Title: Bryan Corp. v. Abrano

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
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error or other formal error, please notify the Reporter of 
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SJC-12003 
 
BRYAN CORPORATION  vs.  BRYAN ABRANO. 
 
 
 
Suffolk.     March 8, 2016. - June 14, 2016. 
 
Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 
Hines, JJ. 
 
 
Attorney at Law, Disqualification, Conflict of interest. 
 
 
 
 
Civil actions commenced in the Superior Court Department on 
November 7, 2014, and March 13, 2015. 
 
 
After transfer to the business litigation session and 
consolidation, a motion to disqualify counsel was heard by Janet 
L. Sanders, J. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Richard J. Yurko (Douglas W. Salvesen with him) for the 
defendant. 
 
Euripides D. Dalmanieras (Caroline Stoker Donovan with him) 
for the plaintiff. 
 
 
 
CORDY, J.  The defendant, Bryan Abrano (Bryan), appeals 
from a Superior Court judge's order disqualifying his attorneys, 
members of the firm of Yurko, Salvesen & Remz, P.C. (YSR), from 
2 
 
representing him in a dispute against the plaintiff, Bryan 
Corporation (company), of which Bryan is a shareholder.   The 
Superior Court judge granted the plaintiff's motion to 
disqualify on the ground that YSR's representation of Bryan 
violated Mass. R. Prof. C. 1.7, as appearing in 471 Mass. 1335 
(2015), or in the alternative, Mass. R. Prof. C. 1.9, as 
appearing in 471 Mass. 1359 (2015), governing the concurrent and 
successive representation of clients, respectively.  Because we 
conclude that YSR's conduct violated rule 1.7's prohibition 
against the simultaneous representation of adverse parties, we 
affirm the order of disqualification.1 
 
1.  Background.  We summarize the facts relevant to the 
posture of this controversy, which arises from a dispute between 
family members who are shareholders in a close corporation.2  The 
company, which is headquartered in Woburn, was incorporated in 
1985 as a close corporation and supplies pharmaceuticals and 
medical devices.  Since October, 2008, the company has had three 
                                                          
 
 
1 Also before us is a motion filed by Bryan Corporation 
(company) to supplement the appellate record with materials that 
were not before the motion judge and the defendant's opposition 
thereto.  We deny the motion, and do not rely on the appended 
materials in reaching our conclusion. 
 
 
2 "A close corporation is typified by a small number of 
shareholders, no ready market for the corporate stock, and 
substantial majority shareholder participation in the 
management, direction, and operations of the corporation."   
Merriam v. Demoulas Super Mkts., Inc., 464 Mass. 721, 726 n.12 
(2013), citing Donahue v. Rodd Electrotype Co. of New England, 
367 Mass. 578, 586 (1975). 
3 
 
shareholders:  Bryan; his sister, Bridget Rodrigue (Bridget); 
and their mother, Kim Abrano (Kim).  Kim holds fifty-one per 
cent of the company, Bryan holds thirty-three per cent, and 
Bridget holds sixteen per cent.  Bryan, Bridget, and Kim all 
obtained their shares from Frank Abrano (Frank), who founded the 
company, and who is Kim's estranged husband and Bryan and 
Bridget's father.  Bryan and Bridget were directors of the 
company until July, 2014.3  Bryan was the company's president and 
chief executive officer until 2013, when he was replaced by 
Libor Krupica.  Bridget was the company's secretary and her 
husband, Dennon Rodrigue (Dennon), was the treasurer.  Kim has 
been a director since 2008, and in July, 2014, she became the 
secretary and treasurer, replacing Bridget and Dennon.  Frank is 
not a stockholder, director, or officer.4 
 
a.  The Waldman action.  In October, 2013, Waldman 
Biomedical Consultancy, Inc., a former consultant to the 
company, sued the company for over $300,000 in alleged unpaid 
                                                          
 
 
3 Prior to becoming shareholders and directors, Bryan Abrano 
(Bryan) and Bridget Rodrigue (Bridget) were employees of the 
company. 
 
