You have requested guidance from the committee regarding your duty to disclose the alleged fraudulent nature of your clients' personal injury claim. Your clients originally informed you they were passengers in a double parked automobile that was struck by an automobile which was owned and operated by defendant. Subsequent to the accident, both your clients received medical treatment for injuries they claimed were a result of the accident. Later, you received information from the defendant's insurance company. Armed with this information, you confronted your clients and they admitted that they were neither in the double parked car nor were they harmed in the accident. Subsequent to their admission, you informed defendant's insurance company that you were withdrawing as counsel in this matter and told your clients that you would no longer represent them. You now wish to know what further duties you have and to whom.
Pennsylvania Rule of Professional Conduct 1.2(d) provides that:
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the proposed consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning arid application of the law.
The comment to that rule provides in part that:
When the clients' course of action has already begun and is continuing, the lawyer's responsibility is especially delicate. The lawyer is not permitted to reveal the client's wrongdoing, except where permitted by Rule 1.6. However, the lawyer is required to avoid furthering the purpose, for example, by suggesting how it might be concealed. A lawyer may not continue assisting a client in conduct that the lawyer originally supposes is legally proper but then discovers is criminal or fraudulent. Withdrawal from the representation or rectification, therefore, may be required.
Rules 1.6 (a) & (c) provide that:
(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 to carry out the representation and except as stated in paragraphs (b) and (c).
(c) A lawyer may reveal such information to the extent that the lawyer reasonably believes necessary:
1. To prevent the client from committing a criminal act that the lawyer believes is likely to result in death or sustained bodily harm or substantial injury to the financial interests or property of another.
2. To prevent or rectify the consequences of a client's criminal or fraudulent act in the commission of which the lawyer's services are being or had been used.
However, it also provides in the comment to Rule 1.6 that, A disclosure adverse to the client's interest should be no greater than the lawyer believes necessary to the purpose of prevention of harm. The Committee is of the opinion that you have a duty to inform your former clients that they should not pursue this fraudulent claim because they may have already exposed themselves to criminal and civil liability in this matter. It should be explained to them that it is in their best interest that the fraudulent claim with defendant's insurance company be withdrawn, and that you intend to take that action. Further, you should warn your former clients that if they seek to pursue this claim with a new attorney, you may be compelled to disclose the admissions of your former clients if that attorney contacts you.
Having informed your clients of your intention, and assuming that it was you who made the claim with defendant's insurance company, the Committee is further of the opinion that you have a duty to inform the insurance company that you are withdrawing the claim. If your clients do not agree with this course of action, the exceptions to the confidentiality Rule under 1.6(c) (2) permit you to make the disclosures necessary to rectify the fraud and the comment to Rule 1.2 (d) makes clear that you must avoid continuing to assist your clients in pursuing their fraudulent claim.
Although there is no independent affirmative ethical duty under the exceptions to Rule 1.6 for you to make such disclosures, as permissive, not mandatory language is used in both the Rule and the comment, your once active involvement in dealing with defendant's insurance company has given your former clients assistance in pursuing this claim. Merely admonishing your former clients to notify defendant's insurance company themselves is insufficient.
The Committee feels that this limited course of action is sufficient to rectify your role in this fraudulent conduct and to prevent further fraudulent action in this matter. The Committee reminds you that pursuant to Rule 1.6(c)(1) and 1.6(c)(2) you should only disclose that which is necessary to prevent further fraud and to rectify your role in it.