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                                         114 N.J.L.J. 68
                                        July 19, 1984


Appointed by the of New Jersey Supreme Court


Confidentiality - Non-Disclosure
of Fraudulent Insurance Claim

    During the course of an initial conference with a client concerning the rights of the client to recover for injuries sustained as a result of an automobile accident, the client disclosed information which, if true, would establish the identity of the operator of the other vehicle. A retainer agreement was signed at this conference. Sometime thereafter, the client called to advise that he was retaining other counsel, primarily because such other counsel had indicated that the client would have rights against the insurance carrier covering the vehicle in which the client was a passenger if the driver of the other vehicle was unidentified. The inquirer asks whether he has an obligation, in the event an "uninsured motorist" claim is filed, to advise the insurance carrier of the information gained in the initial conference with the client. Inquirer further asks whether he has a present duty to advise the carrier (whether or not an "uninsured motorist" claim has been filed) of the same information. Inquirer suggests that the client has the "apparent intention" to file a fraudulent claim.

    DR 7-102(B) provides:
        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.

            A person other than his client has perpetrated a fraud upon a tribunal shall promptly reveal the fraud to the tribunal.

    Of course, this Rule must be read in conjunction with DR 4-101 dealing with the preservation of confidences and secrets of a client. The information in question was certainly within the definition of confidential communication. Such communications may be revealed only under the narrow exceptions set forth in DR 4-101(C).
    The sanctity of the attorney-client privilege has withstood assault for centuries. There has been some minimal erosion, but only in cases of the most compelling nature. See, for example, Opinion 280 (Supplement) 97 N.J.L.J. 753 (1974).
    After years of study and debate, the House of Delegates of the American Bar Association on August 2, 1983 adopted its Model Rules of Professional Conduct. The pertinent rule is 1.6, Confidentiality of Information, which in part, provides as follows:
    (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 paragraph (b).

    (b)    A lawyer may reveal such information to the extent the lawyer reasonably believes necessary:

        (1)    to prevent the client from committing a criminal act that the lawyer believes is likely to result in imminent death or substantial bodily harm.

    The ABA rule is clearly more restrictive than DR 4-101(C) (3) which provides that a lawyer may reveal "the intention of his client to commit a crime and the information necessary to prevent the crime."
    In sum, defenders of the attorney-client privilege give ground grudgingly, and occasionally recover positions lost heretofore. The public expects, and has a right to expect, that a lawyer will preserve confidences since the soundness of the advice given absolutely depends upon full disclosure by the client.
    DR 7-102 dealing with frauds upon a person or tribunal requires that the information "clearly establish" a past fraud. That is not present here.
    The inquirer informs us that he advised the former client that if he knowingly advances a fraudulent claim he will be in jeopardy. Having done so, his obligation to the client is discharged, but this obligation to maintain confidentiality continues.

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