Last February, the ABA House of Delegates, which is comprised of 597 delegates from ABA entities and state, local and specialty bar associations, adopted a measure that updates the ABA’s policy that endorsed for the first time “reasonable and appropriate” federal government efforts aimed at combating money laundering. The policy seeks to balance the longstanding attorney-client privilege with the demands of governmental entities seeking access to information on criminal activities.
Following this policy, yesterday, the HoD adopted an amendment to Model Rule 1.16 "to protect lawyers from unwittingly becoming involved in a client’s or prospective client’s criminal and fraudulent activities."
Reportedly, there was a lengthy debate on the proposal but it was eventually approved by a vote of 216-102.
The amendment creates a duty to "inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation" and adds a new (a fourth) case in which lawyers are obligated to refuse to represent a client or to withdraw from representing a current client.
This section of the amendment states that the a lawyer shall not accept the representation or shall withdraw from representation if "the client or prospective client seeks to use or persists in using the lawyer’s services to commit or further a crime or fraud, despite the lawyer’s discussion pursuant to Rules 1.2(d) and 1.4(a)(5) regarding the limitations on the lawyer assisting with the proposed conduct.
As you probably know, Model Rule 1.16(a) lists the circumstances when a lawyer is required to withdraw, while 1.16(b) lists the circumstances in which a lawyer may withdraw. Model Rule 1.16(b)(2) states that a lawyer may withdraw if "the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent."
The original proposal before the House of Delegates eliminated this discretionary duty and essentially converted it to an obligation. But, at some point in the process it was decided to keep section 1.16(b)(2), so now we have a mandatory duty related to a client's intent to engage in fraud, etc, and a separate discretionary duty.
That can be confusing so we will have to wait and see how they are interpreted.
You can read the Resolution that was approved and its full report here.
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