Can a lawyer settle a client's civil exposure by agreeing the other side won't report the client's possible crime, and can the aggrieved party's lawyer negotiate such a non-reporting deal?

Plain-English summary

The committee considered whether a lawyer for a client who faced both a civil suit and possible criminal charges could offer to settle the civil claim on the condition that the adversary not bring the criminal matter to law enforcement, and whether the aggrieved party's lawyer could negotiate such a non-reporting agreement. The starting point was DR 7-105(A), which bars a lawyer from presenting, participating in presenting, or threatening criminal charges solely to gain advantage in a civil matter, a rule grounded in EC 7-21's concern that using the criminal process to coerce civil settlements subverts both processes.

The committee answered both questions in the affirmative, subject to substantial caveats. It explained that DR 7-105(A) does not bar reporting a crime, but has been read to forbid even veiled allusions to an adversary's criminal liability in settlement talks, so a plaintiff's lawyer may not suggest that the client would withhold a report in exchange for a satisfactory settlement. It cautioned that non-reporting agreements carry serious legal problems: a settlement containing a promise not to report may be unenforceable by either side (citing Union Exchange National Bank v. Joseph), so the lawyer must fully disclose that risk to the client; a lawyer must withdraw a client's threat to avoid becoming an accomplice to extortion under the Penal Law; the agreement cannot extend to falsifying, suppressing, or destroying evidence, refusing lawful subpoenas, or testifying falsely; and the deal is governed by the Penal Law's "Compounding a Crime" statute, which permits a benefit no greater than reasonable restitution or indemnification for the harm, arising from the same facts as the crime, with a reasonable belief the facts support a charge. Given those limits, the committee concluded the Code does not stop a defendant's lawyer from seeking a non-reporting agreement, and that where the defendant first raises forbearance, the aggrieved party's lawyer may negotiate it without perverting the victim's civic duty into a recovery strategy; DR 7-105(A) should not be extended beyond its language to forbid responding to a proposal the defendant introduced.

Currency note

This opinion was issued in 1995, before New York replaced the Code of Professional Responsibility (the Disciplinary Rules and Ethical Considerations cited here) with the New York Rules of Professional Conduct, effective April 1, 2009. The New York Rules and the ABA Model Rules do not carry forward DR 7-105(A) in the same form, and the Penal Law provisions cited may have changed. 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 offer to settle a civil claim if the other side agrees not to report the client's possible crime?

A: The opinion concluded a lawyer for a potential civil and criminal defendant may make such an offer, provided the agreement does not amount to compounding a crime and does not contemplate fabricating, concealing, or destroying evidence.

Q: Can the aggrieved party's lawyer agree to a non-reporting deal?

A: Per the opinion, only if the potential defendant first introduces the idea; DR 7-105(A) bars the aggrieved party's lawyer from raising the adversary's criminal liability in settlement talks.

Q: Is a non-reporting settlement enforceable?

A: The committee cautioned that such settlements may be unenforceable by either side, and that the lawyer must fully disclose that risk to the client before negotiating one.

Q: What limits the size of a non-reporting settlement?

A: The committee explained that the Penal Law's compounding-a-crime provision limits any benefit to what is reasonably believed to be restitution or indemnification for the harm caused by the crime, arising from the same facts.

Background and rules framework

The opinion applied New York Code DR 7-105(A) (threatening criminal charges to gain civil advantage) and EC 7-21, together with DR 1-102(A)(3)-(5) (illegal conduct, dishonesty, conduct prejudicial to justice), DR 7-102(A)(5) (false evidence), DR 7-109(A) (suppressing evidence), and DR 1-103(A) (reporting), read against New York Penal Law provisions on extortion and compounding a crime. The analysis corresponds to ABA Model Rules 3.4 (fairness to opposing party), 4.4 (respect for the rights of third persons), and 8.4 (misconduct); the Model Rules do not retain DR 7-105(A).

Citations and references

Rules of Professional Conduct:

• New York Code DR 7-105(A), DR 1-102(A)(3), DR 1-102(A)(4), DR 1-102(A)(5), DR 1-103(A), DR 7-102(A)(5), DR 7-109(A); EC 7-21 (applied in the opinion)
• MR 3.4 (fairness to opposing party); MR 4.4 (rights of third persons); MR 8.4 (misconduct)

Statutes:

• New York Penal Law (extortion provisions; Compounding a Crime; evidence-tampering and witness-bribery provisions)

Cases:

• Union Exchange National Bank v. Joseph, 231 N.Y. 250 (1921), unenforceability of a settlement with a non-reporting promise
• In re Himmel, 125 Ill. 2d 531, 533 N.E.2d 790 (1988), suspension for trading nonreporting for settlement

Other opinions cited:

• ABA Formal Op. 92-363: non-reporting settlements under the Model Rules
• N.Y. County 607 (1972): threat to a civil enforcement agency

See also

• NYC Bar Formal Op. 1995-5: Reporting a Former Partner's Misconduct
• NYC Bar Formal Op. 1995-2: A Lawyer's Conflict From Its Own Possible Malpractice
• ISBA Ethics Op. 705: Acting on Claims Solicited by a Lay Corporation

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-1995-13-threatening-criminal-prosecution-agreements-to-forbear-from-presenting-criminal-charges-in-connection-with-civil-settlements/