Legal Ethics

Fact pattern

Attorney is general counsel for Corporation, a relatively small family-owned business. She receives work assignments and instructions from, and reports to, Corporation’s president. The president is also chairman of Corporation’s board.

One day, Comptroller, Corporation’s chief financial officer, came into Attorney’s office and said, “I have a personal issue, on which I need your legal advice and assistance. May I talk to you about it?”

Attorney said, “Of course. I would be happy to help you on your personal matter. However, you realize that I am the company’s lawyer, and not your personal lawyer, so I won’t be able to act as your lawyer in any way if that conflicts with my responsibilities to the company.”

Comptroller replied, “Fair enough, but I do need your assurance that you will keep strictly confidential what I am about to tell you.” Attorney responded, “Yes, definitely.”

Comptroller then told Attorney that for about five years, he had been skimming money from Corporation by creating fictitious payees, to whom he had been writing company checks. He estimated that by doing this, he had skimmed a total of $200,000. He had used the money to fuel a gambling addiction, and had lost all of it. He wanted Attorney’s advice on whether he could deduct these losses against his income on his next tax return.

Attorney was horrified. She asked Comptroller whether he was still taking money from Corporation. Comptroller replied, “Yes, and one day I will hit the jackpot and build a nice nest-egg for my retirement.”

Attorney responded, “You just told me that you have been stealing from my client. I definitely can’t be your lawyer or give you any legal advice. You are in very big trouble, and you need to get your own lawyer right away. I wish that you had not divulged this to me. Now, I am bound to report to the president what you just told me.”

Comptroller reminded Attorney about her promise to keep the information confidential. He then warned Attorney that if she said a word about this conversation, he would report her to the state bar for professional misconduct. Despite this threat, Attorney immediately recounted Comptroller’s admission to Corporation’s president. Comptroller was fired, and he now faces criminal prosecution. As threatened, Comptroller has filed a complaint against attorney with the state bar.

Questions

1. Did Attorney contravene any American Bar Association Rules of Professional Conduct (Rules) during her meeting with Comptroller? Explain.
2. Did Attorney comply with the Rules in reporting Comptroller’s admissions to Corporation’s president? Explain, discussing Attorney’s duties to Comptroller and to Corporation under the Rules, along with how Attorney might have avoided any ethical dilemmas that arose here.