When You Are An Imminent Peril to Your Client
January 25, 2017 § 1 Comment
Earlier this week I saw a piece on a news show about the increasingly rampant practice of thieves stealing tax refunds by filing false tax returns.
In one case, a woman learned that the outlaws had filed a tax return in her name claiming thousands of dollars in fake deductions that resulted in a refund — to them and not her — of $26,000. The refund was directed to a blank (prepaid) credit card where it can not be traced. Of course, the victim had to go through much travail to undo all the damage.
In another case, a man’s tax return with all of his dependency exemptions was hijacked for $5,000.
A tax expert came on screen and said that all a thief requires is the taxpayer’s Social Security Number (SSN), and the number of each co-filer and dependent.
Okay. Let that sink in. All that is required is the SSN’s.
Think about how many documents you have in your possession that are full of your clients’ SSN’s. Every tax return has the taxpayer’s SSN on every single page — sometimes in multiple places. Loan applications have them. Social Security earnings reports and other communications have them.
When you file an 8.05 financial statement and do not redact those SSN’s, you are sending your client’s personal information unprotected out into the world. When you produce unredacted records in discovery, you are violating your clients’ confidences. When you introduce information into evidence that includes SSN’s, you are exposing your clients to fraud.
This is something I have discussed here before. It’s serious, and it has serious implications for you. It won’t be long before PI lawyers discover a fertile new field for liability: lawyers who violate their clients’ financial confidentiality and integrity by not observing either the MEC confidentiality rules or the simple, common-sense precaution of redaction.
It seems like every week I have to caution a lawyer to redact confidential information from documents being introduced into evidence. In one case, we had to take an hour-long recess to allow 10 years of tax returns to be redacted. That should have been done long before the trial date.
The MEC rules make it clear that, if confidential information is filed, it is considered that the client has waived confidentiality. So when you file unredacted information, you have waived confidentiality for your client. Did you have authority to do that? Haven’t you committed an ethical violation when you did it without your client’s express permission?
The Better Chancery Practice Blog 
Social security numbers are also required on many circuit criminal documents, and the courts there don’t seem to care. Many of those documents are also available online in many places, not MEC. I think anyone with $25 and an email address can get access through some of those systems.