What must a lawyer do if a workers' comp client plans to spend a lump-sum award differently from how it was represented to the court?

Plain-English summary

The committee was asked what obligation a lawyer has, after procuring a lump-sum workers' compensation award for a claimant, to ensure the funds are disbursed as presented to the Division of Workers' Compensation and approved by the court. The committee answered that the attorney must not participate in or aid an improper expenditure and must not knowingly mislead the court about the intended use of the funds.

The committee identified two rules. Under Rule 1.2(d), a lawyer may not counsel or assist a client in conduct the lawyer knows is criminal or fraudulent, though the lawyer may discuss legal consequences and help the client make a good-faith effort to determine the law. The committee read Comment 9 to bar participation in a sham transaction and concluded a lawyer would violate Rule 1.2(d) by knowing the client had no intention of using the lump sum as represented to the court and the Division, particularly if the client diverted it to other purposes; the lawyer should not continue to assist a client who has changed those plans.

The committee treated the candor rule as more directly applicable. It explained the rule bars making false statements to a tribunal or failing to disclose a material fact when disclosure is necessary to avoid assisting a client's criminal or fraudulent act, and that this is the only mandatory disclosure provision in the Rules, operating without regard to the confidentiality limits of Rule 1.6. The committee noted the duty turns on actual knowledge (which may be inferred from circumstances), that the basis for a lump-sum request is material, and that the candor duties continue to the conclusion of the proceeding, so post-trial conduct can shed light on what the lawyer knew or intended. It added that if the attorney submitted documentation to justify the lump sum knowing it was false, the obligation to take "reasonable remedial measures" includes disclosing the client's deception to the court.

Currency note

This opinion was issued in 1987, before the State Bar of Montana's adoption of the 2004 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 Treat this page as historical context, not current guidance.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: Can a lawyer help a client obtain a lump sum the client plans to spend differently than represented?

A: No. The opinion concludes that knowing the client has no intention of using the funds as represented to the court and Division would violate Rule 1.2(d), and the lawyer should not continue to assist once the client changes those plans.

Q: Does confidentiality excuse staying silent about the deception?

A: No. The opinion states the candor duty is the only mandatory disclosure provision in the Rules and operates without regard to the confidentiality limits of Rule 1.6.

Q: How long does the duty of candor last?

A: The opinion states the candor duties continue to the conclusion of the proceeding, and that conduct after trial could provide insight into what the lawyer knew or intended during it.

Background and rules framework

The opinion interprets Montana Rule of Professional Conduct 1.2(d) (Scope of Representation; Model Rule 1.2(d)) and the candor rule, Rule 3.3 (Candor Toward the Tribunal; Model Rule 3.3), including its knowledge standard and its duty to take reasonable remedial measures.

Citations and references

Rules of Professional Conduct:

• Mont. R. Prof. Cond. 1.2(d) (scope; not assisting criminal or fraudulent conduct) / Model Rule 1.2(d)
• Mont. R. Prof. Cond. 3.3 (candor toward the tribunal) / Model Rule 3.3

See also

• State Bar of Montana Ethics Op. 870326: A Lawyer's Duty When the Client Commits Perjury
• ABA Formal Op. 508: The Ethics of Witness Preparation

Source

• Landing page: https://www.montanabar.org/For-Attorneys/State-Bar-Resources/Ethics-Opinions
• Original PDF: https://www.montanabar.org/Portals/MONTANA/870522.pdf

Original opinion text

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

Ethics Opinion
QUESTION PRESENTED: What, if any, obligation does an attorney who represents a workers' compensation claimant in procuring a lump sum award, have to insure that the funds are disbursed in the manner presented to the Division of Workers' Compensation and which was approved by the Division of the Court?

ANSWER: The attorney must not participate or aid in improper expenditure or knowingly mislead the court regarding the intended use of the funds. See analysis.

ANALYSIS: This question may be governed by Model Rule 1.2(d) (Scope of Representation) and/or Model Rule 3.3 (Candor toward the Tribunal).

Rule 1.2 Provides:

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

Rule 3.3 provides in part as follows:

(a) A lawyer shall not knowingly:

(1) make a false statement of material fact or law to a tribunal;
(2) fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.

Rule 1.2(d) (comment 9) provides that the lawyer should not participate in a sham transaction; for example, a transaction to effectuate criminal or fraudulent escape of tax liability. A lawyer is required to give an honest opinion about the actual consequences that appear likely to result from a client's conduct. Further, a lawyer may not continue assisting a client in conduct that the lawyer originally supposes is legally proper but discovers is criminal or fraudulent.

It appears to the committee that a lawyer would violate 1.2(d) if he knew that the client had no intention of using lump sum money in the manner represented to the Court and the Division, particularly if the client is using the money for other purposes. Certainly the lawyer should not continue to represent or assist the client in using money in ways other than as represented when the lawyer learns that the client has changed his plans.

Rule 2.2, Candor to the Tribunal, is more directly applicable to this inquiry. In essence, the Rule prohibits making false statements to a tribunal or failing to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client. This rule exists without regard to disclosure of confidential information (Rule 1.6) and, in fact, is the only mandatory disclosure provision in the Rules. The debate on Rule 3.3 reveals that there was very strong sentiment that courts should not be misled.

The Rule requires that the lawyer not knowingly mislead the tribunal. Knowingly is defined as ". . . actual knowledge of the fact in question. A person's knowledge may be inferred from the circumstances." (Terminology section, Model Rules of Professional Conduct). The fact question then becomes whether, under the circumstances, the lawyer knew that the money would not be used as represented. The Rule also prohibits a false statement or failure to disclose material facts. Surely the reason for a lump sum request is material. Rule 3.3(b) provides that, "The duties stated in paragraph (a) continue to the conclusion of the proceeding." Nevertheless, conduct after trial could provide insight into what the lawyer knew or intended during the proceeding.

Rule 3.3(4) provides that an attorney may not:

(4) offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures.

This rule could be applicable if the attorney submits documentation or other evidence to justify a lump sum when he knows that it is false or misrepresents the situation. The phrase ". . . reasonable remedial measures" includes the responsibility to disclose the existence of a client's deception to the court.

                        THIS OPINION IS ADVISORY ONLY