Suppose you are a lawyer representing a client in a civil matter in which the adverse lawyer violates the Rules of Professional Conduct. Can you threaten to report that to obtain a better settlement offer in a lawsuit or better terms in a transaction?
A. The Debate About Rule 3.4(e)
In New York, unlike some other states, the Rules of Professional Conduct do not directly answer this question. Rule 3.4(e) and its predecessor, Rule 7-105 of the Disciplinary Code, prohibit threats of criminal prosecution solely to obtain an advantage in a civil case. However, neither rule expressly prohibits threats to report attorneys’ violations of the Rules of Professional Conduct.
The authorities in New York disagree about whether Rule 3.4 and its predecessor apply to violations of the Rules of Professional Conduct. The Nassau County Bar Association held in opinion 98-12 that Rule 7-105 prohibits threats to report attorneys’ misconduct. By contrast, both the New York State Bar Association (Opinion 772) and the New York City Bar Association (Opinion 2015-5) held that Rule 3.4(e) and its predecessor are inapplicable.
B. Other Potentially Applicable Rules
Although the City Bar and State Bar concluded that Rule 3.4 and its predecessor are inapplicable, they held that under other rules it would be improper:
1. To threaten to bring frivolous charges to a disciplinary committee (citing Rule 3.1(a) and (b) and DR 7-102);
2. To make knowing misstatements of law or fact in making a threat (Rules 3.3 and 3.4 and DR 7-102);
3. To make a threat that serves no substantial purpose other than to embarrass or harm another lawyer or that lawyer’s client (citing Rule 4.4(a)).
4. To make a threat that violates state or federal laws on extortion, coercion or larceny.
5. To make a threat to report a violation that a lawyer has a duty to report under Rule 8.3(a).
Rule 8.4(d) also could apply to bar threats. That rule prohibits conduct prejudicial to the administration of justice. The Appellate Division, First Department disciplined an attorney under Rule 8.4(d) for making an implied threat to report misconduct to gain an advantage in settlement negotiations. In re Dimick, 105 A.D.3d 30 (1st Dep’t 2013).
C. What Constitutes a Threat?
Another risk is the lack of clarity about what constitutes a threat. Opinion 772 of the New York State Bar, relying on cases involving threats of criminal prosecution, stated that courts sometimes will interpret “the mere allusion to a criminal prosecution or criminal penalties or even the use of criminal law labels to describe the opposing party’s conduct in a letter as a veiled threat . . .” That opinion concluded: “A letter containing an accusation of criminal wrongdoing likely constitutes a threat, especially when coupled with a demand that the accused wrongdoer remedy the civil wrong.” If the same analysis applies to threats to report attorneys’ misconduct, then even a reference to violations without an express threat could be deemed a violation.
D. Guidance from the State Bar
The New York State Bar’s Commercial and Federal Litigation Section issued a report advising attorneys who are considering making threats to evaluate whether:
- the lawyer has a duty to report the misconduct, in which case a threat would be improper;
- the lawyer lacks a good-faith belief that there is misconduct, in which case a threat would be improper;
- the lawyer is making the threat merely to embarrass or harm another lawyer, which would be improper;
- the threat would violate criminal laws, which would be improper;
- the threat serves solely to gain an advantage in a civil matter, which would be improper under authorities that apply rule 3.4 to attorneys’ misconduct; and
- the “mere allusion” to a violation of the rules of professional conduct, without an explicit threat, might be construed as a threat.
The report advised attorneys who have been threatened with the possibility of a report of misconduct to consider whether:
- to report the threat to the attorney’s malpractice insurer;
- to report the threat to a disciplinary committee;
- to consult with an expert on ethics about how to respond;
- to provide information to the attorney making the threat, to demonstrate that there is no basis for the threat;
- to advise the client of the threat and analyze whether it creates a conflict with the client that may be waived or may require withdrawal from the representation; and
- to report the threat to a prosecutor’s office as a violation of criminal laws.
Threats to report attorneys’ misconduct to obtain an advantage in a civil matter are fraught with risks. Although there is some disagreement about the applicable rules, there is a consensus that in many situations, such threats are improper and could expose threatening attorneys to the risk of discipline or criminal prosecution.
Anthony J. Harwood