An attorney is representing a client in a complex business transaction. The client informs the attorney that they intend to back out of the deal and breach a valid, binding contract with a third party, which would result in substantial financial injury to the third party. The client asks the attorney to draft a letter repudiating the contract. What is the attorney's ethical obligation?
- AThe attorney may draft the letter, but must advise the client of the legal consequences of the breach.
- BThe attorney must inform the third party of the client's intent to breach the contract to prevent harm.
- CThe attorney must draft the letter as requested, as the client's intentions are confidential.
- DThe attorney must withdraw from the representation if the client insists on proceeding with the breach and refuses to reconsider.
Show answer & explanationAnswer & explanation
Correct answer: D. The attorney must withdraw from the representation if the client insists on proceeding with the breach and refuses to reconsider.
An attorney cannot counsel a client to engage, or assist a client, in conduct that the attorney knows is criminal or fraudulent. While the duty of confidentiality generally applies, if the client insists on engaging in conduct that the attorney is prohibited from assisting, the attorney must withdraw. Breach of contract, while not criminal, can be fraudulent if done with intent to deceive and cause substantial financial injury.
Why the other options are wrong
- A. Advising on consequences is good, but the attorney cannot then proceed to assist in the prohibited act.
- B. Disclosing confidential information to a third party to prevent financial harm from a breach of contract is generally not a permissible exception under Rule 1.6, unless the breach rises to the level of a crime or fraud likely to result in substantial injury to the financial interests or property of another, and even then, it's typically permissive, not mandatory.
- C. Drafting such a letter would constitute assisting the client in fraudulent conduct, which is prohibited.
Assisting Client Fraud
A lawyer is prohibited from counseling or assisting a client in conduct the lawyer knows to be criminal or fraudulent, even if the information about the client's intent is confidential.
- This is a limitation on the duty of confidentiality.
- Requires the lawyer's knowledge of the client's intent.
- Withdrawal is often the appropriate action if the client persists.
Memory trick: Don't Help Bad Deals, You Must Withdraw.