Reporting Your Partners and Associates to the ARDC remember Himmel

July 25, 2013 § Leave a comment

Reporting Your Partners and Associates to the ARDC
by Michael L. ShakmanArthur W. Friedman and Thomas M. Staunton

What is a lawyer’s obligation to report to the ARDC misconduct by other lawyers in his or her firm? This article considers the Himmel doctrine in this context.

“Nothing in Himmel or subsequent cases excuses a lawyer from reporting another lawyer solely because the offending lawyer is his or her partner or associate.”

Most lawyers are aware that the Illinois Supreme Court’s decision in In re Himmel, 125 Ill 2d 531, 533 NE2d 790 (1988), requires a lawyer to report to the ARDC certain types of misconduct by other lawyers. Many are also aware of the supreme court’s subsequent decision in Skolnick v Altheimer & Gray, 191 Ill 2d 214, 730 NE2d 4 (2000), holding that the duty to report is “absolute” and that the report must be made if a lawyer has “more than a mere suspicion” of dishonest conduct.

In Skolnick the court held that an attorney’s duty to report another lawyer’s fraudulent conduct to the ARDC could not be limited by a protective order entered in a lawsuit between the two lawyers. The court also ruled that reporting the fraudulent conduct to the trial judge in the pending case was not a substitute for reporting it to the ARDC. 730 NE2d at 10-15.

Nothing in Himmel or subsequent cases excuses a lawyer from reporting another lawyer solely because the offending lawyer is his or her partner or associate. Reporting a partner or associate obviously generates some significant personal and professional issues that are largely unaddressed in judicial decisions.

Jacobson v Knepper & Moga, P.C., 185 Ill 2d 372, 706 NE2d 491 (1998), emphasizes the mandatory nature of the reporting obligation. In that case, an associate became aware that the firm was routinely filing consumer debt collection actions in the wrong venue to prejudice the debtors, in violation of federal law. The associate was fired, and sued the firm alleging that he lost his job because he had repeatedly raised the issue with the partner in charge.

The supreme court held that the associate was not entitled to be protected against discharge for objecting to the pattern of improper filings. The court agreed that the firm’s conduct violated the Rules of Professional Conduct and had to be reported to the ARDC under Himmel.

But because the associate was obligated by Himmel to make the report, the court concluded that the judicial policy of protecting whistle-blowers need not be extended to the associate: “[T]he attorney’s ethical obligations serve to adequately protect the public policy established by the collection statutes. Because sufficient safeguards exist in this situation, it is unnecessary to expand the limited and narrow tort of retaliatory discharge to the employee attorney.” 706 NE2d at 493.

Jacobson underscores the mandatory nature of the Himmel reporting obligation, even when it results in the reporting lawyer losing his or her job. (A dissent by Justice Freeman persuasively argued that under the majority opinion, “in certain circumstances, it is economically more advantageous to keep quiet than to follow the dictates of the Rules of Professional Conduct.” 706 NE2d at 494.)

Against this background, what issues does a lawyer face when he or she believes that there may be a duty under Rule 8.3 to report a partner or associate?

What conduct must be reported? Rule 8.3 requires reporting “that another lawyer has committed a violation of Rule 8.4(a)(3) or (a)(4)” unless the knowledge is “protected as a confidence by these Rules or by law.” We discuss the exception below.

Reporting criminal acts. Rule 8.4(a)(3) provides that a lawyer commits misconduct if he “commit[s] a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.”

Rule 8.3, which requires reporting of such misconduct, can generate difficult questions. What crimes “reflect[ ] adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects”? Must all such crimes be reported, even if they have not resulted in any charges, much less a conviction? Many lawyers develop social relationships with other lawyers. Through those relationships, lawyers sometimes learn that another lawyer has committed acts that are, or could be, considered “criminal.” In many cases, those acts never lead to any criminal charges, much less convictions.

Rule 8.4(a)(3) has been applied or assumed to apply to a wide variety of criminal acts. These include use and possession of cocaine (see ISBA Advisory Opinion 94-18, assuming that possession of cocaine is reportable misconduct; cf In re Scarnavack, 108 Ill 2d 456, 459-60, 485 NE2d 1, 2 (1985), which was decided under prior rules that required reporting of illegal conduct involving moral turpitude) and driving under the influence of alcohol (see, e.g., In re Dempsey, 94 Ill Atty Reg & Disc Comm CH 454).

