After I withdrew from a client's case because I learned his claim may be fraudulent, must I report it, refund my fee, or warn his new lawyer?

Plain-English summary

A law firm represented a driver and a passenger injured in an automobile accident. After the original lawyer left, the inquiring attorney continued the file, settling the passenger's claim and placing the driver's claim into suit. During discovery the driver told the attorney he never had a passenger in his car; the passenger/client confirmed the driver was not being truthful. The attorney moved to withdraw from the driver's case and asked (1) whether the attorney must notify anyone of the potential fraudulent claim, (2) whether the attorney must return the fee, and (3) whether the attorney must inform the driver's new attorney.

On the first and third questions, the opinion applies Rule 1.6, "Confidentiality of Information." Because the information relates to the representation of a client, it is protected under Rule 1.6(a). The opinion notes that since the case settled out of court, the attorney does not have to be concerned with perpetrating a fraud on a tribunal, and that the attorney acted responsibly by withdrawing once the information was known. As to informing new counsel, the opinion concludes that under Rule 1.6(a) the attorney cannot reveal the information without the informed consent of the client.

On the fee question, the opinion states that it cannot decide whether a refund is owed without judging whether the attorney had knowledge of the alleged fraud. Applying the "knowingly" definition in the Terminology section of the Preamble (actual knowledge, which may be inferred from circumstances), and given the attorney's representation that there was no prior knowledge of the fraud, the Panel agrees that the Rules do not address the issue of reimbursement.

In practice

Under this opinion, the confidentiality obligation of Rule 1.6 controls both the reporting and the disclosure-to-new-counsel questions: the information is protected and may not be revealed without the client's informed consent. The opinion treats the fee-refund question as outside what the Rules address on these facts, because the attorney represented that there was no prior knowledge of the fraud.

Common questions

Q: Must a lawyer report a client's possibly fraudulent claim after withdrawing?

A: On these facts the opinion says no; the information is protected by Rule 1.6(a), and because the case settled out of court there was no fraud on a tribunal to address.

Q: Can the lawyer warn the client's new attorney about the problem?

A: No. The opinion concludes that under Rule 1.6(a) the attorney cannot reveal the information to new counsel without the client's informed consent.

Q: Does the lawyer have to refund the fee?

A: The opinion declines to resolve this, stating it cannot judge a refund without deciding whether the attorney knew of the alleged fraud; given the attorney's representation of no prior knowledge, the Rules do not address reimbursement.

Background and rules framework

The opinion interprets Rhode Island Rule of Professional Conduct 1.6, the analog of Model Rule 1.6, which bars a lawyer from revealing information relating to the representation of a client absent client consent after consultation or implied authorization. The opinion also draws on the Terminology section of the Preamble's definition of "knowingly," "known," and "knows" as denoting actual knowledge, which may be inferred from the circumstances.

Citations and references

Rules of Professional Conduct:

• MR 1.6 (confidentiality of information)
• RI RPC 1.6(a) (same)
• RI Rules of Professional Conduct, Preamble Terminology ("knowingly")

See also

• RI EAP Opinion 92-80: confidentiality bars reporting a prior lawyer's fraud role without client consent under 1.6
• RI EAP Opinion 93-08: subpoenaed lawyer invokes privilege but obeys final court order under 1.6

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%2093-10.pdf

Original opinion text

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

Final
ETHICS ADVISORY PANEL
Opinion #93-10, Request #340
Issued March 15, 1993

An attorney seeks Panel guidance with regard to the following set of facts. The attorney's law firm represented a driver and passenger who were injured in an automobile accident. The attorney who initially handled this case left the law firm therefore the inquiring attorney continued to work on the file. The attorney negotiated settlement with each client and the defendant's insurance carrier. A settlement was achieved on behalf of the passenger but not the driver. The attorney placed the driver's claim into suit. As part of the litigation process, the driver was asked to answer interrogatories. Soon thereafter, the driver informed the attorney that he never had a passenger in his car. The attorney contacted the passenger/client who informed the attorney the driver was not being truthful in his story. The attorney filed a motion to withdraw from the driver's case. The attorney asks the following questions: 1) Whether the attorney must notify anyone of the potential fraudulent claim; 2) whether the attorney must return the attorney's fee on this case; and 3) whether the attorney has a duty to inform the driver's new attorney of these problems.

The issue of whether the attorney must notify anyone of the potential fraudulent claim is guided by Rule 1.6 entitled "Confidentiality of Information". The rule states that:

(a) A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are implicitly authorized in order to carry out the representation, and except as stated in paragraph (b).

This information is protected under Rule 1.6(a) because it relates to the representation of a client. Since the case settled out of court the attorney does not have to be concerned with perpetrating a fraud on a tribunal. In addition, the attorney acted responsibly by withdrawing from the case after the information was known.

The Panel believes that it cannot answer whether or not the attorney must refund the fee without making a judgment as to whether or not the attorney had knowledge of the alleged fraud. The definition of knowledge is set forth in the Terminology section of the Preamble to the Rules. "Knowingly", "Known", or "Knows" denotes actual knowledge of the fact in question. A person's knowledge may be inferred from circumstances." The attorney informed the Panel that there was no prior knowledge of the fraud, therefore, the Panel agrees that the Rules do not address the issue of reimbursement.

The Panel further believes that the information is protected under Rule 1.6(a) with regard to the attorney's duty to inform new counsel of this information. Pursuant to Rule 1.6(a), the attorney cannot reveal this information without the informed consent of the client.