Source: http://www.law.cornell.edu/ethics/dc/narr/DC_NARR_1_07.HTM
Timestamp: 2014-12-21 16:00:10
Document Index: 74337536

Matched Legal Cases: ['§ 55', '§ 121', '§ 7', '§122', '§ 51', '§ 128', '§ 7', '§ 51', '§ 134', '§ 8', '§ 51', '§ 125', '§ 8']

1.7:100 Comparative Analysis of DC Rule
· Primary DC References: DC Rule 1.7 · Background References: ABA Model Rule 1.7, Other Jurisdictions
· Commentary: 1.7:101 Model Rule Comparison
DC Rule 1.7 as originally adopted was quite different in structure and phraseology from Model Rule 1.7, albeit not in substance, and although the changes made to the Model Rule pursuant to recommendations of the Ethics 2000 Commission and those later made to the DC Rule pursuant to those of the Rules Review Committee bring them slightly closer, there remain major differences between them in structure and phraseology. Reflecting the differences in the respective black letter Rules, the Comments to the DC Rule differed markedly from those of the Model Rule, but the Ethics 2000 Commission added a number of new Comments to the Model Rule, and most of those were picked up in the revision of the DC Rule, so that the respective sets of Comments now have considerable overlap.
The Jordan Committee, although "recognizing the desirability of accepting the ABA language whenever feasible," rejected the ABA approach to Rule 1.7 for three reasons. First, the ABA draft was termed "confusingly organized and ambiguously worded." Second, the "reasonably believes" standard in subparagraphs 1.7(a)(1) and (b)(1) of the Model Rule was rejected as a subjective one that would be difficult to understand and enforce. The Jordan Committee also termed the standard inaccurate in failing to recognize that in certain situations dual representation is prohibited even if the lawyer subjectively "believes" that no conflict exists and the clients consent. Third, through different wording in the rule and a definition of "consent" in the Terminology section, the Committee articulated the higher standard of "full disclosure" rather than "consultation" as a requisite for consent.
The rule as rewritten by the Jordan Committee began by specifying, in paragraph (a), that a lawyer may not advance adverse positions for different clients in the same matter, even with consent. This category of non-consentable conflicts was not clearly recognized in MR 1.7 (although as will be seen it has been since). Paragraph (b)then set forth types of conflicts that are prohibited absent consent, including taking a position for one client adverse to another client even if the matter on which the other client is represented is unrelated, and (drawing upon language in DR 5-101(a) not carried forward in MR 1.7) situations in which a lawyer's representation of a client will or may be impaired by the lawyer's personal interests or responsibilities to third persons. As the Jordan Committee stressed and Comment [4] expressly notes, the non-consentable conflict prohibition in DC Rule 1.7(a), by operating on positions taken in matters rather than on representations generally, leaves room for a lawyer to represent two clients in a particular phase of a matter where their interests are not adverse, while not representing both clients in the phase in which their interests are adverse.
The Peters Committee proposed, and the Court of Appeals adopted effective November 1, 1996, a number of changes to DC Rule 1.7 and its accompanying comments. The changes addressed the following points:
· Paragraph (a), addressing non-consentable conflicts, was revised to include conflicts with a position advanced on the lawyer's own behalf.
· Paragraph (b)(1) was narrowed to apply only to matters involving a "specific party or parties," so as not to apply to general lobbying activities.
· Paragraph (c)(2) with its reference to compliance with all other applicable rules as a prerequisite to consent, was deleted, and corresponding changes were made in Rule 1.3 and the Scope section of the Rules, all with a view to making clear that Rule 1.3 does not impose requirements regarding conflicts that are additional to those in Rule 1.7. [See 1996 Amendments, under 1.3:200 above]
· A new paragraph (d) was added, to address the frequently encountered problem of conflicts that arise after a representation is undertaken that were not reasonably foreseeable at the time the representation commenced, providing that in such circumstances the lawyer is not required to withdraw from the representation unless the conflict also arises under paragraphs (b)(2), (b)(3) or (b)(4). This was intended to eliminate an unfair "veto power" which Rule 1.7(b)(1) could have been understood to give one client where, as a result of events that were not reasonably foreseeable when the representation of another client on a different matter commenced, that representation became adverse to the first client..
