CI-841

April 15, 1983

SYLLABUS

A lawyer who receives unprivileged knowledge of another lawyer's ethics violation from persons other than the lawyer's client, is obligated to report the lawyer's misconduct to the Attorney Grievance Commission even though the lawyer's client instructs him/her to remain silent because the disclosure may be detrimental to the client's economic interests.

References: MCPR DR 1-102(A), DR 1-103(A), DR 4-101(A), DR 4-101(C)(2), DR 9-102; CI-572.

TEXT

A lawyer hired to perform services relative to the probate of an estate, engages in unauthorized personal use of the estate funds and later makes restitution. The lawyer also fails to diligently pursue the closing of the estate.

The beneficiaries of the estate suspect wrongdoing and hire a second lawyer to pursue a potential civil remedy against the first lawyer and to substitute for the first lawyer relative to the estate. The first lawyer admits unauthorized use of estate funds and dilatoriness in handling estate matters to the second lawyer. The first lawyer and the beneficiaries of the estate agree to negotiate a settlement that will repair the injury done to the estate. The beneficiaries of the estate indicate to the second lawyer that they do not wish to take any further action against the first lawyer including reporting the alleged misconduct to any disciplinary agency.

The committee understands that the first lawyer admitted unauthorized use of client funds and delay in settling the estate to the second lawyer under circumstances where there was no lawyer-client relationship between the two lawyers. MCPR DR 1-102 provides in part:

"A. A lawyer shall not:

". . .

"(4) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation.

"(5) Engage in conduct that is prejudicial to the administration of justice.

"(6) Engage in any other conduct that adversely reflects on his fitness to practice law."

While this committee does not sit as a fact-finding body, it would appear from the information furnished that the first lawyer has violated the provisions of MCPR DR 1-102 and the provisions of MCPR DR 9-102 regarding the preservation of the identity of client funds.

MCPR DR 1-103(A) states:

"A lawyer possessing unprivileged knowledge of a violation of DR 1-102 shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation."

In this instance, the "tribunal" would be the Probate Court having jurisdiction over the estate and the "authority empowered to investigate or act upon such violation" would be the Attorney Grievance Commission. We emphasize the DR 1-103(A) speaks in mandatory terms requiring disclosure of "unprivileged knowledge."

In CI-572, the committee held that where the first lawyer admitted to the second lawyer that the first lawyer violated MCPR DR 5-103(B) by advancing funds to the client during litigation with repayment contingent upon recovery, the second lawyer had a duty to report the first lawyer's violation of the Disciplinary Rule because the information was not privileged since it had been furnished by the first lawyer, and not by the client.

In this inquiry the clients (the estate beneficiaries) have advised that they do not care to take further action against the first lawyer now that he/she has agreed to make restitution. MCPR DR 4-101 obligates all lawyers to preserve "confidences" and "secrets" of the client. These terms are defined in DR 4-101(A) as follows:

"'Confidence' 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 to be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client."

It is evident that Canon 4 of the MCPR makes a distinction between a "confidence" and "secret" beyond mere technical considerations of secrecy in the evidentiary sense ("confidence") and other information gained in the professional relationship ("secret"). Most, but not all, information received by the lawyer from the client within the professional relationship is protected. The code does contemplate the possibility that client confidences and secrets may have to be revealed in order to satisfy the requirements of other disciplinary rules. MCPR DR 7-102(B)(1) requires a lawyer to reveal client fraud committed in the course of the lawyer's representation and DR 4-101(C)(2) authorizes a lawyer to disclose client confidences or secrets when permitted "under Disciplinary Rules or required by law or court order."

Admissions made to a lawyer in the course of representation of a client by persons other than the client, or client's agent, are not protected as privileged communications under applicable law. If the second lawyer were called as a witness, and asked about the first lawyer's conduct, the clients (estate beneficiaries) of the second lawyer would have no standing to assert the privileged communication rule since the second lawyer's testimony would not disclose any communication made to the second lawyer by the clients, much less a privileged one. Therefore, it is clear that the information concerning the first lawyer's wrongdoing is not a "confidence."

A "secret" is defined, in part, to include "other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which . . . would likely to be detrimental to the client." This "other information" received by the lawyer during the representation of the client necessarily refers to "unprivileged knowledge" or information relating to the client and his/her affairs. Since DR 4-101(A) clearly distinguishes between privileged information and unprivileged information, there is no basis to conclude that the term "unprivileged" in DR 1-103(A) was selected by the drafters of the Code without regard to the limited meaning of that word which flows from the DR 4-101 definition of a "confidence." DR 1-103(A) clearly obligates a lawyer to disclose "unprivileged" knowledge of a violation of DR 1-102.

For this committee to rule that DR 1-103(A) prohibits the disclosure of both "secrets" and "privileged information" would result in the professionally intolerable situation that whenever a lawyer is caught misappropriating client funds to his or her own personal use, the offender could insulate him/herself for disciplinary action by conditioning restitution upon the undertaking of the client and the client's new lawyer not to disclose the misconduct. The client will likely agree since the client is primarily concerned with the return of the money and has little interest in maintaining the integrity of the profession. The consequences of leaving an unscrupulous wrongdoer in the professional marketplace to proliferate a similar act of misconduct upon other unsuspecting clients is intolerable even under circumstances where disclosure may be to the client's disadvantage or economic detriment.

In cases where a lawyer, in the course of his professional employment, learns of misconduct of another lawyer from persons other that the lawyer's client, both the Code and common sense compel disclosure of the other lawyer's wrongdoing. The client has no say in the matter and the lawyer has mandatory obligation to divulge unprivileged knowledge of another lawyer's violation of the Disciplinary Rules.