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                                         118 N.J.L.J. 560
                                        October 23, 1986


Appointed by the Supreme Court of New Jersey


Attorney-Client Confidentiality -
Disclosure of Embezzlement
by Estate Administrator

    This inquiry although posed with more complexities may be stated as follows:
    The lawyer for the administrator of a decedent's estate is told by the administrator that he has "borrowed" estate assets to meet personal expenses. What is the lawyer's ethical obligation to:     (a) his client
    (b) other estate beneficiaries and/or their legal counsel
    (c) the Court
    (d) a bonding company?
Until superseded by the present Rules of Professional Conduct DR 7-102(B)(l) provided:
        A lawyer who received information clearly establishing that 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 present ethical rule, RPC 1.6, states:

        (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).

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

            (1) to rectify the consequences of a client's criminal, illegal or fraudulent act in the furtherance of which the lawyer's services had been used; (emphasis supplied).

    The lawyer's first recourse should be to the client, seeking his consent to the disclosure of the pertinent information in order that the defalcation and any resulting injustice might be corrected as promptly and as effectively as possible.
    Absent the client's consent, is it the obligation of the lawyer to rectify the consequences of the client's act? While the prior disciplinary rule directed disclosure, the present rule merely allows it. By its language, it permits but does not demand disclosure.
    In prior and more recent opinions we have recognized that in certain situations a lawyer is either authorized or obligated to reveal otherwise confidential information to the proper authorities.
    This is consonant with public policy and concern for the role of the legal profession in contemporary society.
    The recent Supreme Court decision in Fellerman v. Bradley, 99 N.J. 493 (1985) is illustrative of a perceptible trend concerning lawyer conduct.
    In Fellerman, the Court held that a lawyer's refusal to disclose a client's address, thereby directly interfering with the judicial process, constituted a "fraud on the Court." Id. at 504. Fellerman explicitly expressed the Court's concern with the "proper and effective administration of justice." Id. at 504.
    In our recent Opinion 586, 117 N.J.L.J. 533 (1986) relating to a judgment based on deception we pointed out the "inherent obligation which a lawyer has to prevent a continuance of a wrong" and that "failure to do so obviously would result in what may be termed a continuing fraud on the Court, or a continuing conspiracy by which fraud remains uncovered." The lawyer should not participate in a "silent conspiracy".
    As to the present inquiry this Committee feels that the lawyer should advise the Court and other counsel, if any, as to the particular situation presented for dealing with it in the most appropriate manner considering all the facts and circumstances.
    The grievousness of a given case could range from embezzlement of an amount relatively small but involving virtually all the assets of the estate (as in the circumstances prompting this inquiry) to embezzlement on a grand scale with a clear and imminent potential for even more egregious harm to the parties involved and possibly o a bonding company.
    Although the language of RPC 1.6(c) is permissive and not mandatory the rights of the parties involved and fundamental concepts of justice and fairness demand and amply justify the procedure outlined in this opinion.
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