Source: https://lalegalethics.org/louisiana-rules-of-professional-conduct/article-1-client-lawyer-relationship/rule-1-7-conflict-of-interest-current-clients/
Timestamp: 2019-04-21 10:56:32+00:00

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The Louisiana Supreme Court adopted this rule on January 20, 2004. It became effective on March 1, 2004, and has not been amended since. This rule is identical to ABA Model Rule of Prof’l Conduct 1.7 (2002). The ABA made a number of notable revisions to Model Rule 1.7 in 2002.
Prior to 2002, the relationship between the two paragraphs of former Model Rule 1.7 was not well understood. Lawyers frequently struggled with identifying a direct-adversity conflict under former paragraph (a) when the representation was still problematic because it involved a clear conflict under the “material limitation” standard of former paragraph (b). See ABA Ethics 2000 Commission Revision Notes to Model Rule 1.7 (2002). To address this problem, the ABA defined “conflict of interest” to include both direct-adversity conflicts and material-limitation conflicts. See id.
As to material-limitation conflicts, the 2002 revision to Model Rule 1.7 limited the scope of such conflicts to situations in which there is “a significant risk” that the representation will be impaired, rather than to situations in which it “may” be impaired, as was the case prior to the revision. See id.
The revised model rule makes clear that in certain situations a conflict may not be waived by the client. See ABA Model Rules of Prof’l Conduct r. 1.7(b). That is, the representation may not go forward even with the client’s consent. Unlike the former Rule, the revised Rule contains a single standard of consentability and informed consent, applicable both to direct-adversity and material-limitation conflicts. This standard is set forth in a separate paragraph, both to reflect the separate steps required in analyzing conflicts (first identify potentially impermissible conflicts, then determine if the representation is permissible with the client’s consent), and to highlight the fact that not all conflicts are consentable. See id.
Under the former model rule, consentability turned on a determination that the conflict would “not adversely affect the representation.” According to the ABA, the difficulty with this standard was that in order to determine that a conflict existed in the first place, the lawyer had to have already determined that the lawyer’s duties or interests were likely to “materially limit” the representation. The ABA believed that there is a subtle difference between “material limitation” and “adverse affect on” the representation. As a result, lawyers were understandably confused regarding the circumstances under which consent may be sought. See id.
In revised paragraph (b)(4), the ABA substituted “informed consent” of the client for “consent after consultation.” The ABA believed that “consultation” did not adequately convey the requirement that the client receive full disclosure of the nature and implications of a lawyer’s conflict of interest. The ABA chose the term “informed consent” because it already has a fairly well-accepted meaning in other contexts. That term, which is used throughout the Rules in place of “consent after consultation,” is defined in Rule 1.0(e).
 Loyalty and independent judgment are essential elements in the lawyer’s relationship to a client. Concurrent conflicts of interest can arise from the lawyer’s responsibilities to another client, a former client or a third person or from the lawyer’s own interests. For specific Rules regarding certain concurrent conflicts of interest, see Rule 1.8. For former client conflicts of interest, see Rule 1.9. For conflicts of interest involving prospective clients, see Rule 1.18. For definitions of “informed consent” and “confirmed in writing,” see Rule 1.0(e) and (b).
 Resolution of a conflict of interest problem under this Rule requires the lawyer to: 1) clearly identify the client or clients; 2) determine whether a conflict of interest exists; 3) decide whether the representation may be undertaken despite the existence of a conflict, i.e., whether the conflict is consentable; and 4) if so, consult with the clients affected under paragraph (a) and obtain their informed consent, confirmed in writing. The clients affected under paragraph (a) include both of the clients referred to in paragraph (a)(1) and the one or more clients whose representation might be materially limited under paragraph (a)(2).
