Lawyers can generally believe what their clients tell them but must conduct some due diligence if there are red flags, a panel said June 1 at a recent American Bar Association conference.

Lawyers can’t ethically turn a blind eye after starting to question whether their clients’ activities are legitimate or not. They must balance their ethical duties with other business and financial interests and be cautious when dealing with new and even long-standing clients, the panel said.

Duties and Dilemmas

Kathleen M. Uston, assistant bar counsel in Virginia, said that while lawyers are generally allowed to rely upon facts...