Opinion 97-12
(October 1997)
This opinion addresses whether, in the circumstances presented, it is permissible under the Rules of Professional Conduct for a lawyer to participate in an agreement, as part of a settlement and release of his or her client's claims, not to report opposing counsel to the Disciplinary Board of the Supreme Court of Pennsylvania.
Since the Inquirer has learned of the circumstances in connection with representing a client, the Inquirer is under no duty to report, and in fact may not report, the matter unless the client waives the confidentiality of the information- R.P.C. 1.6(a); 8.3(c). If, however, after consultation with the Inquirer, the client waives the confidentiality, the Inquirer should review carefully the pertinent portions of the official Comment to R.P.C. 8.3, along with the substantive provisions of R.P.C. 8.4 and 1.1, to determine whether Rule 8.3(a) requires a report to the Disciplinary Board. The Committee does not opine whether the conduct you have described is required to be reported to the appropriate professional authority under R.P.C. 8.3, or whether the non-reporting provision of the release violates any civil or criminal statute.
The facts of the inquiry are these:
In 1990 a partnership purchased a parcel of real estate. Instead of a purchase money mortgage, the partners in the Purchaser partnership each executed a judgment note. A judgment was thereafter entered against each of the partners of the Purchaser. One of those partners is a lawyer, Lawyer B.
In 1995, the Purchaser defaulted on the Note. Collection efforts yielded approximately $70,000 of the $105,000 principal judgment. No attorneys' fees or costs were collected.
A new attorney for the Seller, the Inquirer, sought to execute upon the real estate and discovered that the parcel had been sold to a new buyer that is a co-partner of one of the partners in the original Purchaser, and hence an "insider." The Inquirer also discovered that there is a recorded mortgage, subsequent to the judgment on the Note, in favor of a bank in the amount of $1.4 million.
Upon the Inquirer's contact with Lawyer B, Lawyer B disclosed that he had acted as the title agent in the subsequent sale and that he had abstracted the title at that time himself. When asked why the judgment lien was not paid at the time, Lawyer B said that his review of the title must have been an error and that he had failed to pick up the lien of the judgment as to each partner in the original Purchaser.
Lawyer B paid all outstanding principal, interest, costs, and attorneys' fees provided that a full, general release would be executed. Lawyer B stipulates that the release contains a covenant not to make any report to any governmental agency, including specifically the Disciplinary Board of the Supreme Court of Pennsylvania.
The Inquirer asks whether he or she may participate in the provision of such release.
A number of rules of professional conduct are potentially implicated in this instance. The key rule is R.P.C. 8.3(a), which states:
(a) A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.
Rule 8.3 makes clear, however, that "[t]his rule does not require disclosure of information protected by Rule 1.6." That rule prohibits a lawyer (with certain exceptions not applicable here) from revealing "information relating to representation of a client unless the client consents after consultation."
The information which the Inquirer is being asked not to report, clearly relates to the Inquirer's representation of her or his client. Accordingly, unless and until the client consents, after consultation, to disclosure of the necessary information to the Disciplinary Board, Rule 1.6(a) precludes the Inquirer from making such a report. No further analysis is required, except to note that the official Comment to Rule 8.3 states that "a lawyer should encourage a client to consent to disclosure where prosecution would not substantially prejudice the client's interests." Once the client agrees not to report Lawyer B, the disclosure itself could prejudice the client's interests by exposing the client to a possible claim of breach of contract.
If, however, the client consents after consultation with the Inquirer, the Inquirer must then determine whether the request for the commitment not to report, the obtaining of any such commitment, the underlying conduct of Lawyer B, or a combination of some or all of these factors gives rise to a duty to report under Rule 8.3 (a). Particularly relevant to this determination are the official Comment to Rule 8.3 and the provisions of R.P.C. 8.4 (misconduct) and 1.1 (competence).
The Comment to Rule 8.3 states, in pertinent part, as follows:
Self-regulation of the legal profession requires that members of the profession initiate disciplinary investigation when they know of a violation of the Rules of Professional Conduct... An apparently isolated violation may indicate a pattern of misconduct that only a disciplinary investigation can uncover. Reporting a violation is especially important where the victim is unlikely to discover the offense....If a lawyer were obliged to report every violation of the Rules, the failure to report any violation would itself be a professional offense. Such a requirement existed in many jurisdictions, but proved to be unenforceable. This Rule limits the reporting obligation to those offenses that a self-regulating profession must vigorously endeavor to prevent. A measure of judgment is, therefore, required in complying with the provision of this Rule. The term "substantial" refers to the seriousness of the possible offense and not the quantum of evidence of which the lawyer is aware. A report should be made to the bar disciplinary agency unless some other agency is more appropriate in the circumstances....
The provisions of Rule 8.4 potentially relevant to the Inquirer's evaluation are these:
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of another;...
engage in conduct involving dishonesty, fraud, deceit or misrepresentation; [or]
(d) engage in conduct that is prejudicial to the administration of justice;
Rule 1.1, moreover, states:
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation necessary for the representation.
As stated above, if after consultation the client waives the confidentiality of the Inquirer's information, the Inquirer should carefully review these provisions to determine whether Rule 8.3(a) requires a report to the Disciplinary Board. In the absence of such waiver, the Inquirer is under no duty to report and in fact may not report the matter.
The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.