 
4 In 2008, Frank Abrano (Frank) was convicted in Federal 
court of intentionally causing the company to sell misbranded 
and adulterated drugs.  He was sentenced to one year and one day 
in prison and required to pay a $1 million fine.  As part of a 
related plea agreement and civil settlement with the company, 
Frank was required to cut all ties with the company and divest 
himself of his entire interest in the company.  He transferred a 
controlling interest to his wife, Kim Abrano (Kim), and sold the 
remaining shares to Bryan and Bridget. 
4 
 
fees (Waldman action).  In March, 2014, the company retained YSR 
to defend it in the Waldman action.  YSR and the company 
executed an engagement letter that provided that YSR would 
handle discovery and other pretrial matters, and in the event of 
a trial, a YSR partner (Richard Yurko or Douglas Salvesen) and 
associate (Anthony Fioravanti) would try the case.  The letter 
did not address conflicts of interest or provide that YSR could 
withdraw from the representation were a conflict to arise. 
 
YSR filed an answer on the company's behalf in April, 2014.  
According to YSR's bills for work in the Waldman action, from 
April 1 through July, 31, 2014, YSR drafted and responded to 
discovery requests, reviewed documents, consulted with Dennon 
and Bryan, and discussed various discovery matters with 
Waldman's counsel. 
 
b.  Dispute over compensation.  In late June, 2014, a 
dispute arose over the payment of the company's fiscal-year-end 
profits, with Bryan and Bridget calling for their shares of the 
profits to be disbursed in deductible W-2 compensation to avoid 
double taxation given the company's C Corporation status.  Bryan 
has alleged that Kim, the majority shareholder and "an agent 
having the management of [the company]," stopped payment on the 
2014 year-end profit distribution checks in violation of the 
Massachusetts Wage Act, G. L. c. 149, § 148 (Wage Act).  Kim has 
alleged that she was unaware of the extent of Bryan and 
5 
 
Bridget's compensation, and that such compensation was 
unauthorized by the company. 
 
On June 30, 2014, Bridget's husband, Dennon, contacted YSR 
to "discuss a different matter" from the Waldman action.  The 
following day, Dennon had a conference telephone call with YSR 
attorneys Yurko and Fioravanti, as well as Bruce Garr, another 
lawyer for the company who is not associated with YSR.  Bryan 
and Bridget were not on the call, but YSR has acknowledged that 
an attorney-client relationship was formed with Bryan, Bridget, 
and Dennon on July 1, 2014.5  July 1, 2014, was also the day that 
Bryan and Bridget began requesting that the company issue their 
"year-end wage checks" to them.  During the call, Yurko advised 
Dennon that should YSR undertake representation of one or more 
of Bryan, Bridget, and Dennon, a conflict of interest might 
arise between the company and Bryan or Bridget should they be 
removed from the board of directors.  Yurko indicated to Dennon 
that, should such a conflict arise, he would withdraw from the 
Waldman action. 
 
On July, 15, 2014, Kim, Bryan, and Bridget attended a 
shareholders meeting to elect directors.  Bryan and Bridget, who 
at this point were represented by YSR, did not renominate 
themselves to the board, instead nominating three other people.  
                                                          
 
 
5 Bridget and Dennon Rodrigue (Dennon) are currently 
represented by counsel from another law firm. 
6 
 
Kim nominated herself and two outside director candidates, all 
of whom were elected to the three-member board. 
 
On July 21, 2014, YSR sent a demand letter to the company's 
president and Kim.  In the letter, Yurko indicated that he was 
sending the letter on behalf of Bryan and Bridget in connection 
with the alleged Wage Act violations and other claims.  The 
letter also stated that Bryan and Bridget each had claims 
against the company and against Kim and Frank and others.6  YSR 
demanded that the company "promptly address and correct these 
matters." 
 
On July 23, 2014, Yurko sent a letter to Dennon in which 
YSR resigned as the company's counsel in the Waldman action.  
The letter stated, "As I mentioned to you late last week, a 
conflict has developed in our continued representation of [the 
company] in this matter and therefore, reluctantly, we must 
resign from the representation."  The letter further stated that 
there was one discovery matter that needed to be finished up, 
which YSR would do "with your permission."  An entry from July 
23, 2014, on one of YSR's bills for work on the Waldman action 
states:  "Draft and send letter resigning from case."  YSR's 
bills do not contain any other entries indicating that it 
                                                          
 
 
6 The claims related to Frank's alleged participation in 
company activities in violation of his plea agreement with the 
Federal government and Kim's alleged enabling of such 
participation. 
7 
 
discussed resigning with anyone from the company at any other 
time.  On July 31, 2014, YSR withdrew as counsel from the 
Waldman action. 
 
c.  The parties countersue.  In November, 2014, Bryan, 
represented by YSR, and Bridget, represented by a different law 
firm, commenced an action against Frank and Kim, alleging claims 
under the Wage Act and for breach of contract and breach of 
fiduciary duty against Kim, and a claim for breach of the 
covenant of good faith and fair dealing against Frank.7  Bryan 
and Bridget sought treble the amount of their "end of year 
compensation payments dated June 30," which they said were based 
on the company's "operating profit for the fiscal year ending 
June 20, 2014." 
 
