LEO: Bankruptcy Representation  LE Op. 1140

 

Bankruptcy Representation - Confidentiality - Disclosure of

Crime/Fraud: Duty to Reveal Information Establishing a Client

Has Committed a Fraud on a Tribunal.

 

October 18, 1988

 

You stated that you represent a client in his action against his

insurance agent and various insurance companies for breach of contract,

fraud and negligent infliction of emotional distress. Prior to filing a

motion for judgment for your client, you were aware that your client was

forced into bankruptcy. Since then, however, it has come to your attention

that your client may not have advised the trustee of the bankruptcy

proceeding of the potential assets he could realize if he prevails on the

cause of action you are representing him in. You submit that you were told

by another lawyer that failure to report potential assets in a bankruptcy

proceeding may be considered a fraud upon the court.

 

You want to know what effect his information has on your professional

responsibilities with regard to representation of your client.

 

Whether your client's failure to report to the trustee of the bankruptcy

case the potential assets from the cause of action in which you represent

him is a fraud upon the court is a question of law beyond the purview of

the Committee. If you determine this to be a fraud upon the court, DR:4-

101(D) imposes an ethical obligation upon you to reveal that your client

has perpetrated a fraud or intends to commit a crime related to the

subject matter of the representation upon a tribunal, as well as the

information necessary to prevent the crime. The disciplinary rule provides

you must first advise your client of the possible legal consequences of

his action; advise him that such action would constitute bankruptcy fraud;

and advise the client that you must reveal a fraud and any criminal

intention unless it is thereupon abandoned.

 

In addition, if the crime involves perjury by the client, you will advise

him that you must withdraw as counsel. (See also, LE Op. 833)

 

Under the limited facts you have presented in your inquiry, the Committee

opines that it is your obligation to reveal all necessary information in

order to establish that the client has perpetrated a fraud upon a tribunal

if the client does not abandon his actions in accordance with DR:4-101(D)(

1) and (2).

 

Committee Opinion October 18, 1988