How to avoid becoming an accomplice to a client’s criminal conduct

In recent years, many cases involving allegations of high-profile financial crimes have also involved the accused's lawyers, whether as a key witness or, sometimes, as a co-defendant. Headlines indicate that lawyers can face substantial punishment for any role in Ponzi schemes, insurance fraud, or money laundering, among other crimes.

Those cases can involve a common refrain from the lawyer, who may claim that she was ignorant of the criminal operation and was simply "doing her job" by following client instructions. That can be a tough sell to a jury when a lawyer's job may be to ensure that the client adheres to the law.

Lawyers can take precautions when providing legitimate legal services to help minimize the risk that any alleged criminal activity by clients is not imputed back to the lawyers. At the same time, the ethical rules impose obligations on attorneys that limit disclosure of confidential information and actions that may harm the client. Below are some tips for meeting that balance.

Don't Bury Your Head in the Sand

It is often said that if something seems too good to be true, it probably is. Where a client's representations ring false, lawyers can have a "gut check" moment to make sure they do not unwittingly become parties to dishonest or illegal behavior. The attorney-client relationship is one of trust. For that reason, it can be unconvincing when attorneys claim ignorance regarding their clients' criminal schemes or conspiracies.

Although it is typically not advisable to create a conflict where none exists by accusing a client of criminal behavior, attorneys also can be careful not to accept or perform work blindly. For example, lawyers are often tasks with representing that documents are truthful or accurate when signing and filing those documents in court. Where there is reason for suspicion, lawyers may have a duty to take affirmative steps to confirm that information received from the client is accurate.

That is not to suggest that it is unreasonable to rely on representations made by clients; they do not look kindly upon bills for excessive "due diligence" where the client has already run the issue to ground. But reasonable measures may be called for in situations where there is a glaring issue with the information provided by the client.

Know When and How to Withdraw

Withdrawing from a representation can be tricky. Each jurisdiction has specific rules and steps for withdrawal. In some circumstances, a court will compel a representation to continue even where both the client and the attorney want to end the representation.

The attorney-client relationship is unique in that the ability to terminate the relationship can depend on a wide range of factors. Those factors can complicate a lawyer's ability to withdraw where they suspect their clients are engaged in criminal behavior, particularly when the clients want the attorneys to maintain the representation.

Many jurisdictions distinguish between mandatory and permissive withdrawal. Mandatory withdrawal is limited. Rule 1.16(a) of the California Rules of Professional Conduct identifies circumstances for mandatory withdrawal, including where a client brings an action "without probable cause and for the purpose of harassing or maliciously injuring any person."

But a client's criminal conduct is otherwise generally grounds only for permissive withdrawal, meaning that a lawyer is not required to withdraw. Instead, an attorney may withdraw where "the client either seeks to pursue a criminal or fraudulent course of conduct or has used the lawyer's services to advance a course of conduct that the lawyer reasonably believes was a crime or fraud."

Either mandatory or permissive withdrawal remains limited where permission of the court is required to effect withdrawal. Typically, if an attorney can withdraw without a material adverse effect on the client's interests, courts will allow the attorney to do so. But attorneys will not want to be bound to a representation where they have serious concerns about their clients' conduct.

Whether to Disclose the Criminal Activity

The attorney-client relationship is sacrosanct and is one of the backbones of the American judicial system, so the exceptions to a lawyer's duty to maintain clients' confidential information can be extremely narrow. This includes the disclosure of information relating to a client's criminal conduct. Such information is typically obtained by the lawyer in the context of the attorney-client relationship and thus is generally protected from disclosure. Rule 1.6 of the California Rules of Professional Conduct, along with Business and Professions Code Section 6068, provides an exception, "to the extent that the lawyer reasonably believes the disclosure is necessary to prevent a criminal act" but only where the lawyer "reasonably believes" that the act "is likely to result in death of, or substantial bodily harm to, an individual."

Even then, Rule 1.6(c) requires the attorney to take steps to notify the client and to persuade the client not to commit the act before making the disclosure. And the ability to disclose is only permissive, meaning an attorney is under no obligation to disclose even if the client's conduct may result in death or substantial bodily harm. The rule is also generally understood not to permit reports of a client's past criminal conduct.

Attorneys who fail to follow the rules could face a claim from the client whose confidences were broken. In these difficult scenarios, attorneys can seek additional help, whether from malpractice or ethics counsel or their state bar. Many state bars have hotlines to provide guidance to attorneys faced with ethical dilemmas.

Some attorneys are persuaded to take on a problematic representation to help out a friend or based on the promise of lucrative fees. But the consequences of getting mixed up in criminal activity are severe for attorneys and can result in disciplinary action, if not jail time. 