 If a conflict arises after representation has been undertaken, the lawyer ordinarily must withdraw from the representation, unless the lawyer has obtained the informed consent of the client under the conditions of paragraph (b). See Rule 1.16. Where more than one client is involved, whether the lawyer may continue to represent any of the clients is determined both by the lawyer’s ability to comply with duties owed to the former client and by the lawyer’s ability to represent adequately the remaining client or clients, given the lawyer’s duties to the former client. See Rule 1.9. See also Comments  and .
 Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client’s informed consent. Thus, absent consent, a lawyer may not act as an advocate in one matter against a person the lawyer represents in some other matter, even when the matters are wholly unrelated. The 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. In addition, the client on whose behalf the adverse representation is undertaken reasonably may fear that the lawyer will pursue that client’s case less effectively out of deference to the other client, i.e., that the representation may be materially limited by the lawyer’s interest in retaining the current client. Similarly, a directly adverse conflict may arise when a lawyer is required to cross-examine a client who appears as a witness in a lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only economically adverse, such as representation of competing economic enterprises in unrelated litigation, does not ordinarily constitute a conflict of interest and thus may not require consent of the respective clients.
 A lawyer is prohibited from engaging in sexual relationships with a client unless the sexual relationship predates the formation of the client-lawyer relationship. See Rule 1.8(j).
 Paragraph (b)(2) describes conflicts that are nonconsentable because the representation is prohibited by applicable law. For example, in some states substantive law provides that the same lawyer may not represent more than one defendant in a capital case, even with the consent of the clients, and under federal criminal statutes certain representations by a former government lawyer are prohibited, despite the informed consent of the former client. In addition, decisional law in some states limits the ability of a governmental client, such as a municipality, to consent to a conflict of interest.
 Paragraph (b)(3) describes conflicts that are nonconsentable because of the institutional interest in vigorous development of each client’s position when the clients are aligned directly against each other in the same litigation or other proceeding before a tribunal. Whether clients are aligned directly against each other within the meaning of this paragraph requires examination of the context of the proceeding. Although this paragraph does not preclude a lawyer’s multiple representation of adverse parties to a mediation (because mediation is not a proceeding before a “tribunal” under Rule 1.0(m)), such representation may be precluded by paragraph (b)(1).
 Informed consent requires that each affected client be aware of the relevant circumstances and of the material and reasonably foreseeable ways that the conflict could have adverse effects on the interests of that client. See Rule 1.0(e) (informed consent). The information required depends on the nature of the conflict and the nature of the risks involved. When representation of multiple clients in a single matter is undertaken, the information must include the implications of the common representation, including possible effects on loyalty, confidentiality and the attorney-client privilege and the advantages and risks involved. See Comments  and  (effect of common representation on confidentiality).
 Paragraph (b) requires the lawyer to obtain the informed consent of the client, confirmed in writing. Such a writing may consist of a document executed by the client or one that the lawyer promptly records and transmits to the client following an oral consent. See Rule 1.0(b). See also Rule 1.0(n) (writing includes electronic transmission). If it is not feasible to obtain or transmit the writing at the time the client gives informed consent, then the lawyer must obtain or transmit it within a reasonable time thereafter. See Rule 1.0(b). The requirement of a writing does not supplant the need in most cases for the lawyer to talk with the client, to explain the risks and advantages, if any, of representation burdened with a conflict of interest, as well as reasonably available alternatives, and to afford the client a reasonable opportunity to consider the risks and alternatives and to raise questions and concerns. Rather, the writing is required in order to impress upon clients the seriousness of the decision the client is being asked to make and to avoid disputes or ambiguities that might later occur in the absence of a writing.
 A client who has given consent to a conflict may revoke the consent and, like any other client, may terminate the lawyer’s representation at any time. Whether revoking consent to the client’s own representation precludes the lawyer from continuing to represent other clients depends on the circumstances, including the nature of the conflict, whether the client revoked consent because of a material change in circumstances, the reasonable expectations of the other client and whether material detriment to the other clients or the lawyer would result.