The company was not named as a party in the action, but the 
complaint referred to the company as "[d]efendant Bryan 
Corporation" four times in the complaint.  Bryan and Bridget 
also alleged that the company was obligated to pay the wages 
that formed the basis of their claims:  "Bryan Abrano and 
Bridget Rodrigue earned substantial wages from their employment 
by the [c]ompany, which wages were definitely determined and had 
become due and payable not later than June 30, 2014," and "[t]he 
                                                          
 
 
7 The Superior Court dismissed the breach of contract claim 
against Kim in March, 2015. 
8 
 
[c]ompany had a legal obligation to pay these wages no later 
than July 7, 2014."8 
 
In March, 2015, the company commenced an action against 
Bryan, Bridget, and Dennon for breach of fiduciary duty (company 
action).  In its complaint, the company disputed that the year-
end profit distributions that Bryan and Bridget had previously 
received during the years 2008 to 2013 were wages, and sought to 
recover what it alleged were excess distributions paid to them 
during that period. 
 
In April, 2015, Bryan moved to consolidate the two 
lawsuits, arguing that the claims asserted by the company 
against him and Bridget were "the mirror image" of the claims 
asserted by Bryan and Bridget against Kim and Frank.  Both 
parties appear to agree that the lawsuits turn on whether the 
payments Bryan and Bridget received from 2008 through 2013 and 
the 2014 payouts they are seeking represent wages or dividends.  
The motion was allowed, over the company's objection, in May, 
2015. 
 
At the same time, the company moved to disqualify YSR as 
Bryan's counsel because YSR had represented the company in the 
Waldman action eight months earlier, between March and July, 
                                                          
 
 
8 Because the company was not named as a party to Bryan and 
Bridget's suit, the company did not have standing to challenge 
the representation of Bryan by Yurko, Salvesen & Remz, P.C. 
(YSR). 
9 
 
2014.  The company argued that YSR's simultaneous representation 
of both the company and Bryan constituted an impermissible 
conflict of interest, and that disqualification was required by 
rule 1.7, which governs concurrent conflicts of interest, or, in 
the alternative, rule 1.9, which governs a lawyer's duties to 
former clients.  A hearing was held in August, 2015, and the 
motion judge allowed the motion "[f]or the reasons set forth . . 
. in the motion itself."  Bryan timely appealed, and we granted 
his application for direct appellate review. 
 
2.  Standard of review.  We review an order disqualifying 
counsel for abuse of discretion.  Smaland Beach Ass'n v. Genova, 
461 Mass. 214, 220 (2012).  Our consideration of the motion is 
informed by the principle that courts "should not lightly 
interrupt the relationship between a lawyer and her client."  
Adoption of Erica, 426 Mass. 55, 58 (1997).  "[A]s a 
prophylactic device for protecting the attorney-client 
relationship, . . . courts should hesitate to impose 
[disqualification] except when absolutely necessary" (citation 
omitted).  Id., quoting Freeman v. Chicago Musical Instrument 
Co., 689 F.2d 715, 721 (7th Cir. 1982).  Nonetheless, the right 
to representation by an attorney of one's choosing is not 
absolute, and must, in some circumstances, yield to other 
considerations.  McCourt Co. v. FPC Props., Inc., 386 Mass. 145, 
151 (1982). 
10 
 
 
Because the motion judge did not make oral or written 
findings, our task on appeal is made more difficult, as the 
factual underpinnings of the judge's decision are unclear, and 
both parties refer in their briefs to facts that cannot be 
independently verified.  Because the parties do not contest the 
authenticity of the documents included in the record appendix, 
our analysis depends largely on the facts as drawn from these 
documents. 
 
To the extent that the judge adopted wholesale the 
company's reasons for disqualification, we are free to affirm 
her ruling on any grounds supported by the record.  See 
Commonwealth v. Va Meng Joe, 425 Mass. 99, 102 (1997). 
 
