Opinion 95-5
(April 1995)
 
You represent an executor of a will whom you now know has absconded with estate funds. You have advised that the will was properly probated, income tax returns, and both Pennsylvania inheritance and federal estate tax returns have been filed, and you have received closing letters. You personally prepared all of the documents and believe they accurately reflect the assets received and the disbursements made during the administration of the estate. The estate is simple, and the sole beneficiaries are the three residuary legatees. No account has been filed for formal court adjudication, and it is your opinion that it would be appropriate to settle the estate on a receipt and release basis without the necessity of filing an account with the court. You have not been asked to sign any Supreme Court status reports required under Orphans' Court Rule 6.12, that might reveal the information.
 
During the preparation of the informal account that was to be combined with the receipt and release, you discovered that the distributable funds were not what they should be and your client, who has been handling the bookkeeping, and who has also paid your fee in full, advised that your assistance is no longer needed.
 
You have asked what, if anything, you can or should do to advise the legatees or the Orphans' Court of the disappearance of the funds.
 
In general, Rule 1.6, pertaining to confidentiality of information, particularly Rules 1.6(a) and 1.6(d), prohibits a lawyer from revealing to others the misconduct of one's client. However, there are two exceptions to Rule 1.6 that may either require or allow you to reveal the information.
 
Rule 1.6(b), requires a lawyer to reveal information necessary to comply with Rule 3.3, pertaining to candor toward a tribunal. However, you have not been asked to prepare, or participate in the preparation of, any documents, including an account, that have been or are intended to be filed with the Register of Wills and Orphans' Court that would or should disclose the asset deficiency. Furthermore, because your services have been paid in full, you have no standing to even compel your former client to file an account.
 
On the other hand, Pennsylvania is among the few jurisdictions that have lessened the protection of client confidence to provide greater protection to the interests of third parties in order to rectify harm when the lawyer is not mandated to report pursuant to Rule 3.3. Under Rule 1.6(c)(1) and (2) a Pennsylvania lawyer is permitted to ...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...substantial injury to the financial interests or property of another...[and]...(2) to prevent or to 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.... If you believe this is applicable, you are permitted to reveal the information.
 
If you decide to reveal the information, you should first alert the executor, your former client, to your intentions and try to persuade the executor to take suitable action including the restoration of the funds. If the executor refuses or fails to take such action, you may then notify the legatees of the executor's breach of fiduciary duty. It would not appear appropriate or necessary for you to notify, or take action in, the Orphans' Court once you have so notified the legatees.
 
In some jurisdictions, your representation would be deemed to encompass the estate as a whole, including the legatees, not just the executor. If that were the case in Pennsylvania, you might have an obligation to notify the legatees of the executor's breach. In our opinion, the case law in Pennsylvania does not support that broadened view of your representation, so your notifying the legatees is not obligatory.
 
You advised that you discovered your client's apparent wrongdoing during the preparation of the informal account. We assume that you did not complete the informal account, nor send it to the estate legatees, and that you will not do so, as such acts could be deemed to be violations of Rule 1.2(d). Rule 1.2(d) prohibits a lawyer from assisting a client in criminal or fraudulent conduct. See also Rule 4.1, which prohibits a lawyer from knowingly making a false statement of material fact to a third person (such as a beneficiary) and prohibits failure to disclose a material fact to a third person when disclosure is necessary to avoid aiding and abetting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

   

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.