Must a lawyer disclose to a welfare agency or prosecutor that a client on public assistance has an undisclosed asset or personal-injury claim?

Plain-English summary

The Committee addressed two similar inquiries. In the first, a personal-injury lawyer met with a woman who had been injured in a fall and was on welfare, with welfare having paid her medical bills; he asked whether he had a duty to advise her to notify the welfare agency of her claim, and whether he had to inform the agency if she objected. In the second, a matrimonial client referred by a county legal aid society had represented to the society that he had no property and was on welfare, but the inquirer learned at the first interview that the client had a substantial equity in real estate he had conveyed to relatives to avoid foreclosure; after the client stopped communicating, the lawyer asked whether he could disclose the client's identity and the facts to the county prosecutor.

The Committee began with the general rule that a lawyer is ordinarily prohibited from revealing the confidences and secrets of his client and from using them to the client's disadvantage (DR 4-101), and that DR 7-101(A)(3) bars a lawyer from knowingly prejudicing or damaging his client, except as required under DR 7-102(B). It then turned to DR 7-102(B)(1), which requires a lawyer who receives information clearly establishing that his client has, in the course of the representation, perpetrated a fraud upon a person or tribunal to call on the client to rectify it and, failing that, to reveal the fraud to the affected person or tribunal.

The Committee held that the meager facts presented fell short of clearly establishing that either individual had, in the course of the representation, perpetrated a fraud upon a person or tribunal, so DR 7-102(B)(1) did not apply. It added that this did not mean a welfare client's relationship would always be protected as a confidence or secret, observing that the welfare statutes demand full initial and continuing disclosure of current financial resources, so under some sets of facts a continuing failure by a welfare recipient to report a potentially valuable claim might constitute a reportable fraud under DR 7-102(B)(1).

Currency note

This opinion was issued in 1977, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The duty of confidentiality and its exceptions, then stated in DR 4-101 and DR 7-102(B), are now governed by RPC 1.6, whose text and exceptions differ. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Must a lawyer report a welfare client's undisclosed asset or injury claim?

A: Under this opinion, not on the facts presented, which the Committee found fell short of clearly establishing a fraud under DR 7-102(B)(1).

Q: When could disclosure become required?

A: The Committee observed that, because welfare statutes demand continuing disclosure of resources, under some facts a continuing failure by a recipient to report a potentially valuable claim might amount to a reportable fraud under DR 7-102(B)(1).

Q: What was the starting point for the analysis?

A: The general rule of DR 4-101 that a lawyer may not reveal a client's confidences and secrets, subject to the DR 7-102(B) exception for clearly established client fraud.

Background and rules framework

The opinion read the confidentiality rule of DR 4-101 together with the fraud-rectification exception of DR 7-102(B)(1) and the no-harm rule of DR 7-101(A)(3), and found the facts did not trigger the exception. In current New Jersey terms, confidentiality and its exceptions are governed by RPC 1.6.

Citations and references

Rules of Professional Conduct:

• DR 4-101 (preservation of client confidences and secrets), as in effect 1977; now MR 1.6 / NJ RPC 1.6
• DR 7-101(A)(3) (not prejudicing or damaging the client) and DR 7-102(B)(1) (revealing a client's fraud), as in effect 1977

Statutes:

• N.J.S.A. 2A:111-2, 2A:111-3, 44:1-95, 44:4-91, 44:4-91.1, 44:8-140, 44:10-1, and 44:13-10 (welfare-recipient disclosure requirements)

See also

• NJ ACPE Op. 535: Confidentiality and Non-Disclosure of a Fraudulent Insurance Claim
• NJ ACPE Op. 439: Confidences of Zoning Violations in a Real Estate Sale

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp364-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Full opinion text unavailable from the official source; see the linked source above for the complete text.