Lawyers who learn that a client is cooking the books or looting a company's till could snitch to authorities with a clear conscience under changes to lawyers' ethical rules approved narrowly Monday by the American Bar Association's policy-making board.
The board voted 218-201 to loosen restrictions on when lawyers can reveal suspected fraud by a client. The changes are a departure from the organization's traditional refusal to place society's concern over financial crimes above a lawyer's duty to keep client confidences.
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The new rules affect in-house lawyers for corporations as well as outside lawyers who learn of current or planned wrongdoing.
The new rules permit disclosure of confidential client information if it would head off fraud, shady accounting or other wrongdoing that the lawyer thinks would harm other people, including shareholders. Lawyers also could rat out a client without violating ethics in instances where a client had used or abused a lawyer's services to commit a crime in the past.
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