Concept
Related Rules Compared
Rule 4.1(b): Failure to disclose a material fact to avoid assisting a client's crime or fraud
Related Rules Compared
Rule 4.1(b) is easy to confuse with its neighbors, because several rules speak to a lawyer's dealings with client wrongdoing and borrow overlapping words. Rule 4.1(b) forbids a lawyer to knowingly fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a client's criminal or fraudulent act, unless Rule 1.6 prohibits the disclosure.1 Each neighboring rule has a different target. One governs what the lawyer may do for the client, one governs when she must or may leave the representation, and one governs what she owes a court. Only Rule 4.1(b) regulates silence toward a private third person, such as a counterparty or a lender, which is why it needs its own two-step analysis: duty first, confidentiality second.
Three questions sort any fact pattern among these rules. What did the lawyer herself do, or what was she asked to do? Who hears her words or her silence? What becomes of client confidences? The first comparison sets paragraph (b) beside the rules on assisting fraud and on withdrawal. The second changes the audience to a tribunal, and the answer on confidentiality changes with it.
Assisting Fraud and Withdrawal
Three rules touch the same client fraud, and they divide the work by verb. Rule 1.2(d) governs what the lawyer does, Rule 1.16 governs when she must or may leave, and Rule 4.1(b) governs what she must say when neither refraining nor leaving undoes the effect of her earlier work. Students who fold the three into one vague duty to “do something about client fraud” lose the analysis. Identify the verb in the question, and the rule follows.
Rule 1.2(d) is the conduct rule. A lawyer shall not counsel a client to engage in, or assist a client in, conduct that the lawyer knows is criminal or fraudulent.2 It attaches to the lawyer's own advice and help, and it turns on what she knows when she gives them. The commentary draws the working line between “presenting an analysis of legal aspects of questionable conduct” and “recommending the means by which a crime or fraud might be committed with impunity,” and it adds that a client's later use of advice in a criminal or fraudulent course of action does not by itself make the lawyer a party to it.3 A lawyer who explains that a proposed structure would defraud a lender is complying with the rule. A lawyer who suggests wording that will keep the lender from noticing is assisting. Neither the prohibition nor the line says anything about telling a third person, so Rule 1.2(d) cannot do the work of paragraph (b).
Rule 1.16 is the exit rule, and it comes in tiers. A lawyer must withdraw if the representation will result in a violation of the rules of professional conduct or other law. She may withdraw if the client persists in a course of action involving her services that she reasonably believes is criminal or fraudulent, or if the client has used her services to perpetrate a crime or fraud.4 The tiers track how close the lawyer stands to wrongdoing of her own. If she cannot go on without counseling or assisting fraud, staying would violate Rule 1.2(d), so withdrawal is mandatory, and the two rules work as a pair: one defines the forbidden act, and the other makes leaving the required response when the act cannot be avoided any other way. The permissive tier reaches back to a client who has already used her services. Two limits frame the exit itself. When a tribunal orders her to continue, she must do so despite good cause to leave, and on termination she must take reasonably practicable steps to protect the client's interests, such as giving notice and surrendering papers.5 Withdrawal also never depends on Rule 1.6 permitting disclosure. Even in the minority of jurisdictions that bar a lawyer from revealing information to prevent a client's securities fraud, lawyers may, and often must, withdraw.6
A client's talk, standing alone, triggers neither tier. The mandatory tier asks whether the representation will result in a violation, and the permissive tier asks whether the client persists in a fraudulent course involving the lawyer's services or has already used them. A suggestion the lawyer declines satisfies none of those conditions. The comment says as much: a lawyer ordinarily must decline or withdraw if the client demands that she engage in illegal conduct, but she is not obliged to decline or withdraw simply because the client suggests such a course, since a client may float an idea in the hope that the lawyer will not feel constrained.7 A suggestion is an invitation she can refuse. Once she refuses and the idea dies, nothing she has done is part of the scheme, so there is no association to end and nothing left for Rule 4.1(b) to correct.
Rule 4.1(b) closes the gap the other two rules leave. Refusing to help and leaving the matter both control the lawyer's future conduct, and neither pulls back the opinion, letter, or closing document she has already placed in a third person's hands. Paragraph (b) operates where the client has appropriated the lawyer's services, the lawyer learns of it while the illegal act may still be prevented, and her failure to take preventive measures would itself amount to assistance.8 Two features separate it from the conduct and exit rules. It is directed at what the lawyer tells a third person rather than at what she does for the client, and it is triggered by silence after discovery rather than by an act of counseling. It also yields where Rule 1.6 prohibits disclosure, so it never replaces the other two rules: a lawyer who may not speak still may not assist, and she still must or may leave.
