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Ethics: To keep a confidence

Every Issue

Cite as: (2003) 77(10) LIJ, p.93

Good ethics requires a choice when it comes to behaviour, not mandatory rulings.

The recent decision by the American Bar Association to allow a lawyer to report a client’s crime or fraud to a regulator, where the client has used a lawyer’s advice to commit the crime or fraud,[1] appears to fly in the face of the ethical duty of confidence as “... duty inherent in the fiduciary relationship between practitioner and client”.[2]

The Australian Corporate Lawyers Association (ACLA) has suggested that American corporate lawyers, already somewhat cornered by the Sarbanes-Oxley Act[3] requirement to report misconduct inside their company – that is, “up the line”[4] – will find it impossible to live with reporting to a regulator because that requirement will see in-house counsel kept out of the boardroom in order to preserve corporate secrecy.[5]

The ACLA reaction might suggest that here in Australia the law about client confidentiality is somehow conducive to maintaining client secrets in similar circumstances. In fact, the Australian ethical regime is already arguably far more intrusive, in several respects.

First, there is High Court authority for the proposition (in the area of tax evasion) that some confidential information will lose its protected status where it can be established that there is a greater public interest in discovering the truth.[6] Depending on the circumstances, it is not hard these days to imagine that corporate secrets will indeed have enormous “public interest” – look only at executives’ knowledge of the state of the books of Enron and HIH for illustration.

Second, some statutory waiver of client confidences has always been recognised, particularly where money laundering is concerned.[7] Current debate about corporate document destruction or retention, as the case may be, now also squarely raises the issue of client confidentiality versus public interest.

Third, and most importantly, the Law Council’s Model Rules of Professional Conduct and Practice are persuasive[8] that a lawyer may well disclose confidential information for the sole purpose of avoiding the probable commission or concealment of a felony.[9]

“Concealment” contemplates confessing to the past. Compare this with the equivalent US rule which, until amendment as mentioned above, permitted disclosure of confidential information only where the risk to the public interest was associated with impending physical violence.[10]

It is already the case that in Australia disclosure of confidential information which is necessary to prevent concealment of a past felony (that is, an indictable offence – not just a violent offence – punishable by prison[11]) will be permitted.

The use in our Model Rules of the words “felony” (without qualification) and of “concealment” has meant that an Australian lawyer, corporate or otherwise, has been permitted to disclose to a proper authority information about the concealment of past (financially related) crimes by clients.

So why is the ACLA concerned with a position that has existed for some time, at least in Australia?

Perhaps it is the thought that an American rule of similar impact might lead to what is merely a permissive report becoming a mandatory duty? This would be a major concern. If a conduct rule that allows reporting of crime in the public interest is ignored and therefore requires substitution with a mandatory rule, what room is left for ethics?

To the extent that the ACLA is nervous about lawyers’ access to boardrooms, we might be sceptical if it was not also the case that professional discretionary ethics might about to be sacrificed to the impersonal regulator. Professionalism requires a choice as to behaviour and will wither in the face of compulsion.

ADRIAN EVANS is associate professor in law at Monash University and former coordinator of Springvale Legal Service Inc.

[1] Chris Merritt, “Hearsay”, Australian Financial Review, 15 August 2003, p52.

[2] Law Council of Australia (LCA), Model Rules of Professional Conduct, r2.2.

[3] Act of 2002, HR 3763, 107th Cong 2002.

[4] Deborah Rhode, “Defining the challenges of professionalism: access to law and accountability of lawyers”. Paper presented at the conference on “Enhancing the accountability of lawyers for unprofessional conduct”, Charleston, South Carolina, US, 2002.

[5] Note 1 above.

[6] Baker v Campbell (1983) 153 CLR 52 at 65 per Gibbs CJ, at 111 per Deane J.

[7] Solicitors are required to report transactions involving more than $10,000, entered into by the solicitor in the course of practice. See Financial Transactions Reports Act 1988 – Further, as lawyers, we are compelled to disclose confidential information on request to regulators who investigate complaints of misconduct. See Legal Practice Act 1996 (Vic) s149, which also requires a practitioner not under investigation to assist in disclosure, for the purposes of some other investigation being conducted by any of the current authorised regulators. Finally, the Legal Aid Act 1978 (Vic) s31 obligates a practitioner to disclose confidential information to Victoria Legal Aid where it relates to an applicant’s eligibility for legal aid.

[8] The Victorian Professional Conduct and Practice Rules 2000 are the only conduct rules now enforceable against solicitors in Victoria, but these rules are unsatisfactory because of their confusing expression and selective coverage. While the LCA’s Model Rules do not bind Victorian practitioners in the strict sense, they are progressively acquiring the status of a de facto uniform standard in all Australian jurisdictions, and are likely to form the basis of nationally enforceable conduct rules under the emerging national profession project.

[9] Note 2 above, r2.1.

[10] American Bar Association, Model Rules of Professional Conduct, r1.6.

[11] Concise Australian Legal Dictionary, 1997, Butterworths, p156.


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