-actual-knowledge mental state culpable.

On what the lawyer must do, the opinion is direct: "[i]f the client does not agree to provide information, then the lawyer must decline the representation or withdraw." A lawyer who proceeds without requested information may supply evidence of willful blindness, and the opinion states "a lawyer may not agree to exclude inquiry into the legality of the transaction" under Rule 1.2(c). At the same time, the opinion protects reasonable judgment: a lawyer who makes a reasonable evaluation based on information reasonably available at the time does not violate the Rules and should not be disciplined because a reasonable course later proves wrong in hindsight.

In practice

Under this opinion, a lawyer asked to help with a non-litigation matter must inquire further when the facts the lawyer already knows establish a high probability that the client is using the lawyer's services for crime or fraud. The opinion holds that deliberately avoiding such inquiry is willful blindness treated as actual knowledge under Rule 1.2(d), and that the duty to inquire is reinforced by the competence, diligence, communication, and entity-representation rules. It holds that if the client refuses to provide the information needed to assess legality, or asks the lawyer not to evaluate it, the lawyer must decline or withdraw under Rule 1.16, and that the lawyer may not contract around the inquiry under Rule 1.2(c). The opinion also holds that a lawyer who reasonably evaluates the matter on the information reasonably available does not violate the Rules even if the judgment later proves wrong.

Common questions

Q: Do I have to investigate every client to make sure a deal isn't a fraud?

A: Per the opinion, no. The duty to inquire arises when facts known to the lawyer establish a high probability that the client seeks to use the lawyer's services for criminal or fraudulent activity; it is not a freestanding duty to scrutinize every client.

Q: If I suspect something is off but don't ask, am I protected because I didn't actually know?

A: The opinion says no. A conscious, deliberate failure to inquire in the face of a high probability of crime or fraud is willful blindness, punishable under the actual-knowledge standard of Rule 1.2(d).

Q: What if the client won't answer my questions?

A: The opinion says if the client will not provide the information the lawyer needs to assess the conduct's legality, the lawyer must decline the representation or withdraw.

Q: Can the client and I just agree that I won't look into whether the transaction is legal?

A: No. The opinion states that in these circumstances a lawyer may not agree under Rule 1.2(c) to exclude inquiry into the legality of the transaction.

Background and rules framework

The opinion interprets Model Rule 1.2(d) (no counseling or assisting client crime or fraud) and 1.2(c) (limiting the scope of representation), with the knowledge definition in Model Rule 1.0(f). It applies Model Rule 1.1 (competence), Model Rule 1.3 (diligence), Model Rule 1.4 (communication), Model Rule 1.13 (organization as client), Model Rule 1.16 (declining or terminating representation), and Model Rule 8.4(b) and (c) (criminal acts and dishonesty).

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.2(d), 1.2(c) (assisting crime or fraud; limiting scope)
• ABA Model Rule 1.0(f) ("knows"; inferred from circumstances)
• ABA Model Rule 1.1 (competence), 1.3 (diligence), 1.4 (communication)
• ABA Model Rule 1.13 (organization as client), 1.16 (withdrawal)
• ABA Model Rule 8.4(b), (c) (criminal acts; dishonesty)

Other opinions cited:

• ABA Formal Op. 463 (2013): client due diligence; money laundering
• ABA Formal Op. 92-366 (1992): withdrawal where services would further a fraud
• ABA Informal Op. 1470 (1981)

See also

• ABA Formal Op. 513: Duty to Inquire Into Each Representation
• ABA Formal Op. 514: Advising an Organization on Constituent Legal Risk
• ABA Formal Op. 493: Model Rule 8.4(g) Scope

Source

• Landing page: ABA Formal Ethics Opinions index
• Original PDF: aba-formal-opinion-491.pdf