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 [.]