If a lawyer discovers that her partners defrauded government agencies to shield firm clients from penalties, must she tell the clients, the agency, and bar counsel?
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This page answers the general question as of 1999. Ezel answers yours: whether it's allowed on your facts, under the current Massachusetts Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer discovered that several of her partners had intentionally misrepresented material facts to state and federal agencies (which were not tribunals) when explaining the firm's failure to file required client reports on time. The clients had no knowledge of the fraud. The state agency had not yet acted on a request to forgo substantial penalties; the federal agency, relying on the false explanations, had already declined to assess penalties. The lawyer, who had not represented her partners when she learned of their conduct, asked what she owed the clients, the agencies, and Bar Counsel.
On disclosure to the clients, the committee applied Rule 1.4(a) and Rule 5.1(c)(2). The wrongdoing partners were obligated to tell the clients how their matters had been handled, and if they would not, Rule 5.1(c)(2) made the innocent partner responsible for taking reasonable remedial action, which included contacting the clients herself. Because she had not acted as counsel to her partners, telling the clients raised no Rule 1.6 confidentiality issue.
On the agencies, the committee explained that the partners had violated Rule 4.1(a) by making false statements of material fact to third persons, and that Rule 5.1(c)(2) made the lawyer responsible if she failed to take reasonable remedial action. Disclosure to an agency, unlike disclosure to the clients, would reveal the clients' confidential information, so the committee turned to Rule 1.6(b)(1), which permitted revealing confidences to prevent a fraudulent act likely to cause substantial financial injury to another. Because the fraud on the state agency was not yet consummated, that provision gave the lawyer discretion to disclose, and Rule 5.1(c)(2) required her to act to avoid or mitigate it (for example, by withdrawing the filed papers or disclosing the fraud to the agency). Whether disclosure of the completed fraud on the federal agency was permitted raised a harder question the committee declined to address without more facts.
On Bar Counsel, the committee applied Rule 8.3(a), which required reporting a violation that raised a substantial question about another lawyer's honesty, trustworthiness, or fitness. Although Rule 8.3(c) exempts information protected by Rule 1.6, the committee reasoned that because the lawyer had discretion to reveal the fraud, the information was not protected, so Rule 8.3 required her to report her partners. The committee added that she should urge her partners to tell the clients, and if they refused, tell the clients herself, while also informing them of her own obligations to act, since they could be injured by her actions through no fault of their own.
Currency note
This opinion was issued in 1999, before Massachusetts's adoption of the 2015 revisions to the Rules of Professional Conduct. Subsequent rule amendments or 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, deadline, or requirement mentioned here.
Common questions
Q: Did the innocent partner have to tell the clients what had happened?
A: Yes. The committee concluded that under Rule 1.4 the clients had to be informed, and that Rule 5.1(c)(2) made the innocent partner responsible for doing so if the wrongdoing partners would not. Because she had not represented her partners, telling the clients raised no confidentiality problem.
Q: Could she disclose the fraud to the state agency, given client confidentiality?
A: The committee concluded that Rule 1.6(b)(1) gave her discretion to disclose the not-yet-completed fraud to the state agency to prevent substantial financial injury, and that Rule 5.1(c)(2) required her to act to avoid or mitigate its consequences.
Q: Was she required to report her partners to Bar Counsel?
A: Yes. The committee concluded that the conduct fell squarely within Rule 8.3, and that because Rule 1.6 permitted disclosure of the fraud, the Rule 8.3(c) exception did not apply, so reporting was mandatory.
Q: Did the opinion resolve the duty as to the federal agency?
A: No. Because the fraud on the federal agency was already complete and the committee lacked the full facts, it expressly declined to decide whether Rule 1.6(b)(1) would permit reporting it.
Background and rules framework
The opinion applied Mass. R. Prof. C. 1.4 (keeping clients informed), 1.6 (confidentiality and the crime/fraud exception in paragraph (b)(1)), 4.1 (truthfulness to third persons), 5.1(c)(2) (a partner's responsibility for another lawyer's violation), and 8.3 (reporting professional misconduct). These corresponded to the Model Rules of the same numbers as they stood at the time. The committee emphasized that the agencies involved were not tribunals, so the analysis ran through Rule 4.1 rather than Rule 3.3.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.4 / Mass. R. Prof. C. 1.4 (communication)
- Model Rule 1.6 / Mass. R. Prof. C. 1.6(b)(1) (confidentiality; preventing financial-injury fraud)
- Model Rule 4.1 / Mass. R. Prof. C. 4.1(a) (false statement of material fact to a third person)
- Model Rule 5.1 / Mass. R. Prof. C. 5.1(c)(2) (partner responsibility for another lawyer's violation)
- Model Rule 8.3 / Mass. R. Prof. C. 8.3 (reporting professional misconduct)
Other opinions cited:
- Office of Bar Counsel statement of policy, MBA Lawyers' Journal (March 1999) (defining reportable conduct under Rule 8.3)
See also
- MA Bar Ethics Op. 05-06: Reporting a client's partner to police
- MA Bar Ethics Op. 99-5: Joint clients and a theft from the estate
Source
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