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