3.  Discussion.  The company asks us to affirm the 
disqualification order on the ground that YSR violated rule 1.7 
when it undertook concurrent representation of both the company 
and Bryan where the parties had a conflict of interest that 
existed or was foreseeable at the inception of the dual 
representation.  It also asks the court to adopt the so-called 
"hot potato" doctrine, which "limit[s] the ability of a law firm 
to terminate its relationship with an existing client 'like a 
hot potato' so that it may accept a representation of another 
client in an adverse, but more lucrative, matter."  National 
Med. Care, Inc. vs. Home Med. of Am., Inc., Mass. Super. Ct. No. 
0081CV01225, slip op. at note 5 (Middlesex County Sept. 12, 
11 
 
2002).  In the alternative, the company argues that rule 1.9's 
prohibition on using a former client's confidences in subsequent 
litigation involving that client warrants disqualification. 
 
Bryan counters that rule 1.7 does not govern the issues 
before us because his interests were not adverse to those of the 
company at the time the dual representation commenced.  He also 
asks the court to eschew the "hot potato" doctrine as an 
unnecessary addition to the existing rules of professional 
conduct and that adopting the doctrine would amount to 
impermissible ad hoc rulemaking.  He also argues that rule 1.9 
does not apply in this matter because the record does not 
support a conclusion that YSR used confidential information 
relating to its representation of the company to the company's 
disadvantage in the suit against the company.  See Mass. R. 
Prof. C. 1.9 (c).  Lastly, he asserts that even if YSR committed 
ethical violations, disqualification is not the appropriate 
remedy in this matter. 
 
Based on our review of the record, we conclude that YSR, 
acting as a reasonable lawyer, should have known at the time it 
agreed to represent Bryan, Bridget, and Dennon that their 
interests were adverse to, or were likely soon to become adverse 
to, those of the company, and, in these circumstances, both the 
duty of loyalty and rule 1.7 required it to decline 
representation, or at least seek the informed consent of the 
12 
 
company.  See Mass. R. Prof. C. 1.7 comment 6.  It was therefore 
also improper for YSR to send a demand letter to the company 
while it was still representing the company in the Waldman 
action and had not obtained its informed consent to do so.  
Accordingly, the issues in this case are properly analyzed under 
rule 1.7, and based on the particular facts in this case, we 
conclude that disqualification is an appropriate remedy.  
Because the rules and our prior case law provide an adequate 
framework for resolving the issues in this case, we need not 
reach the parties' arguments concerning the "hot potato" 
doctrine, nor do we consider the parties' arguments related to 
rule 1.9.  Accordingly, we affirm the ruling of the Superior 
Court judge. 
 
a.  The lawyer's duty of loyalty.  We begin our discussion 
by reviewing the contours of the duty of loyalty and rule 1.7, 
particularly as they apply to organizational clients.9  With 
limited exceptions, rule 1.7 prohibits a lawyer from 
representing a client if the representation is "directly adverse 
to another client," Mass. R. Prof. C. 1.7 (a) (1), or where 
                                                          
 
 
9 The company moved to disqualify YSR under the prior 
version of rule 1.7.  Rule 1.7 was amended effective July 1, 
2015. "Because the substance of rule 1.7 remains unchanged, we 
analyze [the issues] against the most recent version of the 
rules, published in 2015.  See Mass. R. Prof. C. 1.7, as 
appearing in 471 Mass. 1335 (2015)."  Maling v. Finnegan, 
Henderson, Farabow, Garrett & Dunner, LLP, 473 Mass. 336, 339 
n.6 (2015). 
13 
 
"there is a significant risk that the representation of one or 
more clients will be materially limited by the lawyer's 
responsibilities to another client, a former client or a third 
person or by a personal interest of the lawyer."  Mass. R. Prof. 
C. 1.7 (a) (2). 
 
We have previously explained the rule's dual purpose as "a 
prophylactic [measure] to protect confidences that a client may 
have shared with his or her attorney . . . [and] safeguard[s] 
loyalty as a feature of the lawyer-client relationship" 
(citation omitted).  Maling v. Finnegan, Henderson, Farabow, 
Garrett & Dunner, LLP, 473 Mass. 336, 340 (2015), quoting SWS 
Fin. Fund A v. Salomon Bros. Inc., 790 F. Supp. 1392, 1401 (N.D. 
Ill. 1992).  In this case, we are particularly concerned with 
rule 1.7's function in furthering the lawyer's duty of loyalty, 
which forms the bedrock of the attorney-client relationship.  
See, e.g., Strickland v. Washington, 466 U.S. 668, 692 (1984) 
(duty of loyalty is "perhaps the most basic of counsel's 
duties"); Mass. R. Prof. C. 1.7 comment 1 ("Loyalty and 
independent judgment are essential elements in the lawyer's 
relationship to a client").  By prohibiting the simultaneous 
representation of clients with adverse interests absent informed 
consent, rule 1.7 fosters a sense of trust between the lawyer 
and client that promotes the lawyer's ability to competently 
represent the client's interests.  See Mass. R. Prof. C. 1.7 
14 
 
