Must a lawyer report another lawyer's trust-account misconduct learned during a case when the client orders him not to disclose it?

Plain-English summary

A lawyer represented the ex-wife of an attorney in a domestic-relations case. Through subpoenaed records and other financial information, the lawyer uncovered apparent irregularities in the attorney-ex-husband's trust account, including apparent payment of personal expenses and personal loans from the trust account and an apparent failure to follow the recordkeeping and segregation rules. The client, however, did not want her ex-husband's finances disclosed and directed the lawyer not to disclose, partly because trust problems for the ex-husband could reduce or end her support. The circuit court had sealed the file and ordered that the subpoenaed documents not be publicly disseminated and be returned at the end of the case. The committee was asked whether the seal and the court order relieved the lawyer's duty to report, whether disclosure to the judge satisfied any reporting duty, and whether the lawyer had to inform the bar over the client's direct order not to.

The controlling rules were DR 1-103(A) (duty to report another lawyer's violation that raises a substantial question as to fitness, except as provided in DR 4-101), DR 4-101(A) and (B)(1) (defining confidences and secrets and barring their disclosure), and DR 7-101(A)(3) (not intentionally prejudicing the client), with guidance from EC 1-4.

The committee acknowledged that trust-account misconduct generally constitutes a per se violation that must be reported. But it concluded that here the information was a "secret" under DR 4-101, because it was gained in the professional relationship, the client asked that it be held inviolate, and disclosure would likely be detrimental to her. Because DR 1-103(A) exempts information protected by DR 4-101, and the duty to preserve the client's secret is paramount to the duty to report, the lawyer could not inform the bar over the client's wishes (citing LE Op. 217, 497). That conclusion rendered the seal and disclosure-to-the-court questions moot. The committee added that reporting might also violate the court's order against disseminating the documents, which would be improper under DR 7-105(A).

Currency note

This opinion was issued in 1992, under Virginia's former Code of Professional Responsibility (the disciplinary rules it cites), before the Virginia State Bar's adoption of the Rules of Professional Conduct effective January 1, 2000. As the opinion's committee note observes, where the information is a client confidence, current Rule 1.6(c)(3) allows reporting only with the client's consent, and the lawyer must consult the client. 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: Must a lawyer report another lawyer's trust-account misconduct?

A: The committee said trust-account misconduct is generally a per se reportable violation, but that the duty under DR 1-103(A) yields where the information is protected by DR 4-101.

Q: What happens when the information is the client's secret and the client objects?

A: Under this 1992 opinion, the lawyer could not report. The committee held the information was a "secret" under DR 4-101, that DR 1-103(A) exempts such information, and that the duty to preserve the secret was paramount, so reporting over the client's objection would be improper.

Q: Did the court's sealing order matter?

A: The committee held the confidentiality conclusion rendered the seal and disclosure-to-the-court questions moot, and added that reporting might also violate the court's order against disseminating the documents, which would be improper under DR 7-105(A).

Background and rules framework

The opinion interpreted former Virginia DR 1-103(A) (reporting), DR 4-101(A) and (B)(1) (confidences and secrets), DR 7-101(A)(3) (not prejudicing the client), and DR 7-105(A) (compliance with court orders), with EC 1-4. The reporting duty is now in Virginia Rule 8.3 and the confidentiality limit on it in Rule 1.6, including Rule 1.6(c)(3) as the committee note describes.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 1-103(A); DR 4-101(A), (B)(1); DR 7-101(A)(3); DR 7-105(A); EC 1-4 (Code of Professional Responsibility)
• ABA Model Rule 8.3 (reporting misconduct); Model Rule 1.6 (confidentiality)

Other opinions cited:

• Virginia LE Op. 217, 497: improper to report another lawyer's misconduct learned in the professional relationship where the client will not consent or disclosure would harm the client.

See also

• VA LEO 1545: Reporting Opposing Counsel
• VA LEO 1562: Fee Arbitrators' Duty to Report
• VA LEO 1646: Reporting Misconduct in a Civil Case

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1468.pdf

Original opinion text

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

Committee Opinion
December 14, 1992
LEGAL ETHICS OPINION 1468

OBLIGATION TO REPORT ATTORNEY
MISCONDUCT.

