Professional Responsibility; Conflicts of Interest

August 24, 2014

Last week I wrote about confidentiality. Another core element of attorney ethics is conflicts of interest.

While confidentiality comes within one rule—ER 1.6—with a few touches elsewhere, conflicts of interest take up ERs 1.7-1.12 and lots of subparts. The structure is pretty simple. Current client issues are in ER 1.7, ER 1.8 addresses a dozen special situations, ER 1.9 describes duties owed to former clients, ER 1.10 focuses on indirect conflicts of interest faced by law firms, and ERs 1.11 and 1.12 deal with government attorneys and judges/mediators, respectively. (Lots of material here; you’re getting a “broad brush overview,” and if you have questions about particular situations, please contact me or someone else with expertise regarding the Rules of Professional Conduct and attorney ethics.)

What does ER 1.7(a) say? No attorney can represent a client whose interests are directly adverse to those of another client. Plain and simple, this means an attorney cannot represent the buyer and seller in a transaction, or two parties who are forming a business. Litigation is easy, for judges are watching, but in the world of transactions, business formations, etc., no matter how simple they may seem, the attorney can only represent one party. Ever! She or he can draft documents that reflect the deal the parties have described, but the attorney must choose one side or the other and recommend that the other party get counsel. No exceptions, and it’s not about attorneys making life more difficult or running up fees! Really!!!

ER 1.7(b) allows an attorney to represent someone, adverse to her or his client, under certain limited circumstances. Three elements are part of the exception. First, the attorney must believe she or he can represent both clients. Second, there can be no legal prohibition. Finally, the two parties cannot be adverse in litigation.

So when does this exception situation apply? I represent client A in litigation matters unrelated to client B. Client B is doing a transaction with client A. Everyone has been informed, and has consented in writing to my representation of client B. (I will only handle matters under the ER 1.7(b) when my non-client in the matter has counsel, just to be on the safe side of the rule.)

ER 1.8 includes the dozen specific requirements associated with dealing with current clients. Here are some highlights:

No business transactions with a client unless three requirements are met. (Don’t loan money to your attorney, and attorney readers, go elsewhere for a loan! And, business transactions with clients often don’t end well!)

Don’t solicit gifts from a client—charitable donations excepted, unless you have a pecuniary interest in the charity—and don’t write a will that includes you as a devisee, unless you are a relative.

Don’t loan money to clients when you are handling their case, hard as it may in situations where your client needs money for food or rent.

Don’t “have sexual relations with a client unless a consensual sexual relationship existed between when the client-lawyer relationship commenced.” On this one, two things:  First, I’m sure the Presiding Discipline Judge and the discipline system define sexual relations broadly; no room for the hair-splitting associated with le affaire Clinton/Lewinsky. Second, anyone who wants to buy me a drink can hear the sad story about why this rule is a rule in Arizona.

With respect to ER 1.9 and former clients, attorneys can be adverse to former clients, so long as the second matter is not “the same or a substantially related matter,” and so long as the attorney did not acquire confidential information. This area gets touchy, for clients don’t like to see their attorney on the other side, but hiring a new attorney does limit a client’s ability to object, assuming the limitations are addressed.

The other rules are complicated. I’ve worked in this area actively for 25+ years, and I always go to the rules when I’m advising someone. That’s especially true with imputed conflicts and government employment. Complicated stuff!

One more thing! I—and I’m sure I’m not the exception here—will sometimes choose not to get involved in a matter only because of “non-conflict” limitations. Suing someone I know well is not a conflict, but it may limit my ability to be effective. Turning down paying work never makes me happy, but if my ability to be “all in, all the way” for my client may be compromised by a relationship, I’m “out now!”


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