The Degree of Harm: Toward a Cogent Fraud Exception to Client Confidentiality
DOI:
https://doi.org/10.5195/lawreview.2025.1085Abstract
One of the greatest unresolved issues in legal ethics is the tension between the attorney’s duties to client, such as confidentiality, and duties to third parties, which include fair dealing. Fulfilling these duties to an individual or entity under one rule may necessarily require the attorney to violate ethical obligations under another.
The conflict between duties to client and third parties is acutely seen with the issue of client fraud. Clients may engage in fraud or other misconduct during the course of a representation and may, in some cases, use the attorney as an instrumentality to further the fraud. The attorney is bound by ethical obligations not to engage in their own misconduct or aid in a client’s fraud. However, the attorney is also bound by client confidentiality in ways that sometimes make it impossible to remedy, or avoid serving as an instrumentality of, such fraud.
The rules of professional conduct, as currently constructed, fail to cohesively address this tension. Scholarship has touched upon this issue, but has also failed to address it thoroughly. This Article breaks new ground by clearly identifying the dilemma and developing a solution in the form of a new framework based on the avoidance of harm. The Article argues that a comprehensive exception to confidentiality, which requires the attorney to balance contextual and fact-specific harms in order to determine whether disclosure of misconduct is permissible, is the best way to address the dilemma in a cogent manner.
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