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Bar Assn. Approves Ethics Rule Changes

August 12, 2003|Anne Gearan | Associated Press

SAN FRANCISCO — Lawyers who learn that a client is cooking the books or looting a company's till could notify authorities with a clear conscience under changes to lawyers' ethics rules approved narrowly Monday by the American Bar Assn.'s policymaking board.

The board voted 218 to 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 about financial crimes above a lawyer's duty to keep client confidences.

The ABA rejected nearly identical changes two years ago, before revelations about alleged boardroom fraud and accounting irregularities at Enron Corp., Tyco International Ltd., WorldCom Inc. and other companies. Then as now, debate was emotional over what opponents saw as a dimming of lawyers' fundamental mission to be trustworthy confidants and represent the interests of their clients.

"The lesson we've learned over the past two years is that the substantial injury ... is not just to the big guys," said incoming ABA President Dennis Archer, who supported the changes.

"We're talking about the employees who lost not just their jobs but their pensions" and about small investors who were bilked, said Archer, who assumes his post today.

The changes approved during the ABA's annual meeting do not go as far as regulators want but would bring the nation's largest lawyers group in line with state rules that already bind many lawyers.

Opponents said the ABA was knuckling under out of fear that government regulators might step in to require more cooperation from lawyers if they failed to change the way they did business.

"This is not the proper time to bow to threats by others who seek to regulate us," argued ABA President-elect Robert Grey Jr., who will succeed Archer in 2004.

"It is not a time to take the position that the core values of the profession are subject to compromise."

The ABA's model ethics rules are not law, but they often are the basis for state mandates and policies on lawyer conduct.

The new rules affect in-house lawyers for corporations as well as outside lawyers who learn of current or planned wrongdoing.

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