Opinion 94-2
(April 1994)

You have informed the Committee that at the request of spouse A, your firm agreed to represent spouses A and B in seeking relief from a Sheriff's Sale of their jointly owned real estate. In that regard, spouse A also authorized the filing of a joint Chapter 7 bankruptcy petition for spouses A and B, on which petition spouse A undertook to secure, and did purportedly secure, spouse B's signature. You attended the Sheriff's Sale and filed the bankruptcy petition, as a result of which petition an automatic stay was ordered. You then were able to negotiate a settlement arrangement, which required certain payments be made to the mortgagee. You were to hold the first payment in escrow, as the mortgagee would only accept payment of the full settlement amount in one lump sum. You received the first payment and deposited it in your escrow account, however you never received the final payment, and despite numerous attempts to communicate with spouses A and B, you received no response from them. Pursuant to the stipulated settlement, the automatic stay then was lifted, as spouses A and B had failed to pay the agreed upon settlement in full. You then filed a petition to withdraw as counsel for spouses A and B, based on their failure to cooperate or communicate with you. That petition has since been granted. After the stay was lifted, you received a call from spouse B, who claimed to know nothing about the mortgage delinquency, Sheriff's Sale, bankruptcy, or settlement with the mortgagee. Spouse A called you later that day and informed you that spouse B did not sign the bankruptcy petition and that she had intercepted all mail from you addressed to him. You then advised both spouses that they should obtain separate counsel immediately, pointing out to spouse A that she may have committed a crime and that you already had filed the petition to withdraw as their counsel. Finally, you also found out that the mortgagee had consummated the Sheriff's Sale and recorded a deed to that effect and now intended to take action to evict spouses A and B from the premises.

You have asked the Committee two questions. First, spouse B's new counsel has asked you for a copy of the relevant portions of your file, and you want to know whether you can give such copy to spouse B's new counsel. Second, you have asked what you should do with the money which you are holding in escrow, representing the first payment on the settlement which was never consummated.

Under the facts which you have described, it appears that spouse A may have committed a criminal or fraudulent act, in the commission of which spouse A used your services. If that is the case, then Rule 1.6(c)(2) permits you to reveal confidential information (contents of your file) to the extent that you believe is reasonably necessary to prevent or rectify the consequences of spouse A's criminal or fraudulent act. In addition, it is the opinion of the Committee that you may give a copy of the relevant portions of your file to spouse B's new counsel based on Rule 1.6(a), which permits disclosures of confidential information impliedly authorized in order to carry out the representation,.... As spouse A retained your firm to represent both spouses A and B, spouse B was your client in the representation, and thus spouse A could have had no expectation of confidentiality with respect to spouse B. On the contrary, disclosure to spouse B was impliedly authorized, as necessary and proper in your firm's representation of spouse B. Also, Rule 1.1 6(d) requires that, upon termination of representation, you take steps to the extent reasonably practicable to protect a client's interests,.... including providing a copy of the relevant portions of your file.

With respect to the money given to you by spouse A as the first payment on account of the settlement with the mortgagee, which money you now hold in escrow, the Committee recommends that you continue to hold such money in escrow under Rule 1.1 5(b) and that you promptly notify spouses A and B that you are doing so and that you will release the money to them or their designee upon their joint written instructions.
 
Finally, although you did not specifically ask about your obligation to the bankruptcy court, the Committee refers you to Rule 3.3(a)(2), which may require that you remonstrate with spouse A (through spouse A's new counsel) to disclose to the court the fact that spouse B did not sign the Chapter 7 petition. If spouse A will not do so, Rule 3.3(a)(2) then may require that you do so if you conclude that this fact is material and that disclosure is necessary to avoid assisting a criminal or fraudulent act by [spouse A].

   

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.