When can a lawyer disclose client information to prevent substantial financial harm?

In which situation may a lawyer disclose client information to prevent harm?

• A. To prevent a minor inconvenience
• B. To prevent substantial financial harm
• C. To improve their professional standing
• D. To inform a potential competitor

Answer: (B)

A lawyer may disclose client information to prevent substantial financial harm because the Model Rules of Professional Conduct allow for exceptions to confidentiality when there is a need to prevent reasonably certain death or substantial bodily harm. This precept extends to situations where a client's actions could lead to significant financial loss for another party. The rationale behind this exception is rooted in the ethical obligation to act in the public interest and prevent serious harm, thus prioritizing the well-being of others over strict confidentiality in cases involving severe consequences. Preventing minor inconveniences does not rise to the level of harm that would justify disclosing client information. Similarly, disclosing information to improve a lawyer's professional standing or to inform a potential competitor does not align with ethical standards and would not be justified under any condition within the professional responsibility framework. These scenarios do not present a legitimate basis to override the duty of confidentiality owed to a client.

When Can a Lawyer Break Confidentiality? The Substantial Financial Harm Exception in Plain English

Confidentiality is the backbone of the attorney-client relationship. It’s the trust that lets clients be blunt about their fears, their mistakes, and their plans. Without it, people might withhold crucial information, and the system wouldn’t work as it should. But like every rule, there are exceptions. One of the sharpest and most watched is the idea that there are moments when a lawyer may disclose client information to prevent harm. The scenario most people notice is not about stopping a crime to save a life, but about curbing serious financial damage to others. Let me break it down.

Confidentiality isn’t a blanket shield

Think of confidentiality as a default setting: lawyers keep client information private. That’s fundamental. The rules are crystal about not spilling the client’s details because you disagree with their choices, or because you want to win more cases by bragging about your client’s plans. In practical terms, this duty means a lawyer should resist the urge to share information unless there’s a clearly defined exception that justifies doing so.

One famous and essential exception concerns harm. The governing framework, the ABA Model Rules of Professional Conduct, sets out where disclosure is permitted or even required. The line is narrow, and the stakes are real. The default is privacy; the exception is a responsibly engineered safety valve.

The big idea: prevent reasonably certain harm

Here’s the thing about the exception most people recognize: you can disclose information to prevent harm that is reasonably certain to occur. The classic scenario is to prevent death or substantial bodily harm. That’s the standard you’ll see most often described in ethics texts and bar-reviewed materials. The twist is that this same mechanism sometimes extends to prevent substantial financial harm to another party, in the context of crimes or fraud being planned or carried out with the lawyer’s services.

In plain language, if a client’s actions could cause a heavy financial blow to someone else, and those actions are reasonably certain to go forward, a lawyer may disclose information to stop that harm. It’s not a carte blanche to snoop or to leak for any old reason. It’s a careful balance: protect the public from serious risk while still protecting the client’s confidences as much as the rules allow.

Why “substantial financial harm” isn’t mere inconvenience

You might wonder: what if the loss would be annoying rather than devastating? Or what if it’s a fairly abstract risk? The threshold here is serious. The financial harm has to be substantial, not a minor setback. It’s not enough that someone might lose a few thousand dollars; it’s about a harm that’s significant in scope or consequence, tied to actions where the client used legal services to accomplish the wrongdoing.

This distinction matters because it guards against overreach. The law isn’t about policing every misstep or squashing aggressive business ideas. It’s about stopping harm that hits hard, impairing trust, or destabilizing livelihoods. When the potential harm is substantial, the public interest in preventing that harm can outweigh the client’s right to confidentiality in that limited moment.

What counts as “substantial” in real life

Let’s ground this with concrete examples—and note how careful we need to be with language:

• A client plans to commit a large fraud using the attorney’s services, and that fraud would cause a major financial loss to a business partner, investors, or customers. If the lawyer’s disclosure could prevent that loss, the exception may apply.

• A client is orchestrating a scheme to drain a company’s assets, leading to bankruptcy or massive losses for creditors. Again, disclosure may be justified if it’s reasonably certain the scheme would go forward and cause substantial harm.

• A client designs a scheme that would siphon millions from an insurance pool or a public fund, with the lawyer involved in advising or enabling the plan. Here, stopping the plan might be the right move under the rule.

