Can a lawyer tell a former client about a current client's alleged fraud that the lawyer learned about but has not verified?

Plain-English summary

A lawyer had represented a husband in a divorce four years earlier, in which the wife was alleged to have had an affair with a companion. Later the wife retained the same lawyer to collect money she said she had loaned the companion; the lawyer sent a demand letter, prepared a promissory note, and negotiated with the unrepresented companion. During those discussions the companion told the lawyer the "loan" was actually the wife's attempt to hide assets from the divorce. The lawyer withdrew from representing the wife and declined to represent the companion, then asked whether there was an ethical obligation to disclose the wife's alleged fraud to the former-client husband.

The opinion concluded no authority required disclosure to the former client, and the real question was whether disclosure was permitted. The information, though it came from the opposing party rather than the wife, was a client "secret" under MRPC 1.6(a), since the confidentiality rule covers all information relating to the representation, whatever its source. MRPC 1.6(b) therefore barred disclosure unless an exception in MRPC 1.6(c) applied; those exceptions are permissive.

Two exceptions were potentially relevant: the wife's consent (MRPC 1.6(c)(1), citing RI-207) or disclosure to rectify a fraud furthered by the lawyer's services (MRPC 1.6(c)(3)). The opinion concluded the second did not apply, because the lawyer withdrew before speaking with the wife or investigating, and so did not yet know (as opposed to suspect) that a fraud had occurred or that enforcing the loan furthered it. A lawyer may not reveal confidences or secrets based on mere suspicion rather than knowledge of a client's fraud (citing RI-13), and the lawyer had no duty to investigate after withdrawing. The opinion concluded the lawyer may not reveal the wife's allegedly fraudulent conduct absent her consent.

Currency note

This opinion was issued in 1994, before later amendments to the Michigan Rules of Professional Conduct. MRPC 1.6, 1.9, and the related rules have since been amended, and subsequent rule changes 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 Treat this page as historical context, not current guidance.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: Can a lawyer warn a former client about a current client's suspected fraud?

A: No. The opinion concluded the information was a client secret, so absent the client's consent the lawyer may not reveal an unsubstantiated alleged fraud.

Q: Does it matter that the information came from the opposing party, not the client?

A: No. The opinion concluded that the confidentiality rule covers all information relating to the representation whatever its source, so it was still a protected "secret."

Q: When could the lawyer disclose without consent?

A: Only under MRPC 1.6(c)(3), if the lawyer knew the services were used to further the fraud; the opinion concluded mere suspicion is not enough (citing RI-13).

Q: Does the lawyer have to investigate whether the fraud occurred?

A: No. The opinion concluded the lawyer had no duty to investigate the companion's statements after withdrawing from representing the wife.

Background and rules framework

The opinion applied Michigan's confidentiality and former-client rules. MRPC 1.6(a), (b), and (c) (Model Rule 1.6) define confidences and secrets, bar disclosure, and provide permissive exceptions including client consent and rectifying a fraud furthered by the lawyer's services. MRPC 1.2(c) and (d) (Model Rule 1.2) bar assisting known fraud and require consulting the client about limitations. MRPC 1.9(c) (Model Rule 1.9) bars using or revealing a former client's information except as Rule 1.6 or 3.3 permit. The opinion relied on RI-13 (no disclosure on suspicion alone) and RI-207 (former client's confidentiality and the consent exception).

Citations and references

Rules of Professional Conduct:

• MR 1.2 / MRPC 1.2(c), (d) (not assisting fraud)
• MR 1.6 / MRPC 1.6(a), (b), (c) (confidentiality; permissive exceptions)
• MR 1.9 / MRPC 1.9(c) (former-client information)

Other opinions cited:

• Michigan RI-13: no disclosure based on suspicion rather than knowledge of fraud
• Michigan RI-207: confidentiality of former-client information; consent exception

See also

• Mich Ethics Op. RI-207: disclosing a former client's address to a third person
• Mich Ethics Op. RI-13: duty when a client gave false deposition testimony
• Mich Ethics Op. RI-156: discharged estate lawyer, suspected fraud, and document custody

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=1087&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RI-217

August 10, 1994

SYLLABUS

A lawyer who receives information during the course of a representation about a client's alleged fraudulent act may not reveal the unsubstantiated allegations without client consent.

A lawyer may reveal the information if the lawyer's services were utilized in furtherance of the fraud.

References: MRPC 1.2(c) and (d), 1.6(a), (b) and (c), 1.9(c); RI-13, RI-207.

