Which situation must be reported upwards if discovered by a lawyer representing an organization?

The correct choice identifies a situation that involves legal violations likely to cause substantial harm to the organization. When a lawyer represents an organization, they have an obligation to safeguard the interests of the organization as a whole, rather than the interests of any individual employee or agent.

If a lawyer comes across a legal violation that poses a significant risk or substantial harm to the organization, the lawyer must report this issue up the chain of command within the organization. This is part of the lawyer's duty to act in the best interest of the organization, ensuring that those in leadership positions are aware of serious risks that could affect the organization’s integrity, financial stability, or legal standing.

In contrast, minor infractions or irregularities that do not seem serious may not warrant the same level of urgency or escalation, as they do not pose a significant risk to the organization's operations or overall legal compliance. Furthermore, conduct that affects only one individual is often considered a matter that may be addressed through internal channels without necessitating an upward report, especially if it doesn’t present a wider legal issue for the organization. Therefore, the obligation to report applies principally to violations that could lead to meaningful adverse consequences for the organization, making this choice the most appropriate scenario requiring an upward report.