Advisory Opinion: 1564

Year Issued: 1994

RPC(s):

Subject: Law firm's duty to disclose former partner's overcharging of expenses to clients

The Committee discussed your inquiry regarding the ethical duties a law firm has to report the conduct of Shareholder B. Specifically, a former member of the law firm had overcharged clients for business-related travel expenses. The Committee was of the opinion that the law firm must disclose Shareholder B's actions and the potential conflict of interest which may arise from those actions to all clients from whom Shareholder B had an opportunity to steal. This would include all of Shareholder B's clients. To the extent that Shareholder B had access to other client trust accounts, the law firm should at minimum conduct an independent audit on those accounts. In addition, the law firm must have measures in place to assure that all attorneys and non-attorneys in the firm conform to the Rules of Professional Conduct. The Committee was also of the opinion that the law firm should report Shareholder B to the Disciplinary Counsel of the Washington State Bar Association.

Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.