TEXT

A lawyer represented the husband in a divorce proceeding in which it was alleged that the wife had engaged in an extra-marital affair with a companion. The divorce action was settled during trial approximately four years ago, and the lawyer's representation of the husband ceased at that time. Subsequently, the wife retained the lawyer's services in an effort to collect money which the wife had allegedly loaned to the companion. The lawyer sent a demand letter, prepared a promissory note, and conducted settlement negotiations with the companion, who was apparently unrepresented.

In the course of settlement discussions, the companion told the lawyer that the "loan" was in fact an effort by the wife to hide assets that otherwise would have been subject to the divorce proceedings. Upon learning of this, the lawyer withdrew from the representation of the wife and refused a request to represent the companion on an unrelated matter. The lawyer asks whether there is an ethical obligation to disclose the wife's alleged fraudulent conduct to the former client husband.

MRPC 1.2(c) and (d) state:

"(c) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client to make a good-faith effort to determine that validity, scope, meaning, or application of the law.

"(d) When a lawyer knows that a client expects assistance not permitted by the rules of professional conduct or other law, the lawyer shall consult with the client regarding the relevant limitations on the lawyer's conduct."

MRPC 1.6(a), (b) and (c) state:

"(a) 'Confidence' refers to information protected by the client-lawyer 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."

"(b) Except when permitted under paragraph (c), a lawyer shall not knowingly:

"(1) reveal a confidence or secret of a client;

"(2) use a confidence or secret of a client to the disadvantage of the client; or

"(3) use a confidence or secret of a client for the advantage of the lawyer or of a third person, unless the client consents after full disclosure.

"(c) A lawyer may reveal:

"(1) confidences or secrets with the consent of the client or clients affected, but only after full disclosure to them;

". . .

"(3) confidences and secrets to the extent reasonably necessary to rectify the consequences of a client's illegal or fraudulent act in the furtherance of which the lawyer's services have been used . . . ."

MRPC 1.9 states:

"(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

"(1) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 would permit or require with respect to the client, or where the information has become generally known; or

"(2) reveal information relating to the representation except as Rule 1.6 of Rule 3.3 would permit or require with respect to a client."

We know of no authority that would require the lawyer under the circumstances of this inquiry to reveal the information to the husband, the lawyer's former client. A lawyer may be required to reveal client confidences and secrets under MRPC 3.3, if there is a matter pending before a tribunal, but the matter in this inquiry is not before a tribunal. Nevertheless, the husband would presumably be interested in this information, so the true question appears to be whether, under the circumstances here presented, the lawyer may disclose the information to the husband.

The lawyer received the information while representing the wife. It was not revealed to the lawyer directly by the wife, but by the opposing party. It would not be a "confidence" as defined in MRPC 1.6(a), but it would appear to be a "secret" since it is "other information gained in the professional relationship what 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." See Annotated Model Rules of Professional Conduct, Second Edition, American Bar Association, 1992, page 86, "The confidentiality rule applies not merely to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source."

Because the information constitutes a client "secret," MRPC 1.6(b) prohibits the lawyer from revealing the information unless one of the exceptions in MRPC 1.6(c) applies. These exceptions are permissive. They permit, but do not require, the lawyer to reveal client confidences or secrets in the circumstances described.

Two exceptions in MRPC 1.6(c) are potentially applicable here. First, the lawyer may reveal the information if the wife consents. MRPC 1.6(c)(1). See also RI-207. Second, the lawyer may reveal the information to extent necessary to rectify the consequences of an illegal or fraudulent act in the furtherance of which the lawyer's services have been used. MRPC 1.6(c)(3). Absent the wife's consent, the question becomes whether, under these facts, the lawyer's services were used in the furtherance of an illegal or fraudulent act, permitting disclosure under MRPC 1.6(c)(3).

The lawyer withdrew from the representation prior to speaking with the wife or otherwise investigating the truth of the information conveyed by the companion. As a result, the lawyer does not yet have a sufficient basis on which to conclude that the information from the companion is true, i.e., that an illegal or fraudulent act has taken place and that the wife's attempt to enforce the "loan" furthers that act. A lawyer may not reveal client confidences or secrets based on a mere suspicion, rather than knowledge, of a client's illegal or fraudulent act. RI-13. Nor does the lawyer have a duty to investigate the truth of the companion's statements, since the lawyer has withdrawn from representing the wife.

Based on the circumstances presented, the lawyer may not reveal the wife's allegedly fraudulent conduct absent her consent.