comment 6 ("client as to whom the representation is directly 
adverse is likely to feel betrayed, and the resulting damage to 
the client-lawyer relationship is likely to impair the lawyer's 
ability to represent the client effectively"). 
 
Representation is "directly adverse" within the meaning of 
rule 1.7 (a) (1) when a lawyer "act[s] as an advocate in one 
matter against a person the lawyer represents in some other 
matter, even when the matters are wholly unrelated."  Mass. R. 
Prof. C. 1.7 comment 6.  Thus, "[t]he undivided loyalty that a 
lawyer owes to his clients forbids him, without the clients' 
consent, from acting for client A in one action and at the same 
time against client A in another."  McCourt Co., 386 Mass. at 
146.  See Mass. R. Prof. C. 1.7 comment 6 ("Loyalty to a current 
client prohibits undertaking representation directly adverse to 
that client without that client's informed consent"). 
 
This principle operates with equal force where client A is 
a corporation, and it is "irrelevant [to our analysis] that the 
lawsuits are unrelated in subject matter and that it appears 
probable that client A will not in fact be prejudiced by the 
concurrent participation of the law firm in both actions."  
McCourt Co., supra.  Indeed, the rules are clear that where a 
lawyer represents an organizational client his or her loyalty is 
owed to the organization, and not the constituents through whom 
the organization acts.  Mass R. Prof. C. 1.13 (f), as appearing 
15 
 
in 450 Mass. 1301 (2008) ("In dealing with an organization's 
directors, . . . shareholders, or other constituents, a lawyer 
shall explain the identity of the client when the lawyer knows 
or reasonably should know that the organization's interests are 
adverse to those of the constituents with whom the lawyer is 
dealing"); Mass. R. Prof. C. 1.13 comment 1 ("An organizational 
client is a legal entity, but it cannot act except through its 
officers, directors, employees, shareholders and other 
constituents"). 
 
b.  Applicability of rule 1.7.  Bryan contends that rule 
1.7 does not govern our analysis in this case because there was 
no conflict of interest prior to July 15, 2014.  Bryan maintains 
that the matter in which he and the others sought advice from 
YSR in early July, 2014, was related to Frank's alleged 
impermissible involvement in company affairs, such as Frank's 
interference with the normal payroll process, including the 
withholding of the checks.  Thus, he argues, when YSR agreed to 
represent Bryan, Bridget, and Dennon on July 1, 2014, there was 
no adversity between them and the company, and the rules 
therefore permitted the firm to represent both the company and 
its constituents.  See Mass. R. Prof. C. 1.13 (g) ("A lawyer 
representing an organization may also represent any of its 
directors, officers, employees, members, shareholders, or other 
constituents, subject to the provisions of Rule 1.7").  From 
16 
 
Bryan's perspective, the conflict did not emerge until after 
July 15, 2015, when he and Bridget were not reelected to the 
board of directors, at which point rule 1.7 was triggered and 
YSR was required to resolve the conflict by terminating its 
relationship with one of the clients. 
 
We disagree with this view, as Bryan's arguments depend on 
an overly narrow reading of rule 1.7.  In Maling, we explained 
that rule 1.7 encompasses a lawyer's duty to anticipate 
potential conflicts and, where appropriate, decline 
representation.  Maling, 473 Mass. at 347 ("Before engaging a 
client, a lawyer must determine whether the potential for 
conflict counsels against undertaking representation.")  Rule 
1.13 incorporates a similar duty with respect to an organization 
and its constituents, stating: 
 
"There are times when the organization's interest 
may be or become adverse to those of one or more of 
its constituents.  In such circumstances the lawyer 
should advise any constituent, whose interest the 
lawyer finds adverse to that of the organization of 
the conflict or potential conflict of interest, that 
the lawyer cannot represent such constituent, and that 
such person may wish to obtain independent 
representation" (emphasis added). 
 
