Client Confidentiality

The American Bar Association (ABA) made the right move this week when it agreed that attorneys should report on clients when they suspect or know outright those clients are committing a crime.

The lawyers' group rejected a similar proposal two years ago. But the recent spate of corporate scandals helped force the issue.

The ABA, at its annual meeting in San Francisco, voted to modify its rules regarding the fiercely protected attorney-client privilege. When actions by a client harm the financial interests of others, the ABA says, a lawyer has an obligation to the public good to report the wrongdoing.

The ABA is expected to announce a similar rule change to permit lawyers representing a corporation to speak out when an officer of the company engages in actions that would harm the corporation or its stockholders.

The ABA acted in the face of a Securities and Exchange Commission threat to force the issue of attorneys cooperating with its investigations of corporate malfeasance. The SEC already had enacted new rules that require lawyers for public companies to tip regulators to clients when they believe clients are committing fraud.

The ABA's rule changes are not legally binding. And in most instances, they still honor the attorney-client privilege - long a linchpin of the justice system.

The new rules simply keep up with the times, and it is hoped, give attorneys a little more room to blow a whistle when needed, without compromising conscience.

Thirty-eight states already allow attorneys to take such action; four states require it. Eight others, plus the District of Columbia, have laws prohibiting lawyers from revealing client confidences, except to prevent death or bodily harm. States should now adjust their regulations to reflect the ABA's new guidelines.