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125 N.J.L.J. 1097
April 26, 1990
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the Supreme Court of New Jersey
OPINION 642
Privileged Communications: Disclosure
of Client's Non-Material Misrepresentation
Issues regarding attorneys' duties and responsibilities in
cases of client misconduct are seemingly simple but, in truth, are
fraught with complexity and conflict.
An attorney serves two masters: his client and the
law. As a servant of the law, he is an "officer of the
court," charged with the duty to see that justice is
done. He is required to deal with the Court fairly and
candidly and may not "suppress evidence that he or his
client has a legal obligation to reveal." In all his
actions he must act in good faith and within the
framework of the law. But at the same time, the attorney
must serve as an advocate on behalf of the client. He
must represent the interests of the client "zealously"
and with "undivided loyalty" and he must do nothing to
prejudice or damage the client during the course of the
professional relationship. The attorney must use proper
care to safeguard the interests of the client and to
preserve his "confidences and secrets."
J. M. Callen & H. David, "Professional Responsibility And The Duty
of Confidentiality: Disclosure of Client Misconduct In An Adversary
System," 29 Rugers L. Rev. 332 (1976).
It is hypothesized here that a firm of attorneys represents a
claimant in a suit for damages against an insurance company and an
insurance agency. The claim involves damages by reason of a theft
of a motor vehicle insured for loss under a comprehensive policy
obtained by the agent and issued by the insurance company. At the
time of the issuance of the policy claimant represented that he was
a resident of a suburban community in New Jersey and that the
vehicle would be principally garaged in that community. Actually,
plaintiff was, and is, a resident of New York. The vehicle was
garaged there and was stolen while parked there. The denial of
payment by the insurance company is based on issues unrelated to
residence. Claimant asks the attorneys to prepare and file a
complaint. During the course of the suit interrogatories will be
propounded and will have to be answered. Other discovery may also
take place.
The questions to be answered may be framed as follows:See footnote 1
1
1. May counsel in the complaint or in answers to
interrogatories either omit any reference to the residence address
of his client; set out a fictitious New Jersey address, if client
demands; or must he set out client's correct address?
2. Must counsel now reveal the fact of plaintiff's
misrepresentation at the time of the application to his adversary?
3. May the former merely do no further work on the case,
thereby satisfying his ethical obligations?
4. If one member of the firm prepared the complaint and
answers to interrogatories and another member of the firm learns of
the client's misrepresentation, must the latter inform the ethics
committee thereof?
The statutory and evidentiary basis for the attorney-client
privilege is set out in Evid. R. 26, N.J.S.A. 2A:84A-20. The
foundation of the privilege is grounded in the need for full and
frank communication between lawyer and client. A rule requiring
disclosure serves to destroy the element of trust necessary for a
lawyer to adequately serve his client. See Matter of Nackson, 114
N.J. 527 (1989). The privilege, however, is circumscribed by
ethical considerations involving public policy, the public welfare,
and the interests of all parties subject to the operation of
non-disclosure. Thus, our Supreme Court has promulgated rules
intended to set ethical guidelines which affect the attorney-client
privilege; e.g. RPC 1.6, RPC 3.3 and RPC 3.4. Those portions
relevant to our discussion follow:
RPC 1.6 Confidentiality of Information
(b) A lawyer shall reveal ... information to the
proper authorities ... to the extent the lawyer
reasonably believes necessary, to prevent the client
(1) from committing a ... fraudulent act that the
lawyer reasonably believes is likely to result ... in
substantial injury to the financial interest ... of
another;
(2) from committing a ... fraudulent act that the
lawyer reasonably believes is likely to perpetrate a
fraud upon a tribunal.
(c) A lawyer may reveal ... information to the
extent the lawyer reasonably believes necessary:
(1) to rectify the consequences of a client's ...
fraudulent act in the furtherance of which the lawyer's
services had been used; ... (Emphasis supplied).
RPC 3.3 Candor Toward the Tribunal
(a) A lawyer shall not knowingly:
(1) make a false statement of material fact or law
to a tribunal;
(2) fail to disclose a material fact to a tribunal
when disclosure is necessary to avoid assisting [a] ...
fraudulent act by the client ;... (emphasis supplied).