The supreme court has made clear that those acts need not result in a criminal conviction in order to trigger Rule 8.4(a)(3). See, e.g., In re Rolley, 121 Ill 2d 222, 233, 520 NE2d 302, 307 (1988) (“It is not the conviction of a crime which justifies discipline, but the commission of the act.”); In re Ettinger, 128 Ill 2d 351, 368-69, 538 NE2d 1152, 1160 (1989) (acquittal in criminal proceeding does not bar subsequent disciplinary proceedings based on substantially the same conduct).

Under Rule 8.3, all violations of Rule 8.4(a)(3) must be reported. Accordingly, the duty to report can arise from a single instance of reckless driving or driving under the influence of alcohol (such as after a party), or a single use of an illegal drug. Although such reporting is rare, that fact may be more a function of lawyers’ resistance to reporting fellow lawyers than to any limitation in Rule 8.3.

These apparent consequences of Rule 8.3 might warrant amendment or interpretation to limit the reporting requirement to criminal acts that reflect adversely on the individual’s performance as a lawyer.

Reporting dishonesty, fraud, deceit or misrepresentation. Issues also arise with respect to reporting violations of Rule 8.4(a)(4). Rules 8.3 and 8.4(a)(4) require reporting of a lawyer’s “conduct involving dishonesty, fraud, deceit or misrepresentation.” “Fraud, deceit and misrepresentation” are well understood since each is the subject of litigation and case law. Presumably the term “dishonesty” means something else, but that term is not defined in the Rules of Professional Conduct. But cf ISBA Advisory Opinion 93-20 (stating that “dishonesty, deceit or misrepresentation” were used interchangeably with fraud under the Code of Professional Responsibility, the predecessor to the current Rules). It is reasonable to conclude that whatever it means, it must be of a similar degree of seriousness or wrongdoing as the other three terms used.

Case law holds that “dishonest conduct” can involve one’s work as a lawyer, such as repeatedly filing improper debt collection cases, as in the Jacobson case. But it can also involve actions not related to a lawyer’s work, but that are too troubling to ignore. See, e.g., In re Lamberis, 93 Ill 2d 222, 228, 443 NE2d 549, 552 (1982) (plagiarism in preparation of master’s degree thesis, under predecessor to present rules); In re Chandler, 161 Ill 2d 459, 471-73, 641 NE2d 473, 478-80 (1994) (false statements in mortgage application).

The open-ended scope of “dishonest conduct” under Rule 8.4(a)(4), coupled with the serious consequences of failing to report a possible violation, make Himmel and Skolnick potent sources of problems for lawyers.

Exclusion for privileged information. Rule 8.3 provides that a lawyer need not report knowledge that is “protected as a confidence by these Rules or by law….” Here, the Rules provide some definitional help. “Confidence,” the definitions state, “denotes information protected by the lawyer-client privilege under applicable law.”

For a lawyer learning of misconduct by another member of the firm, this exception can arise in at least two contexts.

First, the offending lawyer may seek legal advice from a partner or associate about the lawyer’s conduct. Under such circumstances, no report should be required. This would certainly be the result if the offending lawyer were to seek legal advice from a lawyer not affiliated with his or her firm. See ISBA Advisory Opinion 90-8. There is no reason why the result should be any different if the lawyer from whom the advice is sought works at the same firm.

Whether this exception will apply is likely to be highly fact-dependent. The strongest case to apply the exception would be one in which the offending lawyer asks a lawyer in the firm to provide legal advice and specifically states that he intends that the information he is sharing remain confidential.

An ISBA Advisory Opinion concluded that once a lawyer has been “retained” to represent another lawyer whose professional conduct is in question, the exception applies not only to “confidences,” but also to “secrets,” which are defined in the Rules as “information gained in the professional relationship that the client has requested be held inviolate or the revelation of which would be embarrassing or detrimental to the client.” ISBA Advisory Opinion 90-8.

Under this interpretation of the exception, the retained lawyer has no duty to report the offending lawyer, regardless of whether he or she learns of the misconduct as a result of a privileged communication, or simply as part of a nonprivileged investigation in connection with the case. Again, there is no reason why this rule should not apply where an offending lawyer seeks advice from another lawyer within his or her own firm.

Second, issues arise where the other lawyer acquires the knowledge of the offending lawyer’s misconduct because a client confidence is involved. Where a lawyer obtains knowledge of the misconduct from a client within an attorney-client relationship, there should be no reporting obligation as long as the circumstances indicate that the acquired information is privileged. See, e.g., ISBA Advisory Opinion 91-7.

