Must a lawyer reveal a client's fraud that happened before the lawyer was hired, and what must the lawyer do if the client may have to testify about it?

Plain-English summary

In litigation over a partnership dissolution between former partners A and B, the attorneys for A and B learned that, before they were hired, A and B had fraudulently obtained and converted property belonging to a third party. The litigation involved other parties, and A and B might be questioned about the property; truthful answers could reveal the fraud. The inquiry asked whether the attorneys must reveal the fraud to the defrauded person or the court, whether DR 7-102(B)(1) reaches fraud committed before the representation, and what the attorneys must do after warning their clients to answer truthfully.

The Committee applied DR 4-101, which bars a lawyer from knowingly revealing a client's confidence or secret, subject to limited exceptions (client consent after full disclosure, when permitted by the rules or required by law or court order, and an intention by the client to commit a crime). It also described DR 7-102, which forbids using perjured testimony or false evidence, participating in creating or preserving evidence known to be false, and assisting a client in conduct the attorney knows is fraudulent or illegal; once an attorney knows the client has, in the course of the representation, perpetrated a fraud, the attorney must call on the client to rectify it and, if the client will not, reveal it to the affected person or tribunal. The opinion also quoted Article 3810 of the Texas Code of Criminal Procedure on the attorney's duty not to disclose client communications (citing Cochran v. Cochran, 333 S.W.2d 635 (Tex. Civ. App. 1960)) and noted that, because it does not answer questions of law, it did not decide whether nondisclosure would violate any civil or criminal statute, though an attorney must reveal information if a statute so requires.

On the questions asked, the Committee concluded: the attorney has no duty under DR 4-101 to reveal a prior fraud to third persons or the court absent one of the exceptions; DR 7-102(B)(1) is by its terms limited to fraud perpetrated during the representation and does not address fraud committed before it; and the attorneys, having warned their clients to testify truthfully, may not allow them to perjure themselves and should warn that, if they do, the attorneys will have to bring the matter to the court's attention and seek leave to withdraw. The Committee added that it did not address every factual situation, including questions about sworn pleadings or affidavits referring to the fraudulently obtained property as "partnership" assets, and limited the opinion to the specific facts and questions.

Currency note

This opinion was issued in 1987, under the former Texas Code of Professional Responsibility, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. The Disciplinary Rules have since been amended, and Texas never adopted the ABA's Ethics 2000 framework. The current Texas rules on confidentiality and candor are Rules 1.05 and 3.03, with closest ABA analogs Model Rules 1.6 and 3.3; the duties surrounding client fraud were significantly restructured in the modern rules. Subsequent rule changes or later opinions may have changed the analysis. 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 reveal a client's fraud that occurred before the representation?

A: Per the opinion, no, not absent an exception to DR 4-101. The Committee concluded the attorney has no duty to reveal a prior fraud to third persons or the court unless an enumerated exception applies.

Q: Does DR 7-102(B)(1) cover fraud committed before the lawyer was hired?

A: The Committee concluded it does not. DR 7-102(B)(1) is by its terms limited to fraud perpetrated during the course of the representation.

Q: What if the client may have to testify about the fraudulently obtained property?

A: The attorneys, having warned the clients to testify truthfully, may not allow them to perjure themselves. The Committee said they should warn the clients that perjury would require bringing the matter to the court's attention and asking to withdraw.

Background and rules framework

The opinion interprets DR 4-101 of the former Texas Code of Professional Responsibility (preserving client confidences and secrets, with limited exceptions) and DR 7-102 (including DR 7-102(B)(1) on revealing a fraud perpetrated during the representation), and refers to Article 3810 of the Texas Code of Criminal Procedure. The closest current concepts are Texas Rules 1.05 and 3.03 and Model Rules 1.6 and 3.3 on confidentiality and candor. The analysis turns on the timing of the fraud (before versus during the representation) and on the separate prohibition against assisting client perjury.

Citations and references

Rules of Professional Conduct:

• MR 1.6 (confidentiality of information)
• MR 3.3 (candor toward the tribunal)
• DR 4-101, DR 7-102, DR 7-102(B)(1), Texas Code of Professional Responsibility

Statutes:

• Article 3810, Texas Code of Criminal Procedure (attorney's duty not to disclose client communications)

Cases:

• Cochran v. Cochran, 333 S.W.2d 635 (Tex. Civ. App. 1960, writ ref'd n.r.e.)

