When a lawyer represents a bank client during a regulatory examination, can the lawyer stay silent about facts adverse to the client, and where is the line on misleading regulators?

Plain-English summary

The committee addressed a lawyer's obligations during a bank regulatory agency's examination of a client bank, framing the question as the interplay between the duty to preserve client confidences under Rule 1.6 and the duty under Rule 1.2(d) not to assist a client's criminal or fraudulent acts. It treated the examination as a nonadjudicative proceeding before a government agency, to which Rule 3.9 extends the truthfulness obligations the lawyer would owe, drawing on the standards of Rules 3.3 and 4.1.

On the prohibition side, the opinion was categorical: in representing a client in such an examination, "a lawyer may not under any circumstances lie to or mislead agency officials, either by affirmative misstatement or by omitting a material fact necessary to assure that statements made are not false and misleading." That tracked Rule 4.1's bar on false statements of material fact and on failing to disclose where needed to avoid assisting a client crime or fraud. A lawyer cannot use selective truth to leave the regulators with a false impression.

On the silence side, the committee was equally clear that the lawyer "is under no duty to disclose weaknesses in her client's case or otherwise reveal confidential information protected under Rule 1.6." The duty of confidentiality means the lawyer need not volunteer adverse facts the agency has not uncovered, so long as the lawyer makes no affirmative or partial statement that misleads. Where staying within those limits is not possible because the client insists on a course the lawyer reasonably believes is fraudulent, the opinion held the lawyer "must also take steps necessary to avoid assisting the client in a course of action she reasonably believes to be fraudulent, including if necessary withdrawing from the representation." The line the committee drew was between permissible non-disclosure of confidences and impermissible participation in deception.

Currency note

This opinion was issued in 1993, before the American Bar Association's adoption of the 2002 (Ethics 2000) revisions to the Model Rules of Professional Conduct, which revised Rules 1.6, 1.2(d), 4.1, and 3.3, and before later amendments adding the financial-fraud disclosure exceptions to Rule 1.6 (2003). Subsequent rule amendments and later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Could the lawyer stay silent about facts that hurt the bank client?

A: Yes, as to confidences. The committee held the lawyer is under no duty to disclose weaknesses in the client's case or to reveal information protected under Rule 1.6.

Q: Where was the line the lawyer could not cross?

A: Lying to or misleading the regulators, whether by an affirmative misstatement or by omitting a material fact necessary to keep the lawyer's statements from being false or misleading.

Q: What if the client insisted on a fraudulent course?

A: The opinion held the lawyer must take steps to avoid assisting conduct she reasonably believes fraudulent under Rule 1.2(d), including withdrawing from the representation if necessary.

Background and rules framework

The opinion interpreted Rule 1.6 (confidentiality of information) and Rule 1.2(d) (a lawyer may not assist a client's crime or fraud), with Rule 4.1 (truthfulness in statements to others) and Rule 3.3 (candor) supplying the no-misleading standard, applied to an agency examination through Rule 3.9 (advocate in a nonadjudicative proceeding). It referenced the companion analysis in Formal Opinion 92-366 on withdrawal to avoid assisting a fraud. Because the ABA interprets the Model Rules directly, there is no state-rule analogue.

Citations and references

Rules of Professional Conduct:

• MR 1.6 (confidentiality of information)
• MR 4.1 (truthfulness in statements to others)
• MR 3.9 (advocate in a nonadjudicative proceeding; applying 3.3 candor)
• MR 1.2(d) (not assisting a client crime or fraud)

Other opinions cited:

• ABA Formal Op. 92-366 (1992): withdrawal when a lawyer's services will otherwise be used to perpetrate a fraud

See also

• ABA Formal Op. 491: Avoiding counseling or assisting a crime or fraud under Rule 1.2(d)
• ABA Formal Op. 463: Client due diligence, money laundering, and terrorist financing

Source

• Landing page: ABA Formal Ethics Opinions index
• Original PDF: 93-375.pdf