 Paragraph (b)(3) prohibits representation of opposing parties in the same litigation, regardless of the clients’ consent. On the other hand, simultaneous representation of parties whose interests in litigation may conflict, such as coplaintiffs or codefendants, is governed by paragraph (a)(2). A conflict may exist by reason of substantial discrepancy in the parties’ testimony, incompatibility in positions in relation to an opposing party or the fact that there are substantially different possibilities of settlement of the claims or liabilities in question. Such conflicts can arise in criminal cases as well as civil. The potential for conflict of interest in representing multiple defendants in a criminal case is so grave that ordinarily a lawyer should decline to represent more than one codefendant. On the other hand, common representation of persons having similar interests in civil litigation is proper if the requirements of paragraph (b) are met.
 Conflicts of interest under paragraphs (a)(1) and (a)(2) arise in contexts other than litigation. For a discussion of directly adverse conflicts in transactional matters, see Comment . Relevant factors in determining whether there is significant potential for material limitation include the duration and intimacy of the lawyer’s relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that disagreements will arise and the likely prejudice to the client from the conflict. The question is often one of proximity and degree. See Comment .
 For example, conflict questions may arise in estate planning and estate administration. A lawyer may be called upon to prepare wills for several family members, such as husband and wife, and, depending upon the circumstances, a conflict of interest may be present. In estate administration the identity of the client may be unclear under the law of a particular jurisdiction. Under one view, the client is the fiduciary; under another view the client is the estate or trust, including its beneficiaries. In order to comply with conflict of interest rules, the lawyer should make clear the lawyer’s relationship to the parties involved.
 As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. This is so because the lawyer has an equal duty of loyalty to each client, and each client has the right to be informed of anything bearing on the representation that might affect that client’s interests and the right to expect that the lawyer will use that information to that client’s benefit. See Rule 1.4. The lawyer should, at the outset of the common representation and as part of the process of obtaining each client’s informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other. In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client’s trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients.
 When seeking to establish or adjust a relationship between clients, the lawyer should make clear that the lawyer’s role is not that of partisanship normally expected in other circumstances and, thus, that the clients may be required to assume greater responsibility for decisions than when each client is separately represented. Any limitations on the scope of the representation made necessary as a result of the common representation should be fully explained to the clients at the outset of the representation. See Rule 1.2(c).
 Subject to the above limitations, each client in the common representation has the right to loyal and diligent representation and the protection of Rule 1.9 concerning the obligations to a former client. The client also has the right to discharge the lawyer as stated in Rule 1.16.
 A lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary. See Rule 1.13(a). Thus, the lawyer for an organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client’s affiliates, or the lawyer’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client.
This rule implements one of the fundamental duties attendant to the lawyer-client relationship–the duty of loyalty. As a loyal fiduciary who must faithfully champion his clients’ causes, a lawyer must avoid conflicts between the interests of the lawyer’s current clients and those of other persons, including the lawyer himself, his other current clients, past clients, and third parties. Unidentified or unresolved conflicts may lead to professional discipline, disqualification, fee forfeiture and malpractice liability. See Restatement (Third) of the Law Governing Lawyers § 121 cmt. f (2000).
A lawyer may not represent a client if that representation is materially and adversely affected by the lawyer’s financial or other personal interests. See, e.g., Restatement (Third) of the Law Governing Lawyers § 125 (2000). Although there exists no per se prohibition against engaging in sexual relations with clients in Louisiana, such relationships sometimes can present a conflict between the lawyer’s personal interest in the relationship and the client’s interests. See ABA Comm. on Ethics and Professional Responsibility, Formal Op. 92-364 (1992); see also In re Hammond, 56 So. 3d 199, 213 (La. 2011) (disciplining lawyer who repeatedly engaged in sexual misconduct with clients for violating rule 1.7); and In re Fuerst, 157 So. 3d 569, 577 (La. 2014) (lawyer violated rule 1.7(a)(2) by having sexual relationship with client whose divorce was pending). The Louisiana Supreme Court has disciplined lawyers when personal relationships have interfered with their ability to exercise independent professional judgment and to render candid advice. See, e.g., In re Bailey, 115 So. 3d 458 (La. 2013) (finding violation for lawyer appointing wife as succession trustee over client’s trust); In re DeFrancesch, 877 So. 2d 71 (La. 2004) (sanctioning lawyer for inappropriate sexual relations with client despite the existence of a preexisting relationship); In re Schambach, 726 So. 2d 892 (La. 1999); In re Ashy, 721 So. 2d 859 (La. 1998); In re Ryland, 985 So. 2d 71 (La. 2008).
