Organization as Client

When a lawyer represents an organization, their client is the entity itself, not the individuals within it. If the lawyer discovers that someone within the organization is likely to cause significant harm, they must act in the organization's best interest, typically by reporting the issue internally, but they cannot disclose this information outside the organization except as allowed by specific rules.

A corporate attorney learns that the CFO is embezzling funds, which could lead to substantial financial harm to the company. The attorney must first report this internally to the board of directors to address the issue. However, the attorney cannot disclose the CFO's actions to law enforcement without the organization's consent. The outcome is that the attorney successfully escalates the issue internally, protecting the organization while adhering to the rules.

The entity is the client, not the individuals; protect the organization first!

Exams may present scenarios where students confuse their obligations to the organization with those to individual constituents, leading to incorrect conclusions about disclosure. Students might also overlook the limitations on outside reporting.

Questions often involve a situation where a lawyer discovers wrongdoing within an organization, testing the candidate's understanding of the duty to report internally versus the restrictions on external disclosure.