Other opinions cited:

• Texas Professional Ethics Committee Opinions 105, 193, 204, 315, 378, and 384

See also

• TX Ethics Op. 473: Appointed Counsel's Duty to Disclose Client's Indigency Fraud
• TX Ethics Op. 480: Duty to Disclose a Concealed Trust to a Bankruptcy Court

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-442/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_442.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION PRESENTED

In the course of litigation involving a partnership dissolution agreement between former partners, A and B, the respective attorneys for A and B learn that prior to hiring an attorney, A and B fraudulently obtained and converted to their own use property that belonged to a third party. The partnership litigation also involves other parties. A and B may be questioned by others concerning the property that was procured by fraud. Truthful answers to these potential questions could reveal the fraud that was perpetrated by A and B.
Are the attorneys representing A and B ethically bound to reveal the fraud either to the person who has been defrauded or to the court in which the partnership dissolution is pending?
Is DR 7-102(B)(1) limited to fraud perpetrated during the course of the representation?
What are the obligations of the attorneys representing A and B once the attorneys have warned their respective clients that they must answer truthfully the questions concerning the property that was procured by fraud?

DISCUSSION

DR 4-101 provides, "A lawyer shall not knowingly reveal a confidence or secret of his client." The three exceptions to this rule which could apply here are as follows:
When there is consent of the client after a full disclosure;
When permitted under disciplinary rules or required by law or court order;
When there is an intention of the client to commit a crime.
DR 7-102 provides that a lawyer shall not knowingly use perjured testimony or false evidence, and he shall not participate in the creation or preservation of evidence which he knows is false. It also provides an attorney shall not assist his client in conduct that the attorney knows is fraudulent or illegal. Once the attorney receives the information clearly establishing that his client has, in the course of the representation, perpetrated a fraud upon a person or other tribunal, the attorney shall promptly call upon his client to rectify the same, and if the client refuses or is unable to do so, the attorney shall reveal the fraud to the affected person or tribunal.

Article 3810 of the Texas Code of Criminal Procedure provides: "An attorney at law shall not disclose a communication made to him by his client during the existence of that relationship, nor disclose any other fact which came to the knowledge of such attorney by reason of such relationship." This applies not only in criminal cases, but also in civil cases. Cochran v. Cochran, 333 S.W.2d 635 (Tex.Civ.App. 1960, writ ref'd n.r.e.). Prior opinions of this Committee have addressed the duty of an attorney to preserve the confidences of a client. See Opinions 105, 193, 204, 315, 378, and 384. This Committee does not answer questions of law and therefore does not decide whether failure to reveal information would be in violation of a civil or criminal statute. Obviously an attorney ethically must reveal such information if required to do so by a civil or criminal statute.

Question 1 is answered by DR 4-101. The attorney has no duty to reveal a prior fraud to third persons or to the court in the absence of one of the exceptions enumerated hereinabove.
DR 7-102(B)(1) is by its terms limited to fraud perpetrated during the course of the representation. It does not address the issue of fraud perpetrated prior to the representation.
The attorneys, having first warned their respective clients that they must testify truthfully concerning the property that was obtained by fraud, may not allow their clients to perjure themselves. The attorneys should further warn their respective clients that in the event they perjure themselves, the attorneys will have to bring this matter to the attention of the court and ask the court to allow withdrawal from the case.
The Committee does not address every factual situation that could come up in the contest of the facts stated. We do not deal with questions concerning sworn pleadings or possible affidavits referring to "partnership" assets, that include the property that was obtained by fraud. Even allowing the client to testify about this property could present severe questions, since such testimony may indicate that the property is truly "partnership" property. That issue is not addressed. This opinion is limited to the specific facts given and the questions asked.

CONCLUSION

Question 1 is answered by DR 4-101. The attorney has no duty to reveal a prior fraud to third persons or to the court in the absence of one of the exceptions enumerated hereinabove.
DR 7-102(B)(1) is by its terms limited to fraud perpetrated during the course of the representation. It does not address the issue of fraud perpetrated prior to the representation.
The attorneys, having first warned their respective clients that they must testify truthfully concerning the property that was obtained by fraud, may not allow their clients to perjure themselves. The attorneys should further warn their respective clients that in the event they perjure themselves, the attorneys will have to bring this matter to the attention of the court and ask the court to allow withdrawal from the case.
The Committee does not address every factual situation that could come up in the contest of the facts stated. We do not deal with questions concerning sworn pleadings or possible affidavits referring to "partnership" assets, that include the property that was obtained by fraud. Even allowing the client to testify about this property could present severe questions, since such testimony may indicate that the property is truly "partnership" property. That issue is not addressed. This opinion is limited to the specific facts given and the questions asked.

Tex. Comm. On Professional Ethics, Op. 442 (1987)