CBA Record

LEGAL ETHICS

John Levin’s Ethics columns, which are published in each CBA Record, are now in-

dexed and available online. For more, go to http://johnlevin.info/ legalethics/.

BY JOHN LEVIN

CONTINUING DEVELOPMENTS ON A LAWYER’S DUTY TO DISCLOSE Reporting Up or Out

WHAT’S YOUR OPINION?

I n October 2003, this column discussed the brewing battle over attorney-client privilege under the then-newly adopted Sarbanes-Oxley Act. Pursuant to the Act, the SEC adopted regulations obliging a lawyer to report and disclose certain client actions, primarily to prevent the client from committing fraud and criminal violations. TheWashington State Bar Asso- ciation issued an Interim Formal Ethics Opinion finding that certain disclosure requirements under the SEC Rules were broader than those permitted under the Washington Rules of Professional Con- duct, and a Washington lawyer could not reveal such protected confidences. This resulted in an exchange of letters between the SEC and the bar associations of several states over the issue. The column anticipated further devel- opments on the issue of an attorney’s duty to disclose, stating at that time: The SEC–as well as other governmental agencies–has long been attempting to push the legal profession toward having a public enforcement function. Such a function not only would force lawyers to violate long held confidentiality obligations to their clients, but would contravene the funda- mental concept that the lawyer owes his or her obligation first to the client–not to the public.…Stay tuned for further develop- ments.

The first “further developments” were amendments to ABAModel Rules 1.6 and 1.13 (adopted in most states, including Illinois, though with some local varia- tions). As reported in the ABA Bar Leader in December 2003: By a 218-201 vote, the ABA Del- egates amended Model Rule 1.6(b) to permit a lawyer to reveal confi- dential client information to prevent a crime or fraud that is reason- ably certain to result in substantial injury to the property or financial interest of another. The ABA also voted to amend Model Rule 1.13 to require a corporate lawyer to report certain violations of law by officers or employees to higher authorities within the organization, unless the lawyer believes that disclosure would not be in the best interest of the organization. The general concept underlying these rules is that the lawyer’s client is the entity, and the duty of the lawyer is to protect the interests of the entity even if it may be against the personal interests of certain officers or employees of the entity, The compromise between the ABA and the SEC seemed to work. But what if the lawyer does not “report up” or “report out” such information? This was the ques- tion brought in 2016 before the Michigan Attorney Grievance Commission concern- ing six former General Motors in-house counsel who failed to disclose either “up” or “out” information they allegedly had about defective ignition switches in GM cars that resulted in numerous injuries and deaths. As reported in the public media and trade press, the Grievance

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Commission declined to commence any disciplinary action against these lawyers after a complaint was filed by the father of an alleged victim. The Commission did not give reasons for taking no action, and there has been speculation–much of which revolves around the specific wording Michigan’s Rules of Professional Conduct, which gives attorneys very limited discre- tion to disclose client confidences, even if necessary to prevent death or bodily injury. Can an Illinois lawyer rely onMichigan’s “no action” decision? I would suggest that the answer is No. Illinois Rule 1.6(c) states that: “[a] lawyer shall reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary to prevent reasonably certain death or substantial bodily harm.” Com- ment 6 to Illinois Rule 1.6 is fairly explicit in stating: Paragraph (c) recognizes the overriding value of life and physical integrity and requires disclosure reasonably necessary to prevent reasonably certain death or substantial bodily harm…Thus, a lawyer who knows from information relating to a representation that a client or other person has accidentally discharged toxic waste into a town’s water must reveal this information

John Levin is the retired Assis- tant General Counsel of GATX Corporation and a member of the CBARecord Editorial Board.

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48 SEPTEMBER 2016