A lawyer typically may not represent a client in litigation if the lawyer will be called upon to cross-examine another (current or former) client as an adverse witness during the course of trial. See State v. Olivieri, 74 So. 3d 1191, 1194 (La. Ct. App. 5th Cir. 2011), cert denied, 82 So. 3d 283, (La. 2012); State v. Cisco, 861 So. 2d 118, 129-30 (La. 2003); see also ABA Comm. on Ethics and Professional Responsibility, Formal Op. 92-367 (1992).
A lawyer must also be aware of a potential conflict of interest when representing multiple parties in a related matter although only one party is involved in litigation. In King v. Martin, No. 10-cv-1774, 2012 WL 4959485, at *4 (W.D. La. 2012), the court found a conflict of interest between a lawyer representing a seller in a sale of immovable property while simultaneously representing the future purchaser of said property, who was not a party to the suit. The basis of the conflict of interest included the lawyer’s previous knowledge of the initial disputed transaction in question; the “competing and conflicting” goals of the litigation between seller and the nonparty future purchaser; the nonparty’s payment of legal fees to the lawyer; and the nonparty’s veto power over settlements in the litigation. Id. at 2-4 (recognizing the existence of a conflict of interest; however, the lawyer’s clients had properly waived the conflict of interest pursuant to Rule 1.7(b)).
Liability insurance policies typically require the insurer to indemnify and to defend the insured for covered claims. Because Louisiana’s direct-action statute permits the assertion of claims against liability insurers, see, e.g., La. Rev. Stat. Ann. § 22:1269, a Louisiana lawyer often represents both the insured and the insurer in litigation. As a result, the conflicts issues that arise in Louisiana insurance defense practice are potentially more vexing than those in jurisdictions that do not permit direct actions. Joint representation of the insured and insurer typically does not present a conflict of interest. After all, both the insured and the insurer have a common interest–resolving the claim quickly and inexpensively. However, in at least three instances, the interests of the insured and the insurer may diverge.
First, the interests of the insured and the insurer conflict when the insurer contends that there is no coverage for the claim asserted against the insured. In such a circumstance, the insurer typically provides a defense to the insured, but does so under a “reservation of rights.” It is absolutely clear that a lawyer may not represent both the insured and insurer when the insurer denies coverage or reserves its right to deny coverage at a later date. See, e.g., Emery v. Progressive Cas. Ins. Co., 49 So. 3d 17, 20-21 (La. Ct. App. 1st Cir., 2010); Storm Drilling Co. v. Atlantic Richfield Corp., 386 F. Supp. 830, 832 (E.D. La. 1974); Belanger v. Gabriel Chem., Inc., 787 So. 2d 559, 565 (La. Ct. App. 1st Cir. 2001) (holding that ‘[i]f an insurer chooses to represent the insured but deny coverage, separate counsel must be employed.”).
Second, the interests of the insured and the insurer conflict when the claimant offers to settle a claim for an amount at or below policy limits, but the insurer prefers instead to press the matter to trial, potentially exposing the insured to a judgment in excess of policy limits. (As a practical matter, the increased risk to the insurance company of incurring liability for “bad faith” has reduced the occurrence of this conflict.) The lawyer in this situation must report the settlement offer to the insured and then determine whether continued representation of either the insured or the insurance company is appropriate.
