Rule 4.1. Truthfulness in Statements to Others

In the course of representing a client a lawyer shall not knowingly:

(a) make a false statement of material fact or law to a third person; or

(b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

Background

The Louisiana Supreme Court adopted this rule on January 20, 2004. It became effective on March 1, 2004, and has not been amended since. This rule is identical to ABA Model Rule of Professional Conduct 4.1 (2002).

Comments to ABA Model Rule 4.1

Misrepresentation

[1] A lawyer is required to be truthful when dealing with others on a client’s behalf, but generally has no affirmative duty to inform an opposing party of relevant facts. A misrepresentation can occur if the lawyer incorporates or affirms a statement of another person that the lawyer knows is false. Misrepresentations can also occur by partially true but misleading statements or omissions that are the equivalent of affirmative false statements. For dishonest conduct that does not amount to a false statement or for misrepresentations by a lawyer other than in the course of representing a client, see Rule 8.4.

Statements of Fact

[2] This Rule refers to statements of fact. Whether a particular statement should be regarded as one of fact can depend on the circumstances. Under generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are ordinarily in this category, and so is the existence of an undisclosed principal except where nondisclosure of the principal would constitute fraud. Lawyers should be mindful of their obligations under applicable law to avoid criminal and tortious misrepresentation.

Crime or Fraud by Client

[3] Under Rule 1.2(d), a lawyer is prohibited from counseling or assisting a client in conduct that the lawyer knows is criminal or fraudulent. Paragraph (b) states a specific application of the principle set forth in Rule 1.2(d) and addresses the situation where a client’s crime or fraud takes the form of a lie or misrepresentation. Ordinarily, a lawyer can avoid assisting a client’s crime or fraud by withdrawing from the representation. Sometimes it may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm an opinion, document, affirmation or the like. In extreme cases, substantive law may require a lawyer to disclose information relating to the representation to avoid being deemed to have assisted the client’s crime or fraud. If the lawyer can avoid assisting a client’s crime or fraud only by disclosing this information, then under paragraph (b) the lawyer is required to do so, unless the disclosure is prohibited by Rule 1.6.

Annotations

Generally

This rule prohibits a lawyer from knowingly making a false statement of material fact or law to a third person. La. Rules of Prof’l Conduct R. 4.1(a) (2004); see also Restatement (Third) of the Law Governing Lawyers § 98(1) (2000). Louisiana lawyers have been disciplined under this rule for, among other things, backdating documents, see In re Sealed Appellant, 194 F.3d 666 (5th Cir. 1999), forging affidavits, In re Stephens, 645 So. 2d 1133 (La. 1994); La. State Bar Ass’n v. Boutall, 597 So. 2d 444 (La. 1992), misrepresenting that a deceased client is still alive, In re Warner, 851 So. 2d 1029, 1036 (La. 2003); lying about the existence of liens, see La. State Bar Ass’n v. Harrington, 585 So. 2d 514 (La. 1990); and failing to disclose disbarment to client while continuing representation, see In re Turnage, 104 So. 3d 397, 398-400 (La. 2012). A lawyer was also disciplined for three years for, among other things, requesting that his client come to his office to sign some “paperwork.” Among the papers was a new retainer agreement which, once signed by the client, would be used to represent to a federal court that the lawyer was hired the day before he was to appear at the call docket setting, thereby setting up an excuse as to why he failed to appear and why his “new” client’s case should be reinstated. The client was unaware of his lawyer’s scheme at the time he signed this “paperwork”, and his case was ultimately dismissed. In re Meisner, 11 So. 3d 1096 (La. 2009).

Lying During Investigations

This rule prohibits lawyers (and their nonlawyer assistants and investigators) from lying about material facts to opponents and third persons during investigations. In a 2009 advisory opinion, the Philadelphia Bar Association opined that lying about a lawyer’s true identity to befriend a witness or opponent on Facebook could violate this rule. See Phil. Bar Assoc. Opinion 2009-02 (Mar. 2009).

“Material” Fact or Law

Paragraph (a) of this rule prohibits a lawyer from knowingly making a false statement of “material fact or law” to a third person. La. Rules of Prof’l Conduct R. 4.1(a) (2004). Whether a fact is “material” is sometimes a difficult issue. No Louisiana case defines the term “material” for purposes of the Louisiana Rules of Professional Conduct. However, the Louisiana Supreme Court has held in another context that a “material fact” is one whose “existence or nonexistence” is “essential” to the resolution of a matter. See Smith v. Our Lady of the Lake Hosp., Inc., 639 So.2d 730, 751 (La. 1994) (legislatively overruled on other grounds via La. C.C.P. art. 966(C)). Likewise, in the context of securities law, a fact is “material” if it is one which an average, prudent person would consider important in making a decision. See, e.g., Simpson v. Se. Inv. Trust, 697 F.2d 1257, 1258 (5th Cir.1983) (holding that the standard for materiality is whether average, prudent investor would consider statement important in making investment decision); see also Dennis v. Gen. Imaging, Inc., 918 F. 2d 496, 505 (5th Cir. 1990) (same). Therefore, a fact should be considered to be “material” for purposes of this rule if an ordinary person would consider the fact “important” in the context asserted.

“Third Persons”

Paragraph (a) of this rule prohibits a lawyer from knowingly making a false statement of material fact or law to a “third person.” La. Rules of Prof’l Conduct R. 4.1(a) (2004). This rule covers not only statements made to adverse counsel and adverse parties, see, e.g., ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 95-397 (1995), but also to clients and other persons. See In re Hackett, 42 So. 3d 972,973-78 (La. 2010) (disbarring lawyer for telling client that proceeds from settlement were seized by a bank when in fact lawyer retained client’s award). Of course, it does not cover statements made to tribunals, whether adjudicative or nonadjudicative, given that such statements are covered by Louisiana Rules 3.3 and 3.9.