RPC 3.4 Fairness to Opposing Party and Counsel
A lawyer shall not...
...
(b) falsify evidence, counsel or assist a witness to
testify falsely....
Additionally, Evid. R. 26(2)(a), by its specific terms,
excludes from the privilege communications received which would aid
in a crime or fraud.
A collation of these codifications undeniably requires that a
balancing must be done between competing interests and policies can
be reached regarding the exercise of the privilege.See footnote 2
2
Matter of
Nackson, supra, 114 N.J. at 539. In some cases, that balancing will
be delicate and only a thin line will separate the exercise of the
privilege as opposed to its exclusion. In Fellerman v. Bradley, 99
N.J. 493 (1985), the Supreme Court held that an attorney could not
withhold the address of his client received in confidence in
connection with an enforcement order where the client thereby
intended not to pay the fee of a court ordered expert. In that case
the Court pointed out that there were other situations where the
privilege would shield the information; e.g. where a spouse may
fear reprisals to herself or harm to a child. Id. at 506.
In Matter of Nackson, supra, 114 N.J. 527, the Court held that
an attorney could withhold from a grand jury the location of his
client who was a fugitive where the client had consulted about a
fugitive warrant. The Court, in balancing competing interests, gave
great weight to the right to counsel in criminal proceedings. U.S.
Const., Amend. VI; N.J. Const. (1947) Art. I, par. 10. In State v.
Pavin, 202 N.J. Super. 255, 263 (App. Div. 1985), the Court said,
"...[w]e see absolutely no public policy interest which would be
advanced by granting privileged status to a purported lie which
(client) told to (insurance adjuster) for the sole purpose of
obtaining coverage under his mother's insurance policy." In Opinion
586, 117 N.J.L.J. 533 (1986), this Committee held that counsel
would be required to disclose a fraud perpetrated by a husband on
counsel's former client (wife), where he obtained information of
that fraud from a present client in a transaction between that
client and husband even though it might adversely affect the
transaction to the detriment of the present client.See footnote 3
3
The crime or fraud exception to the privilege found in Evid.
R. 26(2)(a) and in the cases and opinions referred to above has
been held to be a recognition that the enforcement of the
attorney-client privilege does not outweigh an effort to unduly
interfere with or frustrate the basic search for truth and
fairness, and the proper dispensation of justice. Fellerman v.
Bradley, supra. 99 N.J. 493. Fraud in this context is not defined
by criminal law or tort concepts. It is to be liberally construed.
Ibid.
We now address the application of the guidelines set out
above.
The response to the first question and, indeed, each of the
other queries depends completely, or in some measure, on the
resolution of whether the attorney-client privilege shields the
communication of the misrepresentation of the address of the client
and the garaging of the vehicle at the time the application for
insurance was made. (The assumption is made that it was a material
fact which would have resulted in the policy not having been issued
or, if issued, would have resulted in a void or voidable policy
having been issued).See footnote 4
4
Here, the communication between attorney and client related to
past fraudulent conduct. The communication was made in the course
of the attorney-client privilege. It is privileged. If we were
dealing with a non-judicial situation the information could not and
should not be revealed. The premise in this case is that no issue
between litigants exists regarding the address of the client at the
time of the writing of the insurance policy. The act was in the
past and the lawyer did not participate.See footnote 5
5
The attorney could not,
at this level, reveal the fact of the misrepresentation to the
insurance company. To hold otherwise would result in a dilution of
a fundamental purpose of the rule which is to encourage a full and
complete communication between lawyer and client.
The second question presents more difficult considerations.
The facts posited make it clear that the address of the client at
the time of the filing of the complaint, answering of
interrogatories, taking of depositions or trial probably is
irrelevant, although it might have some tendency to alert a
vigilant adversary or to confirm other proofs relating to the prior
address. However, counsel is not obliged to provide proofs to his
adversary, unless required by other rules. Therefore, he would not
violate any ethical prescription by omitting a reference to an
address in the complaint or answers to interrogatories.
