ETHICS AND FINANCIAL ISSUES: BALANCING DUELING

Transcript:ETHICS AND FINANCIAL ISSUES: BALANCING DUELING:
ETHICS AND FINANCIAL ISSUES: BALANCING DUELING OBLIGATIONS By: William R. Terpening LOYALTY AND CONFIDENTIALITY VS. DUTY OF FAIRNESS AND REPORTING OBLIGATIONS Introduction: Question? What do you do when your duties and responsibilities to clients conflict with your professional, legal, and ethical responsibilities to others? For instance: What does a lawyer do when he finds himself conveying false information from a client to others? What does a CPA do when she suspects that financial reporting is based on inaccurate information? Introduction: A Lawyer’s Competing Obligations to Client and Third Parties… In addition to typical fiduciary duties, every state’s Rules of Professional Conduct governing the legal profession impose and reinforce duties similar to fiduciary duties. NC Rule of Professional Conduct 0.1 instructs not only that a lawyer should zealously assert the client’s position and seek a result advantageous to the client, but must do so consistent with requirements of honest dealing with others. A lawyer cannot counsel a client to engage in conduct that the lawyer knows is criminal or fraudulent. Rule 1.2(d). A lawyer must keep client information confidential, of course. Rule 1.6. Lawyers should act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client’s behalf, and the duty to preserve the integrity of the attorney-client relationship by maintaining the confidentiality of communications, are most fundamental of the profession. Rules 1.3 and 1.6. A Lawyer’s Competing Obligations Despite these fiduciary duties imposed by the Rules of Professional Conduct attorneys are obligated by the same Rules of Professional Conduct not to make false representations to others, counsel or aid and abet a client in the commission of a crime. Attorneys who become aware that a client is engaging in conduct that violates the law, or will violate the law, face a dilemma in determining the nature and scope of their reporting obligations in upholding their ethical duties. While the lawyer must remain faithful in fulfilling their duties to the client, the lawyer must also uphold the integrity of the profession. It’s Not Just a Lawyer’s Dilemma! Lawyers are not the only professionals obligated by law and/or professional rules governing their respective profession to diligently pursue their client’s best interests. While financial professionals, including CPAs and investment advisors may not owe a de jure fiduciary relationship to their clients under North Carolina law, often the financial professional-client circumstances establishing a relationship of confidence and