Truthfulness in Negotiation

Lawyers often engage in “posturing” and “puffery” in the context of negotiations. That is, they sometimes attempt to exaggerate the value of their case or strength of their defenses in an effort to convince an opposing party to settle an ongoing matter. The ABA Committee on Ethics and Prof’l Responsibility has opined that some degree of “posturing” and “puffery” between opposing counsel is an accepted convention in negotiation. See ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 93-370 (1993). Likewise, comment 2 to Model Rule 4.1(b) notes that “[u]nder generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are in this category . . . .” Model Rules of Prof’l Conduct R. 4.1 cmt. 2. Nevertheless, the line between acceptable “puffery” and unethical misrepresentation is sometimes a difficult one to draw. For a classic essay discussing this problem, see Alvin Rubin, A Causerie on Lawyer’s Ethics in Negotiation, 35 La. L. Rev. 577 (1975); see also Geoffrey C. Hazard, Jr., The Lawyer’s Obligation to be Trustworthy When Dealing With Opposing Parties, 33 S.C.L. Rev. 181 (1981).

Duty to Disclose Material Fact

Paragraph (b) of this rule affirmatively requires a lawyer to disclose a material fact when disclosure is “necessary to avoid assisting a criminal or fraudulent act by a client.” La. Rules of Prof’l Conduct R. 4.1(b) (2004). Similarly, Louisiana Rule 1.2(c) prohibits a lawyer from assisting a client in criminal or fraudulent conduct. La. Rules of Prof’l Conduct R. 1.2(c) (2004). Applying Rule 4.1, the Louisiana Supreme Court has disciplined a lawyer who remained silent at a real estate closing at which his client defrauded a third person. See In re Sellers, 669 So. 2d 1204, 1206 (La. 1996). Thus, the Sellers decision suggests that a lawyer may have a duty to blow the whistle on a client who has used the lawyer’s services to commit a crime or a fraud.

However, the issue is far from settled. Paragraph (b) prohibits a lawyer from disclosing any material fact that constitutes “confidential information” protected by Rule 1.6. La. Rules of Prof’l Conduct R. 4.1(b) (2004); id. Rule 1.6. The American Bar Association added this restriction to Model Rule 4.1 during the House of Delegates floor debate in 1983. Given that Louisiana Rule 1.6(a) broadly defines as confidential all “information relating to the representation of a client,” and given that Rule 1.6(b) recognizes only limited exceptions to the rule of confidentiality, much information that Louisiana Rule 4.1(b) would seem to require the lawyer to disclose, Louisiana Rule 1.6 prohibits the lawyer from revealing. See, e.g., ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 93-375 (1993). The lawyer in such a predicament should quietly withdraw from the representation. See La. Rules of Prof’l Conduct R. 1.16(a)(1) (2004); see also Ronald D. Rotunda, The Notice of Withdrawal and the New Model Rules of Professional Conduct: Blowing the Whistle and Waving the Red Flag, 63 Or. L. Rev. 455 (1984).

Note that other authorities suggest that a lawyer would be obligated to blow the whistle on a client notwithstanding the “unless-disclosure-is-prohibited” clause in Model Rule (and Louisiana Rule) 4.1(b). Professor Wolfram has argued that a lawyer must disclose otherwise confidential information if required by “other law.” See Charles W. Wolfram, Modern Legal Ethics § 13.5.8, at 724 (1986). Likewise, the Restatement provides that a lawyer communicating with a third party on behalf of a client may not “fail to make a disclosure required by law.” See Restatement (Third) of the Law Governing Lawyers § 98(3) (2000). Therefore, as to a lawyer’s obligations under Rule 4.1, Rule 1.2(c), and other law, “one can say with confidence . . . only that active misrepresentation is prohibited, while passive misrepresentation [through nondisclosure] is problematical.” Wolfram, supra, § 13.5.8, at 722-23.

Disciplinary Sanctions

Absent aggravating or mitigating circumstances, the following sanctions are generally appropriate in cases involving conduct that involves dishonesty, fraud or deceit: disbarment, when a lawyer, with intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding (see generally, In re Engolio, 7 So. 3d 1162 (La. 2009) (permanently disbarring lawyer for, among many other rules violations, forging a judge’s signature on a judgment of divorce, and then falsely representing to his client that it was real)); suspension, when a lawyer knows that false statements or documents are being submitted to the court or that material information is improperly being withheld, and takes no remedial action, and causes injury or potential injury to a party or to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding (see In re Stanford, 48 So. 3d 224, 232 (La. 2010) (suspension as baseline sanction for lawyer having witness sign confidentiality agreement in criminal proceeding to disuade witness from appearing in court)); reprimand, when a lawyer is negligent either in determining whether statements or documents are false or in taking remedial action when material information is being withheld, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding; and, admonition, when a lawyer engages in an isolated instance of neglect in determining whether submitted statements or documents are false or in failing to disclose material information upon learning of its falsity, and causes little or no actual or potential injury to a party, or causes little or no adverse or potentially adverse effect on the legal proceeding. See ABA Stds. for Imposing Lawyer Sanctions stds. 6.11-6.14 (1992) (False Statements, Fraud, and Misrepresentation); id. std. 6.1.

Notes

This page was updated on August 5, 2013.