Mass R. Prof. C. 1.13 comment 10.  We accordingly focus our 
inquiry on whether, in light of the facts, YSR, acting as a 
reasonable lawyer, was obliged to identify the adverse interests 
between Bryan, Bridget, and Dennon, on the one hand, and YSR's 
client, the company, on the other, and decline representation. 
17 
 
 
Bryan argues that nothing in the record supports the 
company's assertion that he and Bridget consulted with YSR about 
filing an action against the company with respect to the 
withheld checks as of July 1, 2014.  Ultimately, however, 
whether it was on July 1 or July 15, 2014, that YSR agreed to 
represent Bryan and the others regarding claims against the 
company related to Wage Act violations is not essential to our 
decision. 
 
Direct adversity involves a conflict between the legal 
rights and duties of clients.  Maling, 473 Mass. at 341-342, 
quoting American Bar Association Standing Committee on Ethics 
and Professional Responsibility, Formal Op. 05–434, at 140 (Dec. 
8, 2004).  In Maling, we explained that where a lawyer 
represents two clients, and where circumstances arise such that 
a reasonable lawyer would believe that the actions required to 
provide competent representation of one client would render the 
client's interests adverse to those of another client of the 
lawyer, the proper course of action is to disclose the conflict 
and obtain the informed consent of both clients, or withdraw 
from representation.  Id. at 343; Mass. R. Prof. C. 1.7 comments 
3, 4.10  See Coke v. Equity Residential Props. Trust, 440 Mass. 
                                                          
 
 
10 Rule 1.13 (g) of the Massachusetts Rules of Professional 
Conduct, as appearing in 450 Mass. 1301 (2008), adds that, "[i]f 
the organization's consent to the dual representation is 
required by Rule 1.7, the consent shall be given by an 
18 
 
511, 517 (2003) ("[P]utting it as mildly as we can, we think it 
would be questionable conduct for an attorney to participate in 
any lawsuit against his own client without the knowledge and 
consent of all concerned" [citation omitted]).  Similarly, we 
conclude that where such circumstances exist prior to the 
inception of the lawyer-client relationship, best practice 
requires the lawyer to decline representation or disclose the 
conflict to both clients.  See Mass. R. Prof. C. 1.16 (a) (1), 
as appearing in 471 Mass. 1305 (2015) ("a lawyer shall not 
represent a client . . . if . . . the representation will result 
in violation of the rules of professional conduct or other 
law"). 
 
According to Bryan and Bridget's own allegations, they had 
begun requesting the checks allegedly withheld by Kim as of July 
1, 2015, and they claimed that the company had a legal 
obligation to pay these wages.  Such claims fit squarely into 
our definition of direct adversity.  Thus, even accepting 
Bryan's contention that Dennon did not specifically mention the 
withheld checks as of July 1, 2014, YSR should have taken 
reasonable measures to ascertain the potential conflict.  See 
Maling, 473 Mass. at 348; Mass. R. Prof. C. 1.7 comment 3 ("A 
                                                                                                                                                                                           
appropriate official of the organization other than the 
individual who is to be represented, or by the shareholders."  
Thus, Bryan, Bridget, and Dennon were not in a position to 
consent. 
19 
 
conflict of interest may exist before representation is 
undertaken, in which event the representation must be declined, 
unless the lawyer obtains the informed consent of each client . 
. . .  To determine whether a conflict of interest exists, a 
lawyer should adopt reasonable procedures, appropriate for the 
size and type of firm and practice, to determine in both 
litigation and non-litigation matters the persons and issues 
involved"). 
 
Additionally, it is apparent from the record that YSR was 
well aware of the potential for a conflict, as it advised Dennon 
on July 1, 2014, that changes in the board's structure could 
result in an actual conflict of interest that would require it 
to withdraw from representing both them and the company.  Again, 
it was reasonably foreseeable that Bryan and Bridget would be 
replaced as directors, and the minutes of that board meeting 
reflect that neither renominated themselves to remain on the 
board, creating a strong probability that they knew the board's 
structure would change.  Thus, the circumstances in this case 
were not the type of "[u]nforeseeable development[] . . . [that] 
might create conflicts in the midst of a representation."  Mass. 
R. Prof. C. 1.7 comment 5. 
 
