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In what has been described as a breath-taking reform, the American Bar Association (ABA) amended their Model Rules in August of this year and imposed an unprecedented duty on lawyers to investigate their clients before and during representation. To fully understand this change, we will consider the former rules and pressure for reform, the ABA’s Formal Opinion in 2020, and their recent changes in ABA Resolution 100.

The ABA produces the Model Rules of Professional Conduct for lawyer’s conduct. Although the rules themselves are not directly binding on lawyers, states use these model rules as a basis for their own mandatory ethic rules and will often rely on ABA material, like formal opinions, in interpreting their own laws.

Currently, under Model Rule 1.2(d) a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” As this rule only prohibits assistance when the lawyer knows that conduct is a crime or fraud, there has traditionally been no requirement to investigate into the clients’ affairs to assess their legality.

Past corporate scandals have led to concerns over lawyers’ complicity in client crimes. However, recent concerns are more focused on issues of money-laundering, which accounts for $2 trillion US dollars in global gross national product, and international law enforcement actions. Driven by the concerns and fear of potential litigation, the ABA has taken steps over the past few years in an attempt to resolve these concerns and increase the duty of a lawyer to prevent criminal activity by their client.

On April 29th, 2020, the ABA issued a formal opinion on Model Rule 1.2(d), which prevents a lawyer from assisting a client in crime. This opinion expanded the interpretation of the rule and began by citing to media and disciplinary actions over lawyers’ involvement in the clients’ crimes. The ABA wrote that such knowledge could be inferred from circumstances, and thus a lawyer’s “willful blindness to or conscious avoidance of facts” could constitute knowledge. For instance, if a lawyer knows facts that make it a high probability that the client is seeking the lawyer’s assistance for criminal or fraudulent activity, the lawyer then has a duty to inquire or investigate further to avoid assisting in crimes and could be punished for failing to do so.

While this opinion did signal a significant change in interpretation of the model rules, it was far from a perfect solution. As Professor Joy of Washington University points out, the opinion is inconsistent with the strict text of the rules and imposes ambiguous requirements that are not clearly defined. This opinion also conflicts with the duties of a lawyer as defined by The Restatement (Third) of the Law Governing Lawyers, a non-binding but persuasive authority similar to the Model Rules, and will cause tension on which authority to follow. Given the extent of the opinion, it would have been clearer and more functional if the ABA amended the Model Rules themselves, instead of using vague interpretative opinions.   

On August 8th, 2023, the ABA passed Resolution 100, which did indeed amended the Model Rules and explicitly created a new duty for lawyers to investigate their clients. Instead of a duty with actual knowledge or willful blindness, these changes create a much broader duty of due diligence and investigation owed to law enforcement and non-clients, and that operate against the interests of a client. The new language of Model Rule 1.16 requires that a lawyer “inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.”

This change imposes a general duty to investigate clients  even without any suspicion of illegal activity. While lawyers are currently subject to reporting requirements in certain situations under regulatory schemes, this change is unprecedented in the fact that it modified the duties of a lawyer separately from any other laws, and imposes an additional duty of investigation. Overall, this new investigation duty imposed on lawyers is breath-taking and will deputize lawyers to investigate their clients, regardless of the type of representation or suspected crime. Additionally,  if these reforms are adopted by states, it would require drastic increases in firm due diligence and raise the issue of who will bear the cost of such investigations. The new requirements would also create adversarial positions between clients and lawyers during the investigation phase and will open up lawyers and firms to potential liability for defective investigations.

Unsurprisingly, this change has drawn heavy criticism. Robert Keatinge, a lawyer at Holland & Hart, argues this resolution inappropriately reforms the Model Rules in an attempt to preempt regulatory changes. As many lawyers are already subject to heavy regulations in their practice areas, such a rule could replace a preferred statutory change and subject lawyers to potentially inconsistent laws. For example, the recent Corporate Transparency Act currently provides a legislative and regulatory process for law enforcement to trace client funds and could lead to conflict with new ABA rules. Additionally, this resolution only amends Model Rule 1.16, while ignoring Rule 1.2 which addresses a lawyer’s duty more directly. In addition to creating conflicts with existing regulations, the ABA resolution also fails to create uniform requirements under the Model Rules as a whole.

In conclusion, as this resolution reflects only a change in the ABA’s model rules, the full effect of the resolution has yet to be determined. It remains to be seen if, and when, states will adopt similar measures and what the longer-term effects will be on the law profession. However, ABA Resolution 100 still reflects a massive step by the ABA in creating a duty for lawyers to investigate their clients prior to and during any representation.

 

Suggested Citation: Trinity Kipp, ABA Resolution 100 and A Lawyer’s Duty to Investigate their Client, Cornell J.L. & Pub. Pol’y, The Issue Spotter (October 2, 2023), http://jlpp.org/blogzine/aba-resolution-100-and-a-lawyers-duty-to-investigate.