What must a North Carolina lawyer do after learning a client concealed income in a consent judgment about to be presented to the court?

Plain-English summary

A lawyer represented a husband seeking to reduce his child support obligation after a move and a reported drop in income. To resolve the matter by consent, opposing counsel required documentation of the husband's wages, and the lawyer forwarded a pay stub and a proposed consent judgment for the husband's signature. The husband then told the lawyer he had signed, and in the same call revealed that his tax counsel was working to conceal other income he had received but never disclosed, expressing relief that the wife had been misinformed about his true income. With the signed judgment in hand but not yet signed by either attorney, the lawyer believed the husband was attempting a fraud on the court.

The opinion concluded the lawyer could not participate in presenting the consent judgment if it rested on false income information, citing Rule 3.3(a)(1) and (a)(4) (candor toward the tribunal). The lawyer first had to try to persuade the husband to rectify the situation by disclosing his true income to the opposing party (Rule 3.3, Comment [5]). If the husband refused, the lawyer had to tell him he could not participate in presenting false information and had to withdraw from the representation (Rule 3.3, Comment [10]). The opinion added that the lawyer should inform the husband that if he presented the consent judgment himself or through other counsel, the lawyer would have discretion to disclose to the court or opposing counsel as necessary, because the husband had used the lawyer's services to perpetrate a fraud on the court (Rule 1.6(d)(5); Rule 3.3, Comment [10]).

Currency note

This opinion was issued in 2000, before North Carolina's adoption of the 2003 revisions to the Rules of Professional Conduct, and it cites the rules under the numbering then in effect (the candor rule at Rule 3.3(a)(1) and (a)(4) with Comments [5] and [10], and the confidentiality exception at Rule 1.6(d)(5)). The candor and confidentiality provisions were revised in later amendments. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule subsection mentioned here.

Common questions

Q: Can a North Carolina lawyer present a consent judgment the lawyer knows is based on concealed income?

A: No. The opinion held the lawyer may not participate in presenting a consent judgment based on false income information, citing the candor obligations of Rule 3.3(a)(1) and (a)(4).

Q: What must the lawyer do first?

A: The opinion required the lawyer to try to persuade the client to rectify the situation by disclosing his true income to the opposing party, citing Comment [5] to Rule 3.3.

Q: What if the client refuses to correct the false information?

A: The opinion held the lawyer must tell the client he cannot participate in presenting false information and must withdraw from the representation, citing Comment [10] to Rule 3.3.

Q: May the lawyer disclose the fraud if the client proceeds anyway?

A: The opinion held the lawyer has discretion to disclose to the court or opposing counsel as necessary, because the client used the lawyer's services to perpetrate a fraud on the court (Rule 1.6(d)(5)).

Background and rules framework

The opinion applied North Carolina Rule 3.3 (candor toward the tribunal), the analogue to Model Rule 3.3, including subsections (a)(1) and (a)(4) and Comments [5] and [10], together with the confidentiality exception in Rule 1.6(d)(5) (analogue to Model Rule 1.6) permitting disclosure to rectify a client's fraud in which the lawyer's services were used.

Citations and references

Rules of Professional Conduct:

• MR 3.3 (candor toward the tribunal) / NC Rule 3.3(a)(1), (a)(4), Comments [5], [10]
• MR 1.6 (confidentiality of information) / NC Rule 1.6(d)(5)

See also

• ABA Formal Op. 92-366: Noisy Withdrawal to Avoid Assisting Fraud
• ABA Formal Op. 93-376: Client Lies in Discovery
• NY State Bar Op. 781: Matrimonial Lawyer and a False Financial Statement

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/99-formal-ethics-opinion-16/

Original opinion text

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

Inquiry:

Attorney represents Husband in an action filed by Wife for child support and other relief. The parties entered into a consent order giving Wife custody of the minor child, with Husband paying child support.

Sometime thereafter, Husband moved out of state and changed employment. Husband informed Attorney that his income was substantially reduced and he wanted Attorney to file a motion to modify the child support obligation. Attorney filed a motion seeking to reduce the child support obligation. Opposing counsel offered Attorney an opportunity to resolve the matter by consent, but required documentation of Husband's current wages. Attorney received a copy of Husband's current pay stub, which included income year to date, and forwarded it to Wife's attorney. Wife's attorney sent a proposed consent judgment to Attorney, which Attorney forwarded to Husband for his signature. Husband called Attorney and indicated he had signed the document. During the course of that conversation, Husband stated he had a tax attorney working on his tax returns. Husband further indicated his tax counsel was attempting to conceal other income, which Husband had received, but of which he had neglected to inform Attorney. Husband felt relieved that Wife had been misinformed as to his true income.

Attorney has now received the signed proposed consent judgment from Husband. It has not yet been signed by either attorney. Attorney believes Husband's deliberate misrepresentation of the true nature of his income is an attempt to perpetrate a fraud on the court. Thus far, Husband has not been asked under oath, either in a formal court proceeding or during discovery for this motion, to disclose his complete income.

What should Attorney do?

Opinion:

Attorney may not participate in presenting the consent judgment to the court if it is based upon false income information. See Rules 3.3(a)(1) and (a)(4). In the first instance, Attorney must try to persuade Husband to rectify the situation by disclosing his true income to the opposing party. Rule 3.3, cmt. [5]. If Husband refuses, Attorney must inform Husband he cannot participate in presenting false information to a court and must withdraw from the representation. Rule 3.3, cmt. [10]. Attorney should also inform Husband that if he presents the consent judgment on his own or through other counsel, Attorney has the discretion to make disclosure to the court or opposing counsel as necessary, because Husband used his services to perpetrate a fraud on the court. Rule 1.6(d)(5); see also Rule 3.3, cmt. [10].