2. What are the duties of confidentiality in connection with client crime or fraud involving the lawyer's services? Consider the following scenario. You represented a company that obtained loans from a local bank. In issuing the loans, the bank relied upon your opinion letter, which certified that the company had sufficient valid contracts with customers to repay the loans. You subsequently learn that the company is in a worse financial situation than you were led to believe, because many of the documents that you relied upon were forged by the company's officers. You know that the company intends to apply for future loans from the same bank.
The company has agreed that it will not ask you to represent it in further
dealings in which the validity of your opinion concerning the company's worth
would be relevant. May you represent the company in another capacity?
Could the self-defense exception justify disclosure? Could you noisily
disavow the documents? Could you disclose the fraud by appealing to 4.1(b)
and claiming that if you failed to do so you would be assisting a criminal
or fraudulent act by a client?
What is the approach taken by the Model Code? Is it coherent? What is the approach under the Virginia Rules? See 1.6(b)(3). What is the approach taken by the Model Rules?
3. You and your client are engaging in the negotiation of an agreement between your client and a retailer. You discover that while you were out of the room your client falsely told the retailer that no significant competitor for your client's product is likely. In fact, you and the client know that a competitor is about to introduce a cheaper and better version of your product in a few weeks. Negotiations are about to continue. Under the Model Rules, must you withdraw? Under the Model Rules, may you inform the other side about the fraud?4. A client consults you about a business that you think amounts to an illegal Ponzi scheme. You inform him of this and refuse to represent him in connection with it. You later find out that he is pursuing the scheme anyway. Under the Model Rules, may you approach potential investors in the business and tell them it is fraudulent? May you approach them and tell them that you have withdrawn from representation in connection with the business? If so, what do you say when they ask for more details about the withdrawal? What if they ask the client and he tells them the withdrawal was by mutual agreement? Can you tell the investors that this was not so? What if the investors approach you and ask whether the client is telling the truth? Should you refuse to answer? May you refuse to answer?