A summary of ABA Formal Opinion 491      

The American Bar Association issued Formal Opinion 491 on April 29, 2020. The opinion provides guidance on a lawyer’s duties regarding a client’s potentially criminal or fraudulent conduct.

“They don’t send the lawyers to jail, because we run the country.”

Several years ago 60 Minutes aired a story about an undercover investigation conducted by Global Witness, a London-based nonprofit that exposes international corruption.^[1] Several attorneys in New York City were approached by the fictitious “representative” of a government official from a poor West African country who wanted to move millions of dollars into the United States. Of the 16 lawyers who were approached, only one declined to even participate in the discussion and showed the representative the door. The remaining 15 lawyers, one of whom was the president of the American Bar Association at the time, discussed ways to possibly move the suspicious funds into the U.S. without compromising the identity of the government official.

Over four years after this 60 Minutes episode first aired, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 491 (FO 491). FO 491 “addresses a lawyer’s obligation to inquire when faced with a client who may be seeking to use the lawyer’s services in a transaction to commit a crime or fraud.” FO 491 provides guidance on the rules of professional conduct applicable to the issue, case law from around the country, and advice on how to approach certain scenarios. FO 491 discusses the ABA Model Rules of Professional Conduct. This article will discuss the comparable provisions in the Rules Regulating The Florida Bar (“Rules”).

Duty to Inquire

An attorney should look for initial guidance from Rule 4-1.2(d). This rule states a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows or reasonably should know is criminal or fraudulent.” What does it mean by “knows or reasonably should know”? The Preamble to the Rules tells us this means “actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.”

As an attorney you have a duty to inquire further into what sounds shady or potentially unlawful. FO 491 points out that “[s]ubstantial authority confirms that a lawyer may not ignore the obvious.” Perhaps an even stronger point comes from FO 491’s quote from Charles Wolfram, “a distinguished scholar in the field of legal ethics and professional responsibility”^[2]: “As a lawyer, one may not avoid the bright light of a clear fact by averting one’s eyes or turning one’s back.” FO 491, n. 13.

The duty to inquire is not limited to Rule 4-1.2(d). FO 491 shows a lawyer must also consider the duties of competence (Rule 4-1.1), diligence (4-1.3), communication (4-1.4), withdrawal (4-1.16), and honesty (4-8.4). FO 491 contains a laundry list of the facts and circumstances that may trigger a lawyer’s duty to inquire further under these rules:

            “(i) the identity of the client, (ii) the lawyer’s familiarity with the client, (iii) the nature of the matter (particularly whether such matters are frequently associated with criminal or fraudulent activity), (iv) the relevant jurisdictions (particularly whether any jurisdiction is classified as high risk by credible sources), (v) the likelihood and gravity of harm associated with the proposed activity, (vi) the nature and depth of the lawyer’s expertise in the relevant field of practice, (vii) other facts going to the reasonableness of reposing trust in the client, and (viii) any other factors traditionally associated with providing competent representation in the field.”

The rules under consideration and cases discussed in FO 491 make it clear an attorney must “develop sufficient knowledge of the facts and law to understand the client’s objectives, identify means to meet the client’s lawful interests, to probe further, and, if necessary, persuade the client not to pursue conduct that could lead to criminal liability or liability for fraud.”

Reasonable Judgment

Attorneys must be concerned about the impact on their reputation, license to practice, and liberty if they knowingly assist a client in illegal or fraudulent conduct. Of course, no lawyer is completely immune from making a mistake. For this reason, FO 491 recognizes a “lawyer’s reasonable judgment under the circumstances presented, especially the information known and reasonably available to the lawyer at the time, does not violate the rules. Nor should a lawyer be subject to discipline because the course of action, objectively reasonable at the time it was chosen, turned out to be wrong with hindsight.”

Follow Your Instincts and Know When to Withdraw

In uncertain times like the present some lawyers may let their guard down in order to get a fee. Don’t do it. Disciplinary authorities and prosecuting agencies are still open and pursuing cases. If you find yourself in a situation that doesn’t feel right you may need to extricate yourself. FO 491 provides guidance both on how to avoid getting into a questionable attorney-client relationship and getting out if you find yourself in one.

For example, if a client (prospective or current client) “refuses to provide information or asks the lawyer not to evaluate the legality of a transaction the lawyer should explain to the client that the lawyer cannot undertake the representation unless an appropriate inquiry is made. If the client does not agree to provide information, then the lawyer must decline the representation or withdraw.”

You may find yourself in a situation where the client agrees to provide additional information and then fails to follow through at all or only provides incomplete information. In that situation, if you proceed with the representation or advice it may be found to be evidence of willful blindness as proscribed under Rule 4-1.2(d) (“conduct that the lawyer knows or reasonably should know is criminal or fraudulent.”)

The diligence requirements of Rule 4-1.3 should lead you to seek information from sources other than the prospective client or current client. This must be done with the limitations of Rule 4-1.6 (confidentiality of information) and 4-1.8 (conflict of interest) in mind. FO 491 emphasizes that “[i]f the lawyer needs to disclose protected information in order to analyze the transaction, the lawyer must seek the client’s informed consent in advance. If the client will not consent or the lawyer believes that seeking consent will lead to criminal or fraudulent activity, the lawyer must decline the representation or withdraw.”

At one point during the 60 Minutes episode mentioned at the beginning of this article the following exchange occurred between the “representative” of the African country and an attorney. The attorney was asked “why he never worried about government subpoenas.” He replied, “They don’t send the lawyers to jail, because we run the country.” Do you want to bet your law license on that?

[1] See https://www.cbsnews.com/news/hidden-camera-investigation-money-laundering-60-minutes/

[2] https://www.lawschool.cornell.edu/faculty/bio.cfm?id=183