Rutgers School of Law, OAL case ACPE227

95 N.J.L.J. 65
January 27, 1972

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 227

Attorney-Client Privilege
Deceit and Perjury of Client

    An attorney makes the following inquiry.
    What is the duty of an attorney who during a subsequent representation uncovers incontrovertible proof that a favorable civil judgment obtained during a previous representation was based upon his client's perjury.
    This inquiry brings into consideration the fundamental duty of a lawyer to protect the confidences and secrets of his client under DR 4-101 of the Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association, as amended by the Supreme Court of New Jersey and adopted on July 7, 1971, effective September 13, 1971. The factual situation related by the inquirer also brings into play a conflicting duty to call upon his client to rectify a fraud perpetrated upon another person or tribunal pursuant to the provisions of DR 7-102. It thus becomes necessary to reconcile these two competing principles of ethical responsibility. The attorney client privilege of non-disclosure,
previously embodied in the Canons of Professional Ethics, Canon 37, and now DR 4-101 of the Disciplinary Rules, has long been a part of our common law. It was stated in 8 Wigmore, Evidences §2292 (McNaughton rev. 1961), as follows:

        Where legal advice of any kind is sought from a professional legal advisor in his capacity as such, the communications relating to that purpose, made in confidence by the client, are at his instance permanently protected from disclosure by himself or by his legal advisor, except the protection may be waived.

    The reason for the rule is clearly the desire to encourage a freedom of consultation by the client with his attorney without fear or apprehension that such disclosures might be used against him. The attorney-client privilege became a part of our statutory law in 1960 with the enactment of N.J.S. 2A:84A-20. It was just recently incorporated into our Code of Professional Responsibility as DR 4-101 in the following language:
        (A)    “Confidence" refers to information protected by the attorney-client privilege under applicable law, and "secret" refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.

        (B)    Except as permitted by DR 4-lOl(C), a lawyer shall not knowingly:

            (1)    Reveal a confidence or secret of his client.

    The privilege, however, is not absolute and is subject to numerous exceptions. Wise on Legal Ethics (2d ed. 1970), p. 277 places cliental confidences into three categories: (1) those which a lawyer may not divulge; (2) those which a lawyer may divulge; and (3) those which a lawyer must reveal. In fact, the Disciplinary Rules reaffirm this distinction. DR 4-101 (B) describes what a lawyer shall not knowingly relate and then DR 4-101 (C) sets forth specifically that he may reveal, among other things:
        (2)    Confidences or secrets when permitted under Disciplinary Rules or required by law or court order.

    It is this latter reference that suggests the proper approach to the present conflict between the two ethical considerations. It is apparent from the facts presented that a fraud has been perpetrated upon both the judgment debtor and a tribunal. The information uncovered by the attorney accordingly falls within the principles enunciated by DR 7-102, the pertinent portion of which states:
    (B)    A lawyer who receives information clearly establishing that:

        (1)    His client has, in the course of the representation, perpetrated a fraud upon a person or tribunal shall promptly call upon his client to rectify the same, and if his client refuses or is unable to do so, he shall reveal the fraud to the affected person or tribunal.

    The language of DR 7-102 (B) (1) thus places a duty upon the attorney to call upon his client to rectify the wrong, and in the event of the client's refusal to reveal the fraud to the affected party or tribunal, the attorney is bound to do so. The information demonstrating incontrovertible perjury on the part of the client falls also within the definition of a secret under DR 4-101 (A). The question then becomes which of the two competing policies of the law should prevail - the one calling for full disclosure of the facts so that justice might be done, or the other demanding secrecy as between the attorney and his client. Significantly, in the matter of In re Richardson, 31 N.J. 391 (1960), our Supreme Court in requiring an attorney to identify the party who paid his fee in the matter observed:
        Throughout their judicial endeavors courts seek truth and justice and their search is aided significantly by the fundamental principle of full disclosure. When that principle conflicts with the attorney-client privilege it must, of course, give way but only to the extent necessary to vindicate the privilege and its underlying purposes. The matter is truly one of balance and, on balance, it seems clear to us that there should be removal of the cloak of secrecy.

    In the matter sub judice, the desired candor and frankness between the attorney and his client was not present. Instead, the client used the inquirer as an instrument to hoodwink an innocent third party and the court. The information which would unquestionably embarrass or be detrimental to the client was not freely and voluntarily given by the client during the course of the attorney's representation. Against such a background, the underlying purpose of the attorney-client privilege would not be served by protecting the information in the hands of the attorney.     On the contrary, justice can only be served by a full and complete disclosure of the wrong that has been visited upon the judgment debtor. The purpose of the rule against disclosure is to encourage the unrestrained consultation between a lawyer and his client, not to encourage deceit and dishonesty. If we were to protect such information under the time-honored attorney-client privilege, we would be in effect undermining the basic reason for the rule. The privilege was never intended as a tool to enable a client to deceive his attorney, then use that very privilege to hide the wrongdoing. Such an exception to the attorney-client privilege has long been recognized by our authorities. Thus, Drinker, Legal Ethics, 1953, p. 138, recognizes deception on the part of the client as an exception to the attorney-client privilege.
    Although prior decisions of the New Jersey Advisory Committee on Professional Ethics would appear to conflict with this opinion, they are factually distinguishable. In Opinion 116, 90 N.J.L.J. 688 (1967) this Committee was concerned with the duty of a lawyer to disclose admissions of guilt, confided by his client in a criminal case, after the client, contrary to the lawyer's advice took the stand and testified otherwise; Opinion 145, 92 N.J.L.J. 97 (1969) dealt with a creditor's attempt to secure correspondence between the bankrupt and his lawyer several years after the completion of the bankruptcy proceedings; and Opinion 163, 92 N.J.L.J. 825 (1969) determined that an attorney representing a plaintiff seeking divorce had no duty to disclose independent defenses. In each of these situations no third party was injured.
    In addition, the language of the new Disciplinary Rules of the Code of Professional Responsibility now makes a disclosure of the
fraud an overriding consideration in this factual setting. DR 7-102(B)(1); also see, A.B.A. Comm. on Professional Ethics, Opinion 287 (1967); Ass'n. of the Bar, City of N.Y., Committee on Professional Ethics, Opinions 53 (1926-27) and 215 (1932); N.Y. County Lawyers Assn., Committee on Professional Ethics, Opinion 475 (1955 Supp.).
    Accordingly, under the provisions of DR 7-102(B)(1), the inquirer's course of action is clear under the circumstances. The client should be called upon to rectify the fraud at once. If the client refuses or is unable to do so, the attorney should then notify his adversary or the tribunal of the perjury, and then remove himself from any further representation of the client.

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