The most obvious situation where the information would not be privileged Ð and the reporting requirement would apply notwithstanding the fact that the information was obtained from a client Ð is the crime-fraud exception. There are other situations in which the exception for confidences may also not apply. Complex issues arise, for example, wheninformation comes from a client who brings a lawyer information about another lawyer in the firm, seeks legal advice about the conduct, and indicates that he does not want it disclosed. Normally, the client would be entitled to seek advice about the conduct of the other lawyer. The client’s right to confidentiality in this situation should be no different from what it would be if he had sought advice from an outside lawyer.

If, however, the reporting lawyer learns of the information other than through a confidential client communication, that lawyer will not be relieved from reporting simply because the client has asked him not to report, or because the client would benefit from the lawyer not reporting. See, e.g., ISBA Advisory Opinion 91-7. Moreover, if the offending lawyer’s actions or that of the client have misled a court, a long line of ethics opinions and rules require disclosure, even if the client ends up with a perjury prosecution. See ISBA Advisory Opinion 94-24 for a discussion of many of the relevant precedents.

Where the client has shared privileged information with the reporting lawyer, but the exception for confidences does not apply (and thus the reporting requirement does apply), the reporting lawyer is placed in a difficult position. Under certain circumstances, otherwise privileged information may lose its privileged status when provided to a regulatory body. See, e.g., Salomon Bros. Treasury Litig. v Steinhardt Partners, L.P. (In re Steinhardt Partners, L.P.), 9 F3d 230, 233 (2d Cir 1993) (citing cases discussing possible waiver of privilege upon voluntary disclosure to government agencies). Therefore, care must be taken to disclose as little of the client’s information as possible, to avoid prejudicing the client while still providing the ARDC with all of the information to which it is entitled.

If the client does not know of the offending lawyer’s conduct, but other lawyers in the firm do, thought must be given to informing the client of the facts. In general, the client is entitled to all information necessary to be reasonably informed, and to make informed decisions regarding his or her continued retention of the offending lawyer and the firm. See, e.g., Rule 1.4. In most cases, there will be no basis to avoid telling the client.

How certain must you be to report? The Skolnick case goes a long way toward answering this question. If the information is more than a “mere suspicion,” a report is required. In effect, it forces the attorney to err on the side of reporting. But it does not require that the lawyer make any determination regarding guilt. It simply requires that doubt be resolved in favor of reporting.

Whether something is more than a mere suspicion is probably one of those things that, as has been said about obscenity, is hard to define, but falls into the category of “I know it when I see it.” As the Illinois Supreme Court noted in an attorney discipline case, “motive and intent are rarely proved by direct evidence, but rather must be inferred from conduct and the surrounding circumstances.” In re Stern, 124 Ill 2d 310, 315, 529 NE2d 562, 565 (1988).

Must you report immediately? If a lawyer has more than a mere suspicion, must he or she report immediately, or can he or she ask questions of the offending lawyer or permit the offending lawyer to self-report?

Presumably, a protracted delay in reporting could itself be a violation of the duty to report. But a reporting lawyer should be allowed to ask the offending lawyer for information in order to make sure that critical facts are not misunderstood, or that there is no proper explanation for what appears to be dishonest conduct. Since mental state will often determine whether an action is “dishonest” or constitutes deceit or a misrepresentation, it is reasonable to permit a reporting lawyer to ask clarifying questions before initiating a report.

If the offending lawyer chooses to self-report, additional issues arise. As a general matter, the duty to report is not relieved simply because the ARDC has learned of the misconduct from another source. See Himmel 533 NE2d at 792; ISBA Advisory Opinions 90-8, 90-28.

But an informal practice has arisen by which the reporting lawyer may informally contact the ARDC, ask to speak with one of the ARDC staff counsel and ask for confirmation that the ARDC has received a report from the offending lawyer, and that no further reporting is required. This process may be made even clearer if a self-report includes a statement that the other lawyers who know of the violation have been informed of the self-report. Since self-reporting is encouraged by the ARDC, such procedures should also be acceptable to it and not the basis for action against the lawyer who held off reporting for a short period of time to permit the offending lawyer to self-report.

In the context of reporting lawyers in your own firm, self-reporting is also to be preferred because it may improve the chances of salvaging a legal career that is of value to the firm in those cases where the offending lawyer’s actions are aberrations in an otherwise honest andproductive career. To the extent personal relationships are to continue with the offending lawyer, it will be important that he or she be afforded the maximum opportunity to resolve the underlying issue with the ARDC.

It should be noted that a lawyer’s report to the ARDC is absolutely privileged. Weber v Cueto, 209 Ill App 3d 936, 947, 568 NE2d 513, 520 (5th D 1991); Restatement (Second) Torts ¤ 592A (1977) (“One who is required by law to publish defamatory matter is absolutely privileged to publish it.”).

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