On the flip side, this exception doesn’t cover every money-related worry. It doesn’t justify exposing clients’ secrets to improve a lawyer’s standing, to gain a competitive edge, or to leapfrog ethical duties for a quick advantage. Those are red flags. The intent behind the exception is protection, not advantage.

The difference between “substantial” and “not substantial” is subtle but real

Substantial harm isn’t about “a lot of money” in a vague sense. It’s about harm that would have a meaningful, lasting impact on others and that is reasonably certain to occur if no action is taken. The line isn’t always crystal-clear, which is why lawyers often pause and consult before acting. If you’re on the fence, the safest move is to seek guidance and document the reasoning behind any disclosure.

A quick contrast helps make it concrete:

• Minor inconvenience (A): Not a basis for disclosure. If a client’s plan would cause a small, temporary nuisance, confidentiality stays intact.

• Improve professional standing (C): Not a legitimate ground. Revealing information to boost one’s own reputation would breach ethics.

• Inform a potential competitor (D): Not permitted. Revealing client information to help someone else compete would undermine confidentiality and the public trust.

Those contrasts aren’t just pedantic; they’re the guardrails that keep lawyers focused on the right priorities.

What to do in practice when a risk might qualify

If you find yourself contemplating whether the threshold has been met, here are some practical steps that help keep you on the right side of the line:

• Assess the harm: Is it reasonably certain? Is it substantial? Does the client’s conduct involve the use of legal services in a way that makes disclosure necessary to stop the harm?

• Limit the disclosure: If disclosure is warranted, share only what is needed with the person or entity that can prevent the harm. Don’t reveal more than necessary.

• Seek guidance: When in doubt, consult ethics counsel or authoritative resources. A second set of eyes helps reduce risk and clarifies the path forward.

• Document the decision: Keep a brief record of why you believed disclosure was appropriate, what information you disclosed, to whom, and when. Good notes are your best defense if questions arise later.

• Consider alternatives: Could you intervene in a way that doesn’t require disclosure? Sometimes a precautionary measure (like advising a client to change course or to take steps within the bounds of the law) can avert harm without breaching confidences.

• Preserve privilege where possible: Remember, the goal isn’t to abandon protection; it’s to ensure the public is shielded from serious harm while the client’s confidences are still respected to the extent feasible.

A short story to anchor the idea

Imagine a client who’s contemplating a sizable but illegal financial maneuver. The client insists this is just a sharp business move and won’t hurt anyone. The lawyer knows that if carried out, the plan could wipe out a dozen small suppliers, drive a family-owned business into bankruptcy, and cause real economic pain in a local community. The risk is substantial; the harm is real. In this moment, the lawyer weighs the need to protect those suppliers against the duty to keep client information private. The decision to disclose must be precise, limited in scope, and aimed at stopping the harm. It’s a crisis of responsibility as much as a legal calculation.

A few more practical notes you’ll hear echoed in ethics discussions

• It’s not a license to pry: The exception is narrowly tailored. It doesn’t give a lawyer permission to rummage through every file or expose every secret.

• It’s not about punishment: The point of disclosure is prevention, not public shaming or personal gain.

• It’s not always obvious: The line between anticipated harm and speculative risk can be blurry. That’s why prudent lawyers lean on established rules and, when needed, on ethics experts.

• It’s not a one-and-done decision: If a disclosure is made, you may still have ongoing duties to the client and the court or to the process you’re part of. Handle it with care.

Bringing it home

Confidentiality is the quiet engine behind honest client conversations. The exception for preventing substantial financial harm is one of the ethical rules that reminds us: the profession isn’t just about winning cases or protecting a client’s interests; it’s about safeguarding the broader system — the markets, the trust in contracts, the livelihoods of those who depend on fair and lawful conduct.

If you’re ever uncertain, remember the core ideas: the threshold matters, disclosures should be narrow and purposeful, and you don’t override confidentiality for minor issues, for personal gain, or to help a competitor. When in doubt, pause, seek guidance, and document your reasoning. The goal isn’t to be perfect; it’s to act with integrity when the moment demands it.

Takeaway: the answer to the question isn’t a trick. It’s a principled boundary that helps lawyers balance loyalty to clients with responsibility to the public. In the right situation, disclosure to prevent substantial financial harm is not only permissible—it’s a duty to prevent serious consequences. And that duty, like a well-tuned compass, helps keep the legal profession’s compass pointing true.