My client received a Social Security lump-sum payment that I believe was miscalculated and overpaid by about $12,000. The client won't report it, and I still need to file a fee petition with the ALJ to get my percentage of the retroactive benefits. What do I have to do?

Plain-English summary

The inquiring attorney represented a client before a Social Security Administration (SSA) administrative law judge (ALJ), who awarded additional retroactive disability benefits. The client later received a lump-sum SSA payment that the attorney believed was overpaid by about $12,000. The attorney advised the client to hold the excess funds and return any overpayment, but the client had already spent the money and did not intend to report the overpayment. The attorney's fee was 25% of the client's retroactive benefits, which SSA automatically withholds until the attorney files a fee petition the ALJ approves. SSA notified the attorney it was withholding fee funds and urged prompt filing of a fee petition, or the funds would go to the client; because the withheld amount was 25% of the incorrectly calculated (inflated) benefits, it significantly exceeded the fee the attorney was actually owed.

The panel quoted Rule 3.3 ("Candor Toward the Tribunal") in full. It reasoned that the overpayment information, though ordinarily protected under Rule 1.6, is subject to the Rule 3.3(b) rule that candor duties continue to the conclusion of the proceeding and apply even where compliance requires disclosing Rule 1.6-protected information; because the fee petition had not yet been filed or approved, the proceeding was not concluded, so Rule 3.3 rather than Rule 1.6 governed. The panel found the attorney could not proffer a fee petition believed to be false or fraudulent under Rule 3.3(a)(1), and that if fees are based on a percentage of retroactive benefits, a proper fee petition must be based on correctly calculated benefits. It further reasoned that Rule 3.3(a)(2) requires disclosure of a material fact necessary to avoid assisting a client's criminal or fraudulent act, citing the panel's own R.I. Supreme Court Ethics Advisory Panel Op. 99-06 (1999), and concluded that if the client does not rectify the overpayment or consent to disclosure, the attorney's silence would assist the client's fraudulent conduct in violation of Rule 3.3(a)(2). The panel therefore concluded that, absent the client's cooperation, the attorney must advise the ALJ of the believed miscalculation and request confirmation or recalculation before basing a fee petition on it.

In practice

The opinion holds that, under the Rhode Island rules as they stood at the time of the opinion, a lawyer's Rule 3.3 candor duty to a tribunal continues through a still-open fee petition process and overrides Rule 1.6 confidentiality where the lawyer believes a client's retroactive benefit award was miscalculated and the client will not correct it, requiring the lawyer to disclose the believed miscalculation to the ALJ rather than file a fee petition based on the inflated figure.

Common questions

Q: My client got an SSA payment I believe is too high, and won't report it. Can I stay silent under Rule 1.6 and just file my fee petition?

A: No, according to this opinion. Because the proceeding remains open until the fee petition is filed and approved, Rule 3.3's candor duty, not Rule 1.6 confidentiality, governs, and the attorney may not file a fee petition believed to be based on incorrectly calculated benefits.

Q: What must the attorney do if the client won't notify SSA of the error?

A: The panel held the attorney must advise the ALJ that the client's retroactive benefit appears miscalculated and request confirmation or recalculation, so any subsequent fee petition is based on the correct figure.

Q: Does the attorney's candor duty depend on whether the client's conduct is fraudulent?

A: The panel tied the disclosure obligation to Rule 3.3(a)(2), reasoning that silence would assist the client's fraudulent conduct if the client neither rectifies the overpayment nor consents to disclosure.

Background and rules framework

The opinion applies Rule 3.3 (Candor Toward the Tribunal), quoted in full, including the Rule 3.3(a)(1) bar on offering a fee petition known to be false, the Rule 3.3(a)(2) duty to disclose facts necessary to avoid assisting client fraud, and Rule 3.3(b)'s statement that candor duties continue to the proceeding's conclusion and apply even over Rule 1.6-protected information. It relies on the panel's own R.I. Supreme Court Ethics Advisory Panel Op. 99-06 (1999) for the standard governing when silence assists client fraud under Rule 3.3(a)(2).

Citations and references

Rules of Professional Conduct:

• MR 3.3(a), (b), (c), (d) (Candor Toward the Tribunal) / RI Rule 3.3(a), (b), (c), (d)
• RI Rule 1.6 (Confidentiality of Information), addressed as subordinate to the Rule 3.3 candor duty on these facts

Other opinions cited:

• R.I. Supreme Court Ethics Advisory Panel Op. 99-06 (1999): standard for whether silence assists a client's fraudulent or criminal conduct under Rule 3.3(a)(2)

See also

• Alabama State Bar Op. 1993-06: Lawyer's Obligation Under Rule 3.3 to Disclose Adverse Information in an SSA Disability Hearing
• ABA Formal Op. 98-412: Disclosure Obligations of a Lawyer Who Discovers a Client Violated a Court Order

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%202007-06.pdf

Original opinion text

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

Final

                Rhode Island Supreme Court Ethics Advisory Panel
                    Opinion No. 2007-06 - Request No. 934
                             Issued March 26, 2007

Facts:

    The inquiring attorney represented a client before an administrative law judge

(ALJ) at the Social Security Administrative (SSA) in April 2004. The ALJ determined that
the client, who was already receiving disability benefits, was entitled to additional benefits
for a period of twelve months prior to the previously determined onset date.