· New Comment [11] (now renumbered as [19]) was added, providing that a lawyer is generally not required to inquire concerning the full range of a client's interests, and that Rule 1.7 is not violated by a representation that eventuates in the lawyer's unwittingly taking a position for one client adverse to the interests of another client. DC Bar Counsel has called this a "scienter requirement." Becker, "New Rules of Professional Conduct," Washington Lawyer, Dec. 1996, at 8.
· New Comments [13]-[18] (now renumbered as [21]-[27]) were added to address conflicts involving corporate affiliates.
· Comment [3] (formerly [2]) was revised to distinguish "adverse positions" from "inconsistent or alternative positions" advanced on behalf of a single client.
· Former Comment [3], which had discussed the term "matter" in a fashion that made it appear that general lobbying was subject to paragraph (b)(1), was omitted.
· A new Comment [25] (now renumbered as [36]) was added, amplifying in four areas the obligations of a lawyer or law firm with an interest in a related business that is not a law firm. The areas addressed were: a lawyer's recommendation to a client to use non-legal services; a related entity's referral of its customer to the lawyer; possible conflicts created by work of the related enterprise; and preservation of confidences. The DC Rules did not then have a specific rule on a lawyer's participation in law-related or ancillary businesses like MR 5.7, but the DC Rules did not forbid such participation. These comments provide guidance for a lawyer's association with an ancillary business enterprise.
The ABA Ethics 2000 Commission proposed, and the House of Delegates adopted, a substantial revision of the structure of Model Rule 1.7, making it easier to parse and apply, and in addition making some significant changes of substance. Under that new structure, paragraph (a) defines a current conflict of interest and prohibits it unless paragraph (b) applies, and paragraph (b) states that paragraph (a)'s prohibition does not apply if four conditions are met: (1) the lawyer reasonably believes she will be able to provide competent and diligent representation to each client involved, (2) the representation isn't prohibited by law, (3) the representation doesn't involve the lawyer's assertion of a claim by one client against another client that the lawyer is representing in the same proceeding before a tribunal, and (4) each client gives informed consent, confirmed in writing. The first of these four conditions, set by subparagraph (b)(1), in effect replaces the vague provisions of paragraphs (a)(1) and (b)(1) of the original Model Rule, which called for the lawyer to make judgments as to whether a relationship with an existing client or the representation of a new one will be "adversely affected" by a conflict, with a more precise and practical requirement that the lawyer determine whether she will be able to provide diligent and competent representation to both clients. Subparagraph (b)(2)'s requirement that the representation not be illegal was new, as was subparagraph (b)(3)'s recognizing that a lawyer cannot properly argue opposing sides of an issue for different clients in the same proceeding, but both of these reflected court decisions and ethics opinions holding that conflicts involving either of these circumstances were non-consentable. The requirement of client consent in subparagraph (b)(4) was not a new one, but it was termed "informed consent" rather than as "consent after consultation,"and a new requirement was added, that the consent also be "confirmed in writing." (Both "informed consent" and "confirmed in writing" were defined terms that had been added to the Terminology under the new Model Rule 1.0). The DC Rules Review Committee recommended retaining the structure and language of DC Rule 1.7, with just one significant substantive change: the addition to paragraph (c) of a subparagraph (2), borrowed verbatim from paragraph (b)(1) of the revised Model Rule, making it a requirement of a lawyer's representation of multiple clients despite the presence of a conflict that the lawyer reasonably believe that she will be able to provide competent and diligent representation to each affected client. The only other, minor substantive change made to the DC Rule was changing the required client "consent" in what was now a new subparagraph (c)(1) to "informed consent," a defined term that had also been added to the Terminology in the new D.C. Rule 1.0. The Rules Review Committee did not recommend adoption of the additional change in the corresponding provision of the Model Rule requiring that the consent be "confirmed in writing." The Committee also did not recommend following the revised Model Rule in its new subparagraph (b)(2), making a conflict that is prohibited by law non-consentable. And paragraph (a) of the DC Rule had long since recognized the non-consentability of a lawyer advancing two or more adverse positions in the same, which had been newly added to the Model Rule as subparagraph (b)(3).
