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Peter R Jarvis is a partner in Holland &
Knight'sPortlandoffice
Calon N Russell is a associate in Holland &
Knight'sPortlandoffice
HIGHLIGHTS:
The American Bar Association's
(ABA) Standing Committee on Ethics and Professional Responsibility
recently released Formal Opinion 481 addresses the question when a
lawyer who has made a mistake must tell the client about it.
Opinion 481, released on April 17,
2018, concludes that as a matter of legal ethics, lawyers must
inform current clients about material errors but need not inform
former clients.
As Opinion 481 makes clear, the duty
to inform a client of a mistake is not contingent on the client
having a viable legal malpractice claim against the lawyer. Opinion
481 does not address whether or when a lawyer who is concerned that
the lawyer may have made a mistake must also inform the
client.
Sooner or later, pretty much everyone – lawyers included
– makes mistakes. And when lawyers make mistakes, clients can
be harmed. The American Bar Association's (ABA) Standing
Committee on Ethics and Professional Responsibility recently
released Formal Opinion 481 addresses the question when
a lawyer who has made a mistake must tell the client about it.
Opinion 481, released on April 17, 2018, concludes that as a matter
of legal ethics, lawyers must inform current clients about material
errors but need not inform former clients.
Opinion 481 notes, for example, that, "If a lawyer errs and
the error is material, the lawyer must inform a current client of
the error." This is a part of a lawyer's duty to
communicate with a current client under ABA Model Rule 1.4. As
Opinion 481 goes on to note, deciding what the lawyer must say and
when the lawyer must say it "can sometimes be difficult
because errors exist along a continuum." Thus, Opinion 481
states that there will be times (perhaps primarily, if not
exclusively, for errors that can quickly and easily be corrected)
when it is reasonable for a lawyer to attempt to correct an error
before informing the client. Absent such a circumstance, however,
the lawyer must inform the client if a disinterested lawyer would
conclude that the error is either "reasonably likely to harm
or prejudice a client" or the nature of the error "would
reasonably cause a client to consider terminating the
representation even in the absence of harm or prejudice."
As Opinion 481 makes clear, the duty to inform a client of a
mistake is not contingent on the client having a viable legal
malpractice claim against the lawyer. Opinion 481 appears to be
limited by its terms, however, to situations in which there is no
question but that the lawyer has made a mistake. In other words,
Opinion 481 does not address whether or when a lawyer who is
concerned that the lawyer may have made a mistake must
also inform the client. Although a balancing test would presumably
need to be applied, it seems likely that there could be at least
some situations in which a lawyer's certainty of having made a
mistake may be less than absolute but in which a duty to inform the
client may nonetheless exist.
Opinion 481 also states that before informing the client, the
lawyer who made a mistake may generally "consult with his or
her law firm's general counsel, another lawyer, or the
lawyer's professional liability insurer." The opinion
cites ABA Model Rule 1.6(b)(4) for this proposition, noting that
that rule permits disclosure of a client's confidential
information by a lawyer "to secure legal advice about the
lawyer's compliance with these Rules." Presumably, the
justification for disclosure to the professional liability insurer
is that the insurer's position may help inform the legal advice
that the lawyer is seeking.
With respect to former clients, Opinion 481 asserts that there
is no basis in the ABA Model Rules to compel disclosure. Although,
as noted, it can at times be difficult to determine who is a
current client and who is a former client. Opinion 481 is clear
that once a person or entity has become a former client, any duty
to inform the client that would have existed if the lawyer had
known of the mistake before the representation has terminated no
longer exists. On the other hand, and just as a lawyer generally
cannot decide to drop one client like a so-called hot potato to
avoid a conflict of interest with another, more desirable, client,
so too a lawyer generally cannot decide to terminate a relationship
with a current client in order to avoid having to tell the client
about a material error of which the lawyer is then aware. As
Opinion 481 notes, ABA Model Rule 1.16(d) will often if not always
require disclosure of what the lawyer knows at the time of
withdrawal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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