You have indicated that a lawyer was retained to represent the ex-wife of an attorney in
a domestic relations case. As part of the preparation for the trial, the lawyer subpoenaed
the attorney's general and trust account records (only some of which were provided) and
reviewed other financial information from other sources. You indicate further that
apparent irregularities, including the apparent payment of personal expenses from
the trust account and the making of personal loans to the attorney from the trust account,
were uncovered through the examination of those records. You advise that there also
appears to have been no adherence to DR:9-102 and DR:9-103 regarding record keeping
and segregating of funds.
Furthermore, you indicate that it is the client's desire that no disclosure be made
regarding her ex-husband's finances or trust accounts and the client has directed the
attorney not to do so. The lawyer believes that it is not in the client's best interest to
disclose information regarding her ex-husband's trust accounts since the apparent
irregularities in those records may cause the attorney business problems, thus reducing or
terminating the client's support.
Finally, you indicate that the irregularities have been called to the attention of a Circuit
Court judge, to whom the ex-husband/attorney has offered explanations. A seal on the
Circuit Court file exists, preventing disclosure of such documentation to the public, and
the Circuit Court judge has ordered that no documentation provided to the wife's
attorney, as a result of a subpoena to the attorney's partner, shall be publicly
disseminated, and that the wife's attorney must return the originals and all copies of such
documents in the attorney's possession at the end of the case.
You have asked the Committee to opine, under the facts of the inquiry, (1) whether the
seal on the file and the Circuit Court Order alleviates the wife's attorney's duty to report
alleged trust violations; (2) whether the wife's attorney may rely on disclosure to the
Circuit Court Judge as satisfying the attorney's duty to disclose alleged trust account
irregularities; and (3) if the wife's attorney must inform the Bar of the apparent
irregularities over the client's direct order not to do so, despite the likelihood that such
disclosure would cause the client irreparable harm.
The appropriate and controlling disciplinary rules relative to your inquiry are DR:1103(A) which mandates that
[a] lawyer having information indicating that another lawyer has
committed a violation of the Disciplinary Rules that raises a substantial
question as to that lawyer's fitness to practice law in other respects,
shall report such information to the appropriate professional authority,
except as provided in DR:4-101; [emphasis added]

Committee Opinion
December 14, 1992
DR:4-101(A) and (B)(1) which provide respectively that
"[c]onfidence" refers to information protected by the attorney-client
privilege under applicable law, and "secret" refers to other information
gained in the professional relationship that the client has requested be
held inviolate or the disclosure of which would be embarrassing or would
be likely to be detrimental to the client; and
[except in limited circumstances] a lawyer shall not knowingly reveal a
confidence or secret of his client; and
DR:7-101(A)(3) which precludes a lawyer from intentionally prejudicing or damaging
his client during the course of the professional relationship, except as required under
DR:4-101(D), i.e., when the client intends to commit a crime or has committed a fraud
against the court.
Further guidance is available through Ethical Consideration 1-4 which exhorts that
[t]he integrity of the profession can be maintained only if conduct of
lawyers in violation of the Disciplinary Rules is brought to the attention
of the proper officials. A lawyer should reveal voluntarily to those
officials all unprivileged knowledge of conduct of lawyers which he
believes clearly to be in violation of the Disciplinary Rules. [emphasis
added]
As indicated by the facts you have provided, the Committee is cognizant of the
dilemma which arises as a result of the lawyer's tension between his duty, on the one
hand, to report another attorney's misconduct in order to protect the integrity of and
encourage public confidence in the profession and his duty, on the other hand, to preserve
the client's secrets and confidences and not to intentionally prejudice or damage his
client.
The Committee is cognizant that DR:1-103(A) mandates the attorney's reporting of the
misconduct only when such misconduct raises a substantial question as to that lawyer's
fitness to practice law in other respects. Whether an attorney's conduct is such that it
raises a "substantial question as that lawyer's fitness to practice law in other respects"
requires a case-by-case determination which should be made after consideration of the
facts and analysis of the impact on the offending lawyer's fitness to practice law.
Nevertheless, the Committee is of the general opinion that where an attorney has
knowledge of another attorney's misconduct involving a trust account, such misconduct
constitutes a per se violation which must be reported.
In the facts you present, the Committee is of the opinion that the information as to the
ex-husband/attorney's misconduct does constitute a secret as defined by DR:4-101, since
such information was gained in the course of the professional relationship [with the exwife]; the ex-wife/client has requested that it be held inviolate; and the disclosure of

Committee Opinion
December 14, 1992
it would be likely to be detrimental to the ex-wife/client.
The Committee has previously opined that it is improper for an attorney to report to the
Bar information concerning unethical conduct by another attorney when such information
was obtained during the course of the professional relationship and the client refuses to
consent to the disclosure thereof or when such disclosure would adversely affect the
client's interests. LE Op. 217 and LE Op. 497.
In response to the three questions you raise, under the facts you present, the Committee
believes it would be improper and violative of the attorney's ethical responsibility to
preserve the client's secret if the attorney disclosed the information in derogation of the
client's wishes since DR:1-103(A) exempts from obligatory reporting any information
which is protected by DR:4-101. Since the Committee is of the opinion that the attorney's
duty to preserve such secret information is paramount to the attorney's duty to report
misconduct, precluding the wife's attorney from informing the Bar of the apparent
irregularities, your first and second questions, regarding the seal on the file and the wife's
attorney's reliance on disclosure to the Court, are rendered moot.
Finally, it appears to the Committee that for the attorney to report the information also
might be in violation of the Court's direct Order precluding the attorney from
disseminating the information. Such violation of the Order would similarly be improper
and violative of DR:7-105(A).
Committee Opinion
December 14, 1992
Legal Ethics Committee Notes. – If information about the ethics violation is a client
confidence, a lawyer may report the other lawyer’s misconduct only if the client consents
under Rule 1.6(c)(3); the lawyer considering whether to report must consult with the
client under that Rule.