The recommendations of the Ethics 2000 Commission led to extensive modifications to the Comments to Model Rule 1.7. One of the original 15 Comments was dropped, the remainder substantially modified, and 21 new Comments added. The recommendations of the Rules Review Committee dropped one of the existing Comments to the DC Rule and made only minimal changes to the remainder, but also added 24 new comments, some but not all borrowed from the Model Rule. Among the new Comments that were not borrowed from the amended Model Rule are three, numbers [37]-[39], addressing sexual relations between lawyer and client. The revised Model Rules addressed that subject in a new paragraph (j) to Rule 1.8, but the Rules Review Committee recommended dealing with it instead by Comments to Rule 1.7.
Another recommendation of the Ethics 2000 Commission, endorsed with respect to the DC Rules by the Rules Review Committee, was to delete Rule 2.2 (Intermediary) and consolidate the tereatment of common representations and intermediation in Rule 1.7. What are now Comments [14] through [18] to DC Rule 1.7, under the caption Special Considerations in Common Representations, were derived from the commentary to former DC Rule 2.2. (See 2.2:101, below.)
Rule 1.7 represents a complete revision of DR 5-101(A) and DR 5-101. It makes no use of the "appearance of impropriety" standard derived from Canon 9 which was applied by courts and ethics authorities in many conflicts decisions. The Rule is, however, intended to codify objective criteria that developed under DR 5-101(A) and DR 5-105 and in the case law under Canon 9.
· Commentary: ABA/BNA § 55:101, ALI-LGL §§ 121-124, Wolfram §§ 7.1-7.6
DC entirely redrafted MR 1.7, with the aim of clarifying the rule and identifying explicitly a category of non-consentable conflicts. See 1.7:101 above.
In In re Butterfield, 851 A.2d 513 (DC 2004)¸ the Court of Appeals approved a thirty-day suspension for violation of DC Rule 1.7(b)(1) and (2) by reason of the respondent’s failure to perform a conflicts check before undertaking an engagement and failure, after becoming aware of the conflict, to take action to notify the affected parties and attempt to obtain waivers from them or, failing that, to withdraw from the engagement.
DC Ethics Opinion 276 (1997) addressed an inquiry relating to lawyers undertaking to mediate cases under the Superior Court's Alternative Dispute Resolution Program, specifically addressing the issue of potential conflicts between the parties to the mediation and clients of the mediating lawyer's law firm. The Opinion pointed out that although a mediator does not enter into an attorney-client relationship with either of the parties to the mediation (and in consequence is not within the purview of Rule 2.2) the lawyer is likely to acquire confidential information from each of the parties to the mediation, the possession of which could have an adverse impact upon the representation of existing firm clients, by reason of Rule 1.7(b)(4). The Opinion also held that a lawyer acting as a mediator was obliged to impart the results of the conflicts check to the parties to the mediation. This obligation, the Opinion explained, rises from Rule 8.4(c) (prohibiting "conducting involving . . . misrepresentation") because the lawyer would be misrepresenting her status as a neutral if she knew in fact of a client relationship that impaired her neutrality. The Opinion also concluded that the conflicts check necessary for participation in a mediation does not normally also require a check for representation of constitutents of a corporate party to the mediation.
There appear to be no DC court decisions that specifically focus on the materiality of the adverse effect of a conflict on a representation.
DC Ethics Opinion 297 (2000) [which is more fully described under 1.11:200, below] pointed out that where a former government lawyer's representation of a private client in connection with a matter in which the lawyer participated while in government is not barred by the post-employment prohibition in Rule 1.11, it may nonetheless face an obstacle by reason of the lawyer's possession of relevant confidences or secrets of the governmental client which cannot, absent government consent, be disclosed or used in the private representation; and (again absent governmental consent) that obstacle may become a barrier to any representation, under Rule 1.7(b)(2), if the lawyer's inability to disclose or use the information would adversely affect the representation of the private client. 1.7:230 Perspective for Determining Conflict of Interest
Comment [25] (formerly [17]) to DC Rule 1.7 makes clear that DC employs an "objective observer" standard as to whether a particular representation or interest would impair the lawyer's effectiveness. See the discussion of DC Ethics Opinions 257 (1995), 177 (1986) and 169 (1986) under 1.7:500, below.
