University of the District of Columbia Law Review
Attorney Lucy Lawton finds that her client, Curtis Cline, has devised a billing scheme that Appears to be defrauding Cline's customers. Lawton is especially concerned because her services are being used in carrying out the scheme. She confronts Cline and insists that he stop, but Cline refuses. Lawton is not certain, but she reasonably believes that the scheme is both criminal and fraudulent, and that she is the only one who has caught on or is likely to do so.
What is Lawton to do? The answer is: It depends entirely on who Cline is. If Cline is an individual businessman (not a corporate officer), Lawton can ethically blow the whistle on Cline's fraud and offer to help the defrauded customers get their money back; indeed, she might even be required to do so. But if Cline is the officer of a corporation, Lawton is forbidden under the ABA's new ethical rules to blow the whistle.
The reason for this anomalous result is that the ABA's Corporate Task Force has carried out a drafting and public-relations scam that has persuaded the public and commentators that corporate lawyers are now permitted to report their clients' fraud. In the words of one commentator, the ABA's new ethical rules have turned corporate lawyers into "corporate watchdogs." As we will see, however, these corporate watchdogs are forbidden to bark. Here's how it works.
Monroe H. Freedman,
The ‘Corporate Watch Dogs’ That Can’t Bark: How the New ABA Ethical Rules Protect Corporate Fraud, 8 U.D.C. L. Rev. 225
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