    Sometime after the hearing the client informed the inquiring attorney that he/she

received a lump sum payment from SSA. The inquiring attorney believes that the client
was mistakenly paid about twelve thousand dollars more than the amount to which the
client was entitled. The inquiring attorney advised the client that the amount did not
appear to be correct, that the client should hold the excessive funds until the correct
amount could be confirmed, and that the client would have to return any overpayments.
The client asserted that he/she had spent the money. The inquiring attorney does not
believe the client intends to report the overpayment to SSA. The inquiring attorney took
no further action on this matter pending receipt of a Notice of Award, which he/she states
he/she has never received.

     The inquiring attorney's fee for this representation is twenty-five percent of the

client's retroactive benefits. The inquiring attorney states that when SSA makes a
retroactive payment to a claimant, SSA automatically holds back twenty-five percent of the
claimant's benefits for counsel fees. The inquiring attorney further states that in cases such
as this client's case, these funds are not paid to the attorney until the attorney files a fee
petition with the ALJ, and the ALJ approves it.

    SSA recently notified the inquiring attorney that it is withholding funds for his fees

in the client's matter, and urged him/her to promptly file a fee petition or else SSA would
disburse the monies to the client. The amount being withheld for his/her counsel fees
significantly exceeds the fee to which the inquiring attorney is entitled because it is
twenty-five percent of the incorrectly calculated benefits. The inquiring attorney would
like to obtain his/her fee, but does not want to run afoul of the Rules of Professional
Conduct, particularly Rule 1.6.

Issue Presented

   The inquiring attorney asks what the proper course of conduct is under the Rules of

Professional Conduct.
Final 2007-06
Page 2 of 3

Opinion

    The inquiring attorney has an obligation of candor to the tribunal under Rule 3.3. If

the inquiring attorney cannot convince the client to notify SSA of the error, the inquiring
attorney must advise the ALJ that he believes that the client's retroactive benefit was
miscalculated resulting in overpayment, and should request a confirmation or recalculation
of the retroactive benefit upon which he/she can base a proper fee petition.

Reasoning

   Rule 3.3 entitled "Candor Toward the Tribunal" states 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;
                  (3) fail to disclose to the tribunal legal authority in
                  the controlling jurisdiction known to the lawyer to be
                  directly adverse to the position of the client and not
                  disclosed by opposing counsel, or
                  (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.

            (b) The duties stated in paragraph (a) continue to the conclusion
            of the proceeding, and apply even if compliance requires
            disclosure of information otherwise protected by Rule 1.6.

            (c) A lawyer may refuse to offer evidence that the lawyer
            reasonably believes is false.

            (d)   In the ex parte proceeding, a lawyer shall inform the tribunal
                  of all material facts known to the lawyer which will enable
                  the tribunal to make an informed decision, whether or not the
                  facts are adverse.

    The SSA's overpayment to the inquiring attorney's client is information related to

the representation. As such, it is information ordinarily protected from disclosure by the
inquiring attorney under Rule 1.6 "Confidentiality of Information." However, during the
course of proceedings before a tribunal, lawyers have an obligation of candor to the
tribunal which apply even if compliance requires disclosure of information protected by
Final 2007-06
Page 3 of 3

Rule 1.6. See Rule 3.3(b). The duties imposed in paragraph (a) of the Rule continue to the
conclusion of the proceeding. Rule 3.3(b). Insofar as the inquiring attorney must file a fee
petition with the ALJ in order to receive his/her fee, the proceeding in this inquiry is not
concluded. Therefore Rule 3.3, and not Rule 1.6, governs the conduct of the inquiring
attorney.

    One thing is clear. The inquiring attorney may not proffer to the ALJ a fee petition

that the inquiring attorney believes to be false or fraudulent. See Rule 3.3(a)(1). If fees in
SSA matters are based on a percentage of a claimant's retroactive benefits, a fee petition
that comports with the inquiring attorney's obligations under Rule 3.3(a)(1) must be based
on correctly calculated benefits.

    Moreover, Rule 3.3(a)(2) requires lawyers to disclose to the tribunal a material fact

when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.
Whether disclosure is required by Rule 3.3(a)(2) depends upon whether the inquiring
attorney's silence will assist the client in conduct that is fraudulent or criminal. See R.I.
Supreme Court Ethics Advisory Panel Op. 99-06 (1999). The Panel believes that if the
client does not rectify the situation or does not consent to the inquiring attorney's doing so,
the inquiring attorney's failure to disclose the miscalculated benefits would assist his/her
client in fraudulent conduct in violation of Rule 3.3(a)(2).

    Accordingly, the Panel concludes that if the inquiring attorney is unable to

convince the client to notify SSA of the error, the inquiring attorney, pursuant to Rule 3.3,
must advise the ALJ that he/she believes that the client's retroactive benefit was
miscalculated resulting in overpayment, and should request a confirmation or recalculation
of the retroactive benefit upon which he/she can base a proper fee petition.