DC Rule 1.7 is distinctive in expressly recognizing, in Rule 1.7(a), a category of non-consentable conflicts. As to consentable conflicts, the discussion that follows addresses the principles applicable to consent under Rules 1.7, 1.8 and 1.9.
DC Ethics Opinion 309 (2001) addressed in comprehensive fashion the permissibility of advance waivers of conflicts of interest. After canvassing a broad range of decisional and scholarly authority, and noting the lack of square decisional authority in DC jurisprudence, the Opinion concurred with the weight of such authority in holding that as a general matter advance waivers are not ethically forbidden. To be permissible, however, there must be "full disclosure of the existence and nature of the possible conflict and the possible adverse consequences" thereof, per Rule 1.7(c); and the client must have "information reasonably sufficient to prmit the client to appreciate the significance of the matter in question," per Terminology [3], and to allow the client to make "a fully informed decision" with awareness "of the possible extra expense, inconvenience, and other disadvantages that may arise if an actual conflict of position should later arise and the lawyer be required to terminate the representation," per Rule 1.7, cmt [19]. The Opinion asserted that this will ordinarily require either that the consent be specific as to the types of potentially adverse representation and adverse clients contemplated, or else that the waiving client has available in-house or other independent counsel.
The Opinion also noted that the lawyer must make full disclosure of known facts, and so cannot seek a general waiver when he or she knows of a specific impending adverseness unless it is disclosed; though it also pointed out, referring to Rule 1.7 cmt. [19], that if the lawyer can't disclose the adverseness because of an obligation to maintain a client's confidences, then the lawyer can't seek a waiver. It also emphasized that, as Rule 1.7(a) makes clear, a conflict arising from a lawyer being on both sides of a matter is unconsentable.
The Opinion recognized that the DC Rules don't require that waivers be in writing, but endorsed the recommendation of ABA Formal Opinion 93-372 that they be written. It also observed that a lawyer's decision to act in reliance on an advance waiver should be informed by reasoned judgment; thus, "a prudent lawyer ordinarily will not rely upon an advance waiver where the adversity will involve allegations of fraud against the other client or is in litigation in which the existence or fundamental health of the other client is at stake." In a footnote, the Opinion pointed out that "[w]aivers permitting other adverse use or disclosure of confidential information . . . may not be inferred from waivers of conflicts of interest."
An Appendix to the Opinion offers a sample text for an advance waiver. DC Ethics Opinion 317 (2002), building upon the analysis of advance waivers of conflicts of interest in Opinion 309 (discussed immediately above), examines in considerable detail the repudiation of such waivers by a previously consenting client. The Opinion recognizes that repudiation of a previous waiver of conflicts is not explicitly addressed by the DC Rules, nor by any DC judicial authority (although the Court in Griva v. Davidson, 637 A2d 830, 846 (DC 1994) had observed that consent to dual representation may be subject to revocation); but that it is addressed both by the Restatement and by the Model Rules (as amended in 2002).
The Opinion's treatment of the subject begins and ends by emphasizing the desirability of recognizing, in the agreement by which the client initially consents to the conflict, the possibility that the client will later have a change of mind, and spelling out clearly therethere whether the revoking client will have a right to continued representation by the lawyer and, if the lawyer is permitted to withdraw, whether the lawyer may continue to represent the other clients involved. Absent such advance agreement, the Opinion suggests, the questions whether the lawyer may withdraw from representing the repudiating client, or may continue the representation of the other affected clients, should be resolved through a somewhat different approach than is applied by the Restatement or by the Model Rules, although the results under any of the three would appear to be largely the same. Both of these other authorities, the Opinion observes, start with the premise that just as a client can fire a lawyer at any time, so the client also has the unqualified right to revoke a prior consent to a conflict. The Restatement (as interpreted by the Opinion) then considers whether the revocation was justified: if it was justified, the lawyer must withdraw from representation of the other clients, and if it was not justified, then whether the lawyer must withdraw from the other representation turns on whether would result in "material detriment" to either the non-revoking client or the lawyer, by reason of their having acted in reliance on the waiver. Restatement §122, comment f. The Model Rule, more broadly but less helpfully, takes the view that whether the lawyer can withdraw from representing the revoking client "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." MR 1.7 cmt [21]. The Opinion views both of these approaches as involving "the somewhat metaphysical question whether a conflict waiver is irrevocable or revocable with possible adverse consequences for the revoking client," and adopts instead an approach that asks, "what rules govern whether the lawyer may (or for that matter, must) withdraw from representing one or both of the clients whose adversity was the reason for the waiver?"
