For the most part, the news that the IRS audited groups based upon their politics isn't a legal ethics story. But the AP is now reporting that a "chief counsel" within the IRS knew about the problem back in 2011. Paul Caron's Tax Prof Blog has a round-up. We'll see how that plays out. Presumably that counsel was governed by the rules about representing organizations and by the role of government lawyer. Given that the IRS now concedes its behavior was inappropriate, one would expect that any lawyer brought into the loop would have obtained assurance that the behavior had ceased or would "run it up the org chart" to higher people in the organization. I don't want to speculate too much but if a lawyer knew back in 2011, it will be interesting to see what he/she did with the info.
A federal watchdog report is scheduled to be released this week.