Lawyers may advocate zealously for their clients, but only within the bounds of the law. Model Rule 1.2(d) bars a lawyer from counseling or assisting a client in conduct the lawyer knows is criminal or fraudulent. But what if a lawyer only suspects? When does a lawyer have to ask questions, or even investigate, before helping a client with a transaction that could be part of money laundering or fraud?
In this TalksOnLaw interview, recorded in 2021, Joel Cohen speaks with Peter Joy, a legal ethics scholar and professor at Washington University in St. Louis School of Law, about ABA Formal Opinion 491, the 2020 opinion that read a duty to inquire into the ethics rules, and why he believes the opinion went beyond what the rules say.
Knowledge Under Rule 1.2(d)
Joy explains the limits Rule 1.2(d) places on lawyers, using examples from a client asking which countries lack extradition treaties to a client asking a lawyer to dispose of a murder weapon or move illicit funds. Under Rule 1.0, "knows" means actual knowledge, which may be inferred from circumstances, while "reasonably should know" is a separate, defined standard based on what a lawyer of reasonable prudence and competence would ascertain. Some states, including Florida, wrote "reasonably should know" into their own versions of Rule 1.2(d), but the Model Rule uses actual knowledge, as does the Restatement of the Law Governing Lawyers.
Formal Opinion 491 and Willful Blindness
Formal Opinion 491 concluded that a lawyer who fails to inquire when facts indicate a high probability that a client seeks to use the lawyer's services for a crime or fraud, such as unexplained all-cash purchases or funds routed through offshore accounts, may be treated as having knowledge, equating willful blindness with actual knowledge. Joy argues that this creates a duty the rules do not contain, that the circumstantial-inference language in the definition of knowledge concerns how knowledge is proved rather than what it means, and that the opinion relied on a Florida disciplinary case decided under Florida's broader rule. He also questions whether the opinion's stated limitation to transactional matters will hold, posing the example of a criminal defense lawyer paid $5,000 in cash by an unemployed client.
What Happens When a Lawyer Knows
A lawyer who knows a client is engaged in a crime or fraud must not assist and may need to withdraw, including withdrawing work product the client is using, such as an opinion letter. Most jurisdictions permit, and a few require, disclosure to prevent death or serious bodily harm or substantial financial injury. Joy uses the example of a lawyer who discovers that a client like Bernie Madoff is running a Ponzi scheme, noting that whether disclosure is permitted or required depends on where the representation takes place.
The Global Witness Sting and the Costs of Inquiry
The opinion cites the 2016 60 Minutes broadcast of a Global Witness undercover investigation in which an investigator posing as the representative of a foreign official sought advice from about a dozen New York law firms on moving suspect funds into U.S. property; two lawyers were later admonished. Joy discusses the practical problems an inquiry duty raises: who pays for the investigation, how much is enough, whether a client's own assurance suffices, how questioning a client strains the attorney-client relationship, the risk of treating immigrants and foreign clients differently from the wealthy and well known, and how turning away a client may simply teach them what to tell the next lawyer. He argues that any new duty should be created through the open rulemaking process, with drafts and public comment, rather than an ethics opinion, and discusses gray areas such as cash fees above the IRS reporting threshold and immigration clients using another person's Social Security number.
What to Know Now
In August 2023 the ABA House of Delegates amended Model Rule 1.16(a) to require a lawyer to inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue it. ABA Formal Opinion 513 (2024) explains that the inquiry should be risk-based and proportionate, not perfunctory, and that a lawyer need not resolve every doubt before proceeding if the representation is unlikely to assist a crime or fraud. A growing number of states have adopted versions of the amended rule, including New York, where an amended Rule 1.16 imposing a duty of inquiry and risk assessment for each representation took effect on July 1, 2026. Professor Joy's analysis of Opinion 491 and the knowledge standard of Rule 1.2(d) remains the foundation for understanding that duty.
