This was the question posed to the Committee on Professional Ethics of the New York State Bar Association. Its answer was a qualified yes -- counsel has a duty to disclose the alleged error to the client but only if it was a significant error that could give rise to a malpractice claim.
The issue presented to the Committee was the following:
The inquirer was engaged to represent a client on the eve of trial. The client’s prior counsel is serving as co-counsel. In preparing the case, the inquirer has learned that co-counsel conducted virtually no discovery and made no document requests, although the inquirer believes correspondence and emails between the parties could be critical to the case. The inquirer believes this was a significant error or omission that may give rise to a malpractice claim against co-counsel. The outcome of the case, however, has yet to be decided. The inquirer is concerned about disclosing this situation to the client because it would undermine inquirer’s relationship with co-counsel, but the inquirer also believes it is in the client’s best interests to disclose the facts as soon as possible.
It is already established in New York (and several other jurisdictions, including New Jersey) that lawyers must report their own significant errors or omissions to clients. This requirement is based partly on Rule 1.4 and partly on Rule 1.7, each of which the Committee discussed in its opinion.
Rule 1.4 requires lawyers to keep clients informed about any material developments in their representation, and to explain issues "to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." A client may decide not to continue to retain a lawyer who makes significant errors or omissions, and the client cannot make an informed decision on this issue unless the lawyer self-reports his own errors. Accordingly, clients must self-report their own significant errors or omissions to their clients. The Committee held that this rationale applied equally to lawyers reporting significant errors or omissions committed by co-counsel because the decision facing the client in both situations was the same -- whether to continue to retain the lawyer who committed the errors or omissions -- and the client cannot make an informed decision on that issue without full disclosure.
Rule 1.7 mandates that a lawyer should not represent a client if a "reasonable lawyer" would conclude that the lawyer's professional judgment would be adversely affected by his or her "financial, business, property or other personal interests." A lawyer's personal interest in avoiding a malpractice lawsuit might cloud his or her professional judgment, therefore lawyers must self-report their own significant errors or omissions. The Committee observed that the personal interest is "more obvious" in cases involving attorneys reporting their own errors and omissions than in cases involving lawyers reporting co-counsel's errors or omissions. Moreover, the Court held that the concern expressed in the case before it -- that reporting co-counsel's errors or omissions would undermine the lawyer's relationship with co-counsel, which might harm the client's case -- was "clearly not" a personal interest within the meaning of Rule 1.7. Nonetheless, the Committee left open the possibility that a situation could arise in which co-counsel's alleged errors or omissions created a conflict with the lawyer's personal interests such that it would implicate Rule 1.7.
Ultimately, the Committee relied more on Rule 1.4 than Rule 1.7 to conclude that an attorney must report significant errors or omissions committed by co-counsel to the client. The Committee cautioned, however, that such a report must not be made lightly:
[T]he overriding concern of these opinions is fairness to other lawyers, including co-counsel, so Rule 1.4’s concern with the best interests of the client indicates that the inquirer should not report misgivings about co-counsel to the client unless the inquirer reasonably believes co-counsel has committed a significant error or omission that may give rise to a malpractice claim. This standard is lower than the “knowledge” standard that triggers a lawyer’s duty under Rule 8.3(a) to report another lawyer’s disciplinary violation, but we do not think a lawyer should report co-counsel’s shortcomings absent a well-grounded belief that the client needs the information to make informed decisions about the representation.
It will be interesting to see how this decision plays out in practice. It seems reasonable to assume that an attorney who reports co-counsel's alleged errors or omissions to the client will not enjoy the most pleasant of working relationships with co-counsel going forward, but if the alleged errors or omissions are significant enough, it is equally reasonable to assume that co-counsel may not be around for much of the "going forward" once the client finds out about them.