The complaint is a lawyer's product bearing the lawyer's
signature. That signature "...constitutes a certificate by him that
he has read the pleading...; that to the best of his knowledge,
information and belief there is good ground to support it...." R.
1:4-8. Interrogatories are certified to by a party. Testimony at
depositions and in trial is that of the witness. The question
posed, at its core, is whether an attorney, knowing that a past
"fraud" may have occurred, may participate in preventing an
adversary or third party from uncovering that fraud by assisting in
the client's asserting false and fictitious information relating to
facts not directly material to the narrow issues presented in the
litigation.
RPC 3.3 which governs a lawyers obligation to a "tribunal"
proscribes a lawyer form knowingly representing the falsity of a
material fact or failing to disclose a material fact. RPC 3.4
which expresses precepts of fairness between counsel does not
contain the word "material" but countenances against providing
false evidence. No definition is given in the Rules as to what is
or is not "material" or what, and when, a fact is "evidence". Is
materiality as used broad enough to cover all matters which might
reasonably be relevant if known or is it limited to the narrow
issues of the case as it is circumscribed by the parties as of the
point in time that the exercise or non-exercise of the privilege is
to be decided? Is "evidence" to be defined based upon its
materiality as of that same point in time? These questions, on the
surface, are simply answered since our sense tell us that
"complete" candor should be the watchword. However, these, like
many questions, are difficult because they impact upon the sanctity
of the attorney-client privilege. On the one hand, a lawyer is an
officer of the court and is required to deal fairly and candidly
with the court and his adversaries. On the other hand, he owes his
client zealous representation and undivided loyalty. He is not a
policeman, yet in certain circumstances he must inform, even to the
disadvantage of his client. See RPC 1.6(b) and (c).
We have considered all of the conflicting obligations of the
attorney. We hold that an attorney must not set down a false or
fictitious address unless he makes clear, either in the complaint
or elsewhere, that it is not a true address. While the privilege
may require an attorney to remain silent in word or other
expression, it would be violative of every basic precept to permit
him to certify the existence of a fact which he knows to be untrue.
Therefore, the attorney here may not set down a false address in
the complaint.
As alluded to above, information given in interrogatories is
that given by the client. Testimony at depositions or trial is that
of the client. We believe that distinction under the facts
presented to us here creates a different obligation on the
attorney. The balancing, when done, leads to the conclusion that
the attorney-client privilege prevails over a fact or a piece of
evidence not material to the issues presented in the case. Thus,
the attorney should confidentially remonstrate with the client and
attempt to convince him not to assert a false address. If he
insists, the attorney must observe the privilege. However, he
should in no way participate in eliciting the false address by
direct examination or otherwise.
If, however, the question being responded to is directed to
the specific issue of residence at the time of the application for
insurance, counsel, if he cannot convince his client to testify
truthfully, must withdraw from the case. He cannot permit his
adversary or the court to be misled. To do otherwise would impede
the search for truth in the tribunal where truth is being sought.
Thus, neither he nor any other member of his firm may continue in
the case.
The last issue presented is whether a member of a firm who
learns of the violation of the RPC's by another member of the firm
must inform the ethics committee thereof. Of course, the answer
depends upon all of the circumstances. The guide is to be found in
RPC 8.3(a):
A lawyer having knowledge that another lawyer has
committed a violation of the Rules of Professional
Conduct that raises a substantial question as to that
lawyer's honesty, trustworthiness or fitness as a lawyer
in other respects, shall inform the appropriate
professional authority. (Emphasis supplied).
* * *
Footnote: 1 1 The inquiry framed the issues in a retrospective sense.
We have framed them somewhat differently from that of
inquirer.
Footnote: 2 2 Of course, many factual situations will clearly call
for the exercise or exclusion of the privilege.
Footnote: 3 3 The holding should be read as limited to the narrow
facts contained in that opinion.
Footnote: 4 4 We make that assumption because if not so the inquiry
would probably be moot.
Footnote: 5 5 RPC 1.6, therefore, does not apply. Also, Evid R.
26(2)(a) does not apply at this level because the
communication is not being used contrary to the
prohibition in the Rule.
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