OUTSIDE of the legal profession, not too many heads were turning in February when the American Bar Association met in New Orleans to discuss the adoption of a new code of legal ethics. Yet the actions of the lawyer's convention were important and potentially far reaching. In a controversial and unfortunate vote, the 383-member House of Delegates decided to alter the proposed ethical code. Instead, they opted for a formula which casts the lawyer as little but the servant of his client, bound to act in the best interests of that client even if it means disregarding the integrity of the law or the interests of the public.

At stake in the debate was the final form of the Model Rules of Professional Conduct, a new ethics code which a Bar Association commission had been drafting for the last six years. The need for a new ethical platform has been recognized among Bar members for many years. The old Code of Professional Responsibility, adopted in 1969, is seen by many lawyers as ambiguous and outdated. More important, however, is the fact that lawyers today are themselves being sued far more than they had imagined possible in 1969. This proliferation of malpractice suits has, in the words of Andrew Kaufman, a professor at the Law School, "made lawyers very sensitive to the rules under which they were practicing."

The convention last month considered some 50 rules making up the proposed code, rules covering issues ranging from how law firms bill clients to how much pro bono service a lawyer should perform. But the rules which created the most controversy were those involving the confidentiality of the lawyer-client relationship. Suppose a lawyer, having concluded a series of transactions for a corporation, discovers that his client has lied to him and that stockholders will be defrauded as a result. Should the lawyer reveal the information so as to save the stockholders from financial loss? The originally proposed code would have given the lawyer the option of revealing his client's secrets if by so doing he could prevent serious frauds. Many of the lawyers in the House of Delegates, however, refused to accept such an option: they reversed the rule, prohibiting lawyers from divulging such information. The most a lawyer can do under the new rules is quietly resign from the case without revealing his reasons for doing so.

Situations in which a lawyer must weigh the interests of his client with illegalities are not uncommon. Lawyers are often confronted with such choices and only occasionally does the public hear of it. A few years ago, a New York law firm decided to give up its biggest client after learning that the company had used fraudulent collateral to obtain, with the firm's help, more than $100 million of loans. One of the firm's lawyers then got a call from an old law school friend whose firm was going to take over the company's legal work and wanted to see if there was anything he should know about the company. The first lawyer chose to keep silent about the fraud and, when the company later went bankrupt, the second firm lost $600.000.

THERE is clearly something wrong with a lawyer who knowingly protects fraudulent clients. Yet the Bar Association rules as now adopted make his behavior the only route possible in the circumstances. This was not what those who spent six years drafting the code were after. They envisioned a lawyer responsible to his client, but aware and flexible in extreme situations, Robert Meserve, a Boston lawyer who now heads the Bar Association commission which produced the proposed rules, called the action taken in New Orleans "unfortunate." Both he and Geoffrey C. Hazard, a Yale law professor now visiting at Harvard who was the principal draftsman of the rules, hope that the Bar will move to reverse the rules at their next convention in Atlanta in August.

Not surprisingly, however there are those who fought hard for last month's decision. A group attorneys, largely those involved in litigation, believed that the proposed rule would undermine the adversary system by making the client less willing to confide in his lawyer, since he would be aware that the lawyer might divulge information. John C. Elam, an Ohio litigator and past president of the American College of Trial Lawyers, led the attack in New Orleans. He believes that the commission which drafted the rules had a "misguided approach": a lawyer should not in any way police his client's behavior, he asserts, but simply "get all the facts and then convince the client to do the right thing."

The corporate lawyer, however, is more concerned that his choices in relation to his client's illegal activities be carefully spelled out: this split in the interests of the two principal branches of law greatly fueled last month's debates. Yet Hazard sees a certain irony in the outcome of the New Orleans meeting. The rule which the trial lawyers fought so hard and successfully to change would be less important for them than for corporate lawyers. Meanwhile, a different rule among those proposed would restrict the freedom of a trial lawyer in defending a client he knew to be guilty. This rule, which would most likely have a much greater effect on how trial lawyers practice, especially in undermining the sanctity of the client-lawyer relationship, was passed by the Bar Association.

Despite the fact that they may have won on the issue which affects them less, most trial lawyers (or at least those who are most vocal) feel strongly about keeping the lawyer responsible to only his client. Yet lawyers who argue so loudly about preserving the adversary system seem in some important way to be missing the point. They tend to conceive of the client-lawyer relationship as existing in a vacuum, removed from the rest of the world; they have all but put the concept of confidentiality on a pedestal.

Yet the advocation of strict confidentiality divorced from the wider implications of that confidentiality has little value for lawyers or other members of society. Supporting absolute confidentiality can mean accepting the fact that stockholders and the public will be defrauded and the guilty protected through the actions of men trained in the law. By reconsidering its recent actions at its August meeting in Atlanta and reverting to the proposed rule giving the lawyer discretion to reveal information about his client, the Bar Association could still maintain the integrity of the client-lawyer relationship.