Opinion 97-7
(July 1997)
You have asked the Committee to provide you with a guidance opinion based upon the following facts. You received an advance payment retainer from an individual client who was a defendant in a civil action. You did some work on the file and withdrew a fee from the retainer for that work. While part of the retainer was still on deposit, your client filed bankruptcy. While you had some inkling that the client might file bankruptcy, she did so without your advance knowledge or assistance. Your first actual knowledge of the bankruptcy filing came when you received a formal notice that her petition for relief had been filed. Sometime thereafter, the client requested that you refund the balance of her retainer. You declined, telling her that any such refund would have to go to the trustee appointed to her bankruptcy, not directly to her.
Sometime later, the client again asked for the refund, and this time provided you with a copy of her Order of Discharge, indicating that her bankruptcy proceedings were effectively over and that she had received a discharge from her pre-petition debts. You have asked what your disclosure obligations are, if any, in light of this situation.
From your inquiry, it appears that you do not know whether or not the retainer on deposit with you was disclosed in her bankruptcy Statement and Schedules. The answer to that question affects the Committee's answer to your inquiry. First, assuming that the client did not so disclose the retainer in her bankruptcy, you are not under any affirmative obligation to disclose it to anyone under Rule 3.3 of the Rules of Professional Conduct, since that Rule presumes that the attorney who possesses the information in question is or was before a tribunal in a matter to which the information is relevant. You have not been before any such tribunal in connection with the bankruptcy, and the question of the retainer does not appear relevant in the civil action in which you represented the client and from which you are presently seeking to withdraw. You have no disclosure obligation under Rule 1.6(b), since that Rule is simply a cross-reference to Rule 3.3. The Committee also notes were there any duty to disclose information under Rule 3.3 that such duty would end at the termination of the bankruptcy proceedings.
The next question, then, is whether you have the discretion to disclose this situation under Rule 1.6(c), which permits disclosure of otherwise confidential information in certain circumstances. Rule 1.6(c)(2) might be implicated if you determine, based on your knowledge of your client and her conduct, that she intentionally parked the retainer balance with you in order to shield it from disclosure in the bankruptcy. If so, disclosure could be permitted because she used your services (i.e., your representation of her in the original case) to violate the bankruptcy code and other federal criminal statutes. You will note that Rule 1.6(c)(2) carries no requirement that the financial consequences of the criminal act be substantial. By contrast, Rule 1.6(c)(1) would not be relevant, since it is geared toward permitting disclosure that would prevent a bad act from happening; here, the bad act has already occurred.
If you determine that the client disclosed the retainer balance in her bankruptcy filings, the Committee concludes that you will not be permitted to disclose the retainer situation, since no criminal or fraudulent act has occurred that would bring Rule 1.6(c)(2) into play.
In any event, the Committee recommends that you hold the money in escrow pending your resolution of the matter, pursuant to Rule 1.15 (b).
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.