In light of these considerations, we find that a reasonable 
attorney would have or should have known that a conflict of 
interest existed or was so likely to materialize such that a 
20 
 
prudent attorney would have declined representation or disclosed 
the conflict to an appropriate company representative who could 
consent to the dual representation.11  Accordingly, YSR's 
decision as of July 1, 2014, to represent Bryan, Bridget, and 
Dennon constituted a violation of both its duty of loyalty to 
the company and rule 1.7's prohibition against the simultaneous 
representation of clients whose interests are adverse. 
 
c.  Other considerations.  A few final observations are in 
order.  The manner in which YSR terminated its relationship with 
the company was largely improper.  The record indicates that YSR 
only communicated with Dennon regarding its plans to withdraw 
from the Waldman action; however, the rules make plain that 
Dennon could not consent either to the withdrawal or to YSR's 
wrapping up of certain tasks in the Waldman action after YSR 
sent the letter.  Mass. R. Prof. C. 1.13 comment 10.  It also 
follows that YSR acted in contravention of rule 1.7 by 
simultaneously representing Bryan and the others after July 15, 
2014, without obtaining the company's informed consent. 
 
Further, it was improper for YSR to withdraw prior to the 
completion of the Waldman action, and the development of the 
conflict does not justify the firm's actions.  In Maling, 473 
                                                          
 
 
11 Again, because Dennon's interests were adverse to those 
of the company, he was not in a position to consent to the dual 
representation.  See Mass. R. Prof. C. 1.13 (g).  YSR might 
have, for example, contacted Libor Krupica, the company's then 
president, to disclose the conflict and seek consent. 
21 
 
Mass. at 344-345, we recognized that a lawyer's duty to detect 
and prevent potential conflicts may be circumscribed by the 
scope of engagement undertaken by a lawyer.  See Mass. R. Prof. 
C. 1.2 (c), as appearing in 471 Mass. 1313 (2015).  Here, 
however, it appears from the engagement letter with the company 
that YSR did nothing to limit its representation in a manner 
that might have permitted YSR to represent adverse clients on 
matters unrelated to its work in the Waldman action, or that 
might have permitted YSR to withdraw from representation prior 
to the completion of the action if a conflict arose.  See Mass. 
R. Prof. C. 1.16 comment 1 ("A lawyer should not accept 
representation in a matter unless it can be performed 
competently, promptly, without improper conflict of interest and 
to completion"); Mass. R. Prof. C. 1.3 comment 4, as appearing 
in 471 Mass. 1318 (2015) ("Unless the relationship is terminated 
as provided in Rule 1.16, a lawyer should carry through to 
conclusion all matters undertaken for a client"). 
 
Thus, by undertaking representation of the company in the 
manner contemplated by the engagement letter, YSR owed it the 
full panoply of duties that attend the lawyer-client 
relationship, chief among which is a duty of undivided loyalty.   
We therefore conclude that a firm may not undertake 
representation of a new client where the firm can reasonably 
anticipate that a conflict will develop with an existing client, 
22 
 
and then choose between the two clients when the conflict 
materializes.  Both the duty of loyalty and the rules clearly 
forbid such conduct. 
 
d.  Remedy of disqualification.  Bryan argues that the 
Superior Court judge did not have the authority to disqualify 
YSR as a means of remedying its ethical violations.  He contends 
that disqualification is only necessary to protect the 
confidences of a former client or the integrity of a pending 
action.  We disagree.  We have previously explained that 
disqualification is appropriate in concurrent representation 
scenarios even where the client seeking disqualification "will 
not in fact be prejudiced by the concurrent participation of the 
law firm in both actions."  McCourt Co., 386 Mass. at 146.   
Additionally, although we have held that the appearance of 
impropriety alone is not sufficient grounds for disqualifying an 
attorney, we left open the possibility that, where ethical 
violations occurred, disqualification may be appropriate.  See 
Adoption of Erica, 426 Mass. at 64. 
 
Here, where YSR's conduct constituted a violation of both 
its duty of loyalty to the company as well as rule 1.7, we 
conclude that it was not an abuse of discretion for the judge to 
order disqualification as an appropriate remedy.  In this case, 
disqualification furthers the policy rationale underlying the 
rules of professional conduct by upholding the principle that a 
23 
 
client is entitled to the undivided loyalty of his or her 
lawyer. 
 
4.  Conclusion.  For these reasons, we affirm the ruling by 
the Superior Court judge granting the motion for 
disqualification. 
 
 
 
 
 
 
 
So ordered.