Friday, June 1
(9:00 - 10:20am)
Rule 1.2(d) prohibits lawyers from assisting clients “in conduct that the lawyer knows is criminal or fraudulent.” The word “knows” is defined as “actual knowledge,” but the definition also states that “knowledge may be inferred from the circumstances.” When can the suspicious nature of a client’s conduct become so obvious that a lawyer’s lack of actual knowledge can be deemed willful ignorance? If so, does willful ignorance constitute knowledge? While particular attention has been paid to such issues in the context of money laundering and terrorist financing, similar concerns arise in connection with other client activities as well.
In this presentation, we provide the perspective of disciplinary counsel, a malpractice insurance director, professional responsibility counsel and a legal ethics professor and offer practical options to lessen the risk of bad outcomes.
Among the points covered are:
- Avoiding problems by effective client intake procedures at the outset. How to identify high-risk clients and high-risk matters. What provisions to include in retainer agreements. Other tips for effective law firm risk management.
- Principles of client loyalty and exceptions for known wrongful conduct. Do lawyers have a duty to assume that their clients are being honest?
- What sorts of client conduct raises yellow, pink or red flags? What if a lawyer comes to learn that they have unwittingly been assisting wrongful conduct? Hypotheticals will be provided.
- Can a lawyer “investigate” a client without the client’s permission? Should the lawyer confront the client? When is withdrawal (noisy or quiet) the answer? Contemplating the nuclear option of blowing the whistle.
- When should the malpractice carrier be notified and what, if any, role should the insurer play? Claims of aiding and abetting. Potential civil and criminal liability.
- ABA Bass Letter
- ABA Good Practices Guidance Re Money Laundering Terrorist Financing 2010
- ABA Op. 463 Client Due Diligence Money Laundering and Terrorist Financing
- Aiding Abetting Primer
- Dishonest Client Pink Flags
- In Re. Gurney