Third, the interests of the insured and the insurer conflict when the insurer attempts to interfere with the lawyer’s professional judgment in the handling of a matter on behalf of the insured. See also La. Rules of Prof’l Conduct r. 1.8(f) (2004) (prohibiting a lawyer from accepting compensation from third party when doing so interferes with the lawyer’s professional judgment). For example, if the insurer directs the lawyer to limit the number of depositions taken in a matter and the lawyer believes that complying with that directive will result in incompetent representation of the insured, then the lawyer must consult with the insured and take appropriate action. See Restatement (Third) of the Law Governing Lawyers § 134(2)(a) (2000). Depending upon the circumstances, the lawyer facing such a conflict may make arrangements with the insured to pay for the necessary depositions, or withdraw from the representation.
Conflicts that arise in criminal litigation present not only disciplinary issues but constitutional ones as well. Every accused individual has a Sixth Amendment right to conflict-free counsel. See, e.g., Olivieri, 74 So. 3d at 1193; State v. Tensley, 955 So. 2d 227, 245 (La. App. 2d Cir. 2007); Wheat v. United States, 486 U.S. 153 (1988); Holloway v. Arkansas, 435 U.S. 475 (1978). Absent the informed consent of all affected clients, a lawyer in a criminal matter may not represent more than one accused person in the same matter. See Restatement (Third) of the Law Governing Lawyers § 129 (2000). In 2006, the Louisiana Supreme Court disciplined a criminal defense lawyer for breaching his duty of loyalty to his client by giving legal advice to his client’s co-defendant. In re John, 924 So. 2d 990, 990 (La. 2006) (the lawyer also violated Rule 1.4(a)(1) for advising the co-defendant without the client’s informed consent).
In many Louisiana jurisdictions, prosecutors are permitted to maintain private practices in addition to their prosecutorial function. The Louisiana Supreme Court has established a bright-line rule as to how such prosecutors must avoid potential conflicts of interest between their governmental clients and their private clients: “[I]n order to comply with the Rules of Professional Conduct, a district attorney must immediately withdraw from the civil representation of a client when there is substantial reason to believe that charges of criminal conduct have been or will be filed by or against the civil client.” In re Caillouet, 800 So. 2d 367, 370 (La. 2001) (quoting In re Toups, 773 So. 2d 709, 716 (La. 2000)) (internal quotation omitted). This rule applies “even if the criminal charges are unrelated to the civil representation.” Id.; see also In re Smith, 29 So. 3d 1232 (La. Mar. 5, 2010) (suspending an Orleans Parish assistant district attorney for one year for representing criminal defendants in that same parish). For a case presenting an unusual conflict for a prosecutor, see In re Griffing, 236 So. 3d 1213, 1222 (La. 2017) (suspending prosecutor for 6 months for failing to disclose an intimate relationship with law enforcement agent during the prosecution of a criminal defendant).
When a lawyer represents a corporation, a limited liability company or other business organization, the lawyer owes the duty of loyalty to the organization rather than to its constituents. See La. Rules of Prof’l Conduct R. 1.13(a) (2004); see Desire Narcotics Rehab. Ctr., Inc. v. White, 732 So. 2d 144, 146-47 (La. Ct. App. 4th Cir. 1999). Because a lawyer representing an organization owes the organization a duty of loyalty, the lawyer generally must not represent another client if that representation would be adverse to the organization or would materially limit the lawyer’s representation of the organization. See, e.g., Restatement (Third) of the Law Governing Lawyers § 131 (2000). From time to time, a lawyer may be called upon to represent a constituent of an organization. For example, a lawyer may be asked to represent an individual director or officer of a corporation or a general partner in a limited partnership. Such a constituent may have interests that materially diverge from or conflict with the interests of the organization. A lawyer for the organization should not represent the interests of such a constituent against the organization unless (1) the lawyer reasonably believes that he or she can competently represent all interested persons, and (2) the lawyer obtains the informed consent, preferably in writing, from all interested persons. Moreover, the lawyer must obtain the organization’s informed consent from an appropriate official within the organization other than the constituent whom the lawyer seeks to represent. See La. Rules of Prof’l Conduct R. 1.13 (g) (2004) (applying Rule 1.7 to potential conflicts involving representation of an organization’s constituents).
