Advisory Opinion:
1287
Year Issued:
1989
RPC(s):
RPC 1.6; 1.14(b)(4); 4.1(b)
Subject:
Client confidence or secret; disclosure to prevent commission of crime; funds held by lawyer for payment to doctor who lawyer believes defrauded insurance company
The Committee reviewed your inquiry concerning the disposition of funds that you hold in trust and were received by you as part of a personal injury settlement with an insurance company. Those funds were intended to pay bills of a doctor who you now believe has made numerous misrepresentations regarding his activities that constitute fraud upon the insurance company. The Committee was of the opinion that first, you must discuss this matter fairly with your client to determine in fact whether in this particular case fraud had been committed. If you determine that fraud has been committed, then you must determine whether that is a material fact that, if not disclosed, would assist a criminal or fraudulent act by your client, which would violate RPC 4.1(b). If so, then you could disclose the fact so far as permitted by RPC 1.6. However, if you determine that RPC 4.1(b) did not apply, then the Committee is of the opinion that you should disburse the funds as directed by your client, pursuant to RPC 1.14(b)(4).
The Committee was further of the opinion that you should ask any client from whom consent should be obtained pursuant to RPC 1.6 for consent to reveal the fraud. If all of the effected clients did not consent to disclosure of the fraud, and the client whose funds you hold directed that they be paid to the doctor, then you must determine whether to do so would assist a criminal fraud, in which case RPC 4.1(b) would require you to disclose it, but if it would not be assisting a criminal fraud, then pursuant to RPC 1.6 you may not disclose it.
Finally, the Committee was of the opinion that if you determine that it is a civil fraud and therefore disclosure would not be permitted by RPC 1.6, then you would have to disburse the funds at the direction of the client. The Committee noted that the question of whether there is an ongoing and continuing criminal fraud is a legal question on which it can render no opinion.
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