Lawyer ethics code set back

A proposal to revise US lawyers' code of professional conduct was dealt a stunning setback Monday. The American Bar Association's House of Delegates modified the proposed confidentiality plank, which would have attorneys disclose heretofore privileged information between lawyers and clients. Debate centered on whether it is the attorney's ethical responsibility to blow the whistle on a client he knows to be lying when it could result in substantial financial injury to others or perpetrate fraud. The ABA deleted this provision.

Monitor legal correspondent Curtis J. Sitomer assesses that lawyers here will almost certainly pass some form of ethics reform, based on a 21/2-year commission study, before adjourning late Wednesday.

But some lawyers here see their failure to take a strong stand on ethics by giving way on confidentiality, particularly in business and tax cases, as detrimental to their public credibility, which has plummeted in the decade since Watergate.

''This is not a Watergate situation,'' insists Robert W. Meserve, a Boston lawyer who is the new head of the commission pushing reform. ''Everybody knows lawyers shouldn't violate criminal law. Watergate lawyers did.'' But he allows that the public may read the ABA's action in this way.