Many, but not all, conflicts can be resolved through obtaining the consent of the affected client or clients. As to conflicts that can be resolved through client consent–consentable conflicts–the client’s consent must be informed to be effective. “Informed” consent requires that the lawyer consult with each affected client, and in so doing, communicate reasonably adequate information about the material risks of and reasonably available alternatives to the otherwise problematic representation. What information will be reasonably adequate in any given case will vary with the circumstances. However, the lawyer should typically discuss the following with the affected clients: the conflicting interests; the “contingent, optional, and tactical considerations and alternative courses of action that would be foreclosed or made less readily available by the conflict”; any “material reservations” that a disinterested lawyer representing the affected client might reasonably harbor; and, the possibility and consequences of a future withdrawal of consent by the affected clients. See Restatement (Third) of the Law Governing Lawyers § 122 cmt. c(i) (2000). Furthermore, the lawyer should discuss the effect of the proposed representation on confidential client information. Finally, the lawyer should make it clear that the affected client is free to decline to consent to the conflict. In Olivieri, the court found that a criminal defendant did “not knowingly and intelligently” waive the conflict of interest due to the waiver occurring prior to a discussion of the intricacies of the conflict between the lawyer’s representation of both co-defendants. Olivieri, 74 So. 3d at 1194. (additionally finding the defendant may not have been informed of his right to obtain a different lawyer).
Some conflicts of interest, however, cannot be resolved through the informed consent of the affected clients. A conflict is consentable only if a reasonable, disinterested lawyer would believe that the representation will not be adversely affected by potentially conflicting interests. If no reasonable lawyer would have such a belief, the conflict is considered to be “nonconsentable.” See Restatement (Third) of the Law Governing Lawyers § 122(2)(c) (2000). Furthermore, under paragraph (b)(3) of Louisiana Rule of Professional Conduct 1.7, a lawyer may never simultaneously represent opposing parties in litigation. Such conflicting-interest representations are now per se1 nonconsentable. See La. Rules of Prof’l Conduct r. 1.7(b)(3) (2004).
A lawyer sometimes may attempt to cure a potential conflict of interest by dropping a current client like a “hot potato” in order to undertake the representation of another, perhaps more lucrative, client in another matter. See Ronald D. Rotunda, Legal Ethics § 8-5 (2000). By doing so, the lawyer hopes to convert a “current” client into a “former” client, whom he may then permissibly sue in an unrelated matter. See La. Rules of Prof’l Conduct R. 1.9(a) (2004). However, when the lawyer’s primary motivation for dropping the current client is the desire to represent the prospective client, the discharge often will not cure the conflict. See Restatement (Third) of the Law Governing Lawyers § 132 cmt. c (2000).
Absent aggravating or mitigating circumstances, the following sanctions are generally appropriate in cases involving conflicts of interest: disbarment, when the lawyer without informed consent undertakes representation of a client when he knows that doing so presents a conflict of interest, the lawyer intends to benefit himself or another, and the lawyer causes serious or potentially serious injury to the client; suspension, when the lawyer knows of a conflict of interest, does not fully consult with the client about it, and the lawyer causes injury or potential injury to the client; reprimand, when the lawyer is negligent in determining whether a conflict exists, and the lawyer causes injury or potential injury to the client; and, admonition, when the lawyer engages in an isolated instance of negligence in determining whether the representation may present a conflict of interest, and the lawyer’s conduct causes little or no actual or potential injury to the client. See ABA Stds. for Imposing Lawyer Sanctions std. 4.3 (1992).
This page was updated on January 17, 2018.

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