131 N.J.L.J. 856
July 13, 1992
1 N.J.L. 1043
July 13, 1992
OPINION 664
Privileged Communications: Disclosure
of Information Received from Corporate
Client's Employee Concerning Client's
Alleged Illegal Activities
Over a period of time, the inquirer has been retained to
handle collection matters and contractual disputes for a
corporation. He was initially retained for a period of six months
at an hourly rate; renewed for periods of five and then three
months at a flat monthly rate; and subsequently converted back to
an hourly rate. He stresses that he has at no time served as
general counsel, been involved in any business decisions or
processed any corporate filings on behalf of the corporation.
It appears that the inquirer's principal contact at the
corporation was the credit manager, with whom he had established a
personal relationship. When the credit manager sustained a serious
injury in the course of his employment, he contacted the inquirer
concerning his rights. The inquirer advised him that he could not
represent him and urged him to seek the services of an independent
attorney.
The credit manager later advised the inquirer that he had
spoken with another attorney who had communicated with the
corporation. This attorney had apparently been told that the
corporation did not have workers' compensation insurance and was
asked to have the credit manager file a claim under disability in
order to avoid problems for the company. The inquirer told the
credit manager that it appeared he had a workers' compensation
claim and that he should once again speak with his attorney.
At this point, the credit manager told the inquirer that he
was aware of certain information unknown to the inquirer which, if
revealed, could cause problems for the company. He then proceeded
to relate several alleged criminal and fraudulent activities on the
part of the corporation which, if true and disclosed to the
authorities, could have an adverse impact upon it.
The inquirer, citing RPC 1.6, asks whether he has an
obligation to (1) confront the client with these allegations; (2)
discontinue representation of the client; and (3) divulge the
information to the appropriate authorities.
1. The lawyer-client relationship outlined by the inquirer is
between himself and the corporation with which he has contracted to
provide legal services. The fact that he has not been serving as
general counsel for the corporation does not diminish his
obligations to his client. He represents the corporation as
distinct from its directors, officers and employees. RPC 1.13(a).
Since the alleged activities involve violations of law which, if
proven, are likely to result in substantial injury to the
corporation, he has an obligation under RPC 1.13(b) to disclose to
the president as well as the directors of the corporation the
allegations of criminal and fraudulent activities in order that
they may investigate and take such action as they deem necessary.
2. RPC 1.2(d) provides, in part, that a lawyer shall not
counsel or assist a client in conduct that the lawyer knows is
illegal, criminal or fraudulent. In the present situation, a
corporate employee has, after the fact, stated to the inquirer and
impliedly threatened to disclose that certain criminal and
fraudulent acts have been committed in connection with corporate
operations. The inquirer states that he did not counsel or assist
the corporation in respect to these acts. Therefore, there is no
obligation upon him to withdraw from further representation of the
corporation unless it persists in future conduct involving his
services which he reasonably believes to be illegal, criminal or
fraudulent.
3. If investigation discloses that the allegations have
substance, or if the president or directors decline to investigate,
the information which the inquirer has received must nevertheless
remain confidential and may not be disclosed by him without the
corporation's consent. The fact that the inquirer was not employed
as general counsel or otherwise involved in any business decisions
or corporate filings is immaterial since the information came to
him from an employee with whom he had regular contacts in the
course of representing the corporation. The subject of confidential
communications was discussed at length by our Supreme Court in In
re Advisory Opinion No. 544 of N.J. Supreme Court of New Jersey.
Court, 103 N.J. 399 (1986). The following language from the Court's
opinion is particularly relevant:
The Disciplinary Rules have been superseded by the Rules
of Professional Conduct. The relevant rule now provides
that a lawyer shall not reveal information relating to
representation of a client unless the client consents
after consultation except for disclosures that are
impliedly authorized in order to carry out the
representation. RPC 1.6(a). In comparison to the
provisions of the former Disciplinary Rule, this Rule
expands the scope of protected information to include all
information relating to the representation, regardless of
the source or whether the client has requested it be kept
confidential or whether disclosure of the information
would be embarrassing or detrimental to the client. See
ABA, Model Rules of Professional Conduct, Rule 1.6,
Comments. Thus, the definition of confidential
information under Rules of Professional Conduct 1.6(a) is
broader and more inclusive than that of Disciplinary Rule
4-101(A).
Id. at 406-407 (emphasis supplied).
Pursuant to RPC 1.6(a)
A lawyer shall not reveal information relating to
representation of a client unless the client consents
after consultation, except for disclosures that are
impliedly authorized in order to carry out the
representation, and except as stated in paragraphs (b)
and (c).
In pertinent part, paragraph (b) provides that
A lawyer shall reveal such information to the proper
authorities, as soon as, and to the extent the lawyer
reasonably believes necessary, to prevent the client(1)
from committing a criminal, illegal or fraudulent act
that the lawyer reasonably believes is likely to result
in death or substantial bodily harm or substantial injury
to the financial interest of property of another [.]