If a lawyer knows a client plans to engage in fraudulent activity, what must they do?

When a lawyer knows that a client intends to engage in fraudulent activity, the ethical obligations of the lawyer come into play, and the requirement to take reasonable remedial measures is paramount. This obligation stems from the Model Rules of Professional Conduct and the California Rules of Professional Conduct, which emphasize that attorneys must prevent or correct wrongful conduct.

Taking reasonable remedial measures could include advising the client against the fraudulent activity, persuading them to refrain from the illegal act, or, if necessary, disclosing the intention to engage in fraud to the appropriate authorities only when permitted or required by law. The idea is to ethically navigate the situation without enabling or contributing to the client’s intended wrongdoing.

While simply ignoring the situation is not acceptable and neither is advising the client to proceed with caution (which could amount to complicity), reporting the client to the police is often not a first-line action unless required by specific legal obligations. Therefore, the correct approach is to take reasonable remedial measures to address the situation and seek to dissuade the client from committing fraud.