The two scenes differ in whether the lawyer's own work is in anyone's hands. In the backdating meeting nothing had left the lawyer's office, so refusing was enough. In the lien certificate, the lawyer's earlier document keeps deceiving the supplier after she leaves, which is the situation paragraph (b) exists to address. Even where Rule 1.6 forbids disclosure of the client's information, withdrawal may still need to be accompanied by alerting the third party to the fact of the withdrawal, the “noisy withdrawal,” and by disaffirming the previously prepared document.9 A caution on exposure applies to all three rules. The court in the Enron securities litigation called a lawyer's civil liability for failing to disclose nonmisleading information to nonclients a thorny question, and it stressed that disciplinary rules do not by themselves create corresponding legal duties or set standards for civil liability.10
Candor to the Tribunal
Rule 3.3, the rule on candor to a tribunal, borrows nearly the same language as Rule 4.1(b). As adopted in August 1983, it forbade a lawyer to knowingly fail to disclose a material fact to a tribunal when disclosure was necessary to avoid assisting a criminal or fraudulent act by the client.12 The same paragraph is quoted in McCoy v. Court of Appeals of Wisconsin.13 The current rule has been reorganized around a ban on false statements and false evidence, with a duty to correct a false statement and to take reasonable remedial measures when false evidence or a fraud on the proceeding comes to light, but the audience and the purpose are the same.14 The ABA's comment on the 1983 rule observed that there are circumstances in which failure to make a disclosure is the equivalent of an affirmative misrepresentation, though it did not say what those circumstances are.15 Because the wording is so close, the real difference between the two rules lies in what each says about confidentiality, and that is where an exam answer should look first.
Rule 3.3 says that its duties continue to the conclusion of the proceeding and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6.16 The current rule keeps the override: Rule 3.3(c) makes clear that the lawyer's remedial obligations may include disclosing confidential information.17 Rule 4.1(b) closes the other way, with a clause that excuses disclosure whenever Rule 1.6 prohibits it, so the last step of that analysis always asks what confidentiality allows.18 When the audience is a court, confidentiality yields by the rule's own terms. When the audience is a private person, confidentiality draws the boundary. That difference is why the earlier sections spent so long on the Rule 1.6 exceptions: they decide how much of the carve-out in paragraph (b) survives.
The reason for the difference lies in what the deception damages. Perjury and other fraud on a court undermine the administration of justice itself, and the Supreme Court in Nix v. Whiteside traced a lawyer's special duty to prevent and disclose frauds upon the court to exactly that recognition.19 The injury falls on the adjudicative system, which depends on lawyers to present facts honestly, and on everyone who relies on its judgments, not only on the opposing party. A private counterparty's injury is real, but it is a private one. The institutional interest that supports an override is absent, and the rules accordingly leave the question to Rule 1.6.
In Nix v. Whiteside, a murder defendant first told his lawyer he had not seen a gun, then changed his account to say he saw “something metallic” in the victim's hand. The lawyer warned him that he could not testify falsely and that the court would be told if he did. The Supreme Court held that this response fell within the range of acceptable professional responses to threatened client perjury, so it was not deficient performance under Strickland v. Washington. The reasoning shows how far the profession's commitment runs. Counsel's duty to advocate is limited to legitimate, lawful conduct, and although counsel must take all reasonable lawful means to attain the client's objectives, counsel may not assist the client in presenting false evidence, a principle recognized since the first Canons of Professional Ethics in 1908.20 The Court read the professional standards as confirming that the lawyer's duty to advance the client's interests is limited by an equally solemn duty to comply with the law and professional conduct standards. It also treated revealing perjury actually given as a professionally responsible response and withdrawal, when a client threatens perjury, as an appropriate one.21
The tribunal duties turn on knowledge. The lawyer must actually know that the statement or evidence is false, although knowledge may be inferred from the circumstances. The test is not what a reasonable lawyer should have known, but a lawyer cannot ignore an obvious falsehood.22 Withdrawal and disclosure appear on both sides of the comparison, and what differs is whether Rule 1.6 can stop the last step. Before a court, a lawyer who cannot fix the problem by lesser means must take reasonable remedial measures, including disclosure of otherwise protected information if necessary. Before a private person, the same step is available only if Rule 1.6 does not prohibit it. Nix, finally, is a Sixth Amendment decision about what counts as reasonable representation. The Court found the lawyer's response acceptable, and it did not say that every defense lawyer must respond in the same way.
The two scenes hold the lie, the client, and the lawyer's knowledge constant and change only the listener, yet a different rule answers the question. In practice the gap may be narrower than it first appears, because the Rule 1.6 exceptions covered earlier can leave disclosure unprohibited, and in that case the carve-out in paragraph (b) gives the lawyer no shelter. Even so, paragraph (b) always asks the Rule 1.6 question, and the tribunal rule does not. Students go wrong in two directions here. Some carry the Rule 3.3 override into private dealings and announce mandatory disclosure where Rule 1.6 may forbid it, and others carry Rule 4.1(b)'s deference into a courtroom and counsel silence where candor to the court is required.