The Opinion's approach, while perhaps less "metaphysical" than those of the Restatement and the Model Rule, is surely not less elaborate. The Opinion first points out that if the client's revocation of consent amounts to a discharge of the lawyer, then the lawyer must, per Rule 1.16(a)(3), withdraw from the representation. It then observes that even if the client's change of mind doesn't amount to discharge of the lawyer, withdrawal will be required if continuing the representation would result in a violation of any of the Rules, per Rule 1.16(a)(1). Further, withdrawal would be permitted, per Rule 1.6(b)(3), if the client had "fail[ed] substantially to fulfill an obligation to the lawyer regarding the lawyer's services; or, per Rule 1.16(b)(4), if "obdurate" or "vexatious" conduct on the part of the client has rendered the representation "unreasonably difficult." And, finally, if the matter is before a tribunal, the tribunal might conclude the lawyer had "other good cause" for withdrawal, per Rule 1.16(b)(3). As to whether in these circumstances the lawyer may continue to represent the non-revoking clients, the Opinion points out that under Rule 1.7(d), dealing with "thrust upon" conflicts, the lawyer might be permitted to continue the representation of both clients, so long as (i) the revival of the conflict wasn't reasonably foreseeable, and (ii) the conflict doesn't involve the risk of "punch-pulling," as contemplated by Rule 1.7(b)(2), (3) or (4). ("Thrust upon" conflicts are discussed in Opinion 292, which is summarized under 1.7:260, below). Otherwise, the Opinion suggests, if there has been detrimental reliance by the non-revoking client or by the lawyer, the lawyer ordinarily should continue representing the other client. And whether the lawyer may or must then withdraw from continuing to represent the revoking client will be governed by Rule 1.16 and Rules 1.7 and 1.9, per the analysis described above.
DC Ethics Opinion 301 (2000) addressed the question whether a lawyer proposing simultaneously to representing two clients as plaintiffs against a common defendant in separate lawsuits with overlapping subject matter must first obtain consent of both plaintiffs. The Opinion concluded that in the particular circumstances presented, such consent was not necessary. The inquiring law firm represented a plaintiff class of special education students in a class action against the District of Columbia in a federal District Court, complaining of failure to meet the District's obligations under the Individual with Disabilities Education Act. During the pendency of that action, one of the members of the plaintiff class was abducted and assaulted, allegedly as a result of the failure to provide adequate transportation services. The question presented was whether potential conflicts of interest would prevent the law firm's representation of that member of the plaintiff class, and his mother, in a tort action against the District of Columbia. The Opinion pointed out that Rule 1.7 contemplates three categories of potential conflict of interest situations: (1) those in which representation is "absolutely forbidden," because the conflict falls under Rule 1.7(a), and is unconsentable; (2) those where the dual representation is permissible only with client consent, per Rule 1.7(b) and (c); and (3) those where the dual representation is permissible even without consent, under Rule 1.7(b). In determining whether client consent was necessary, the Opinion explained, the key issue is whether one representation "will be or is likely to be adversely affected" by the other, so as to come under Rule 1.7(b)(2) or (b)(3). The necessary determination of likelihood vel non has an objective as well as a subjective element, as Comment [7] makes clear by its reference to an "objective observer" having "any reasonable doubt." The Opinion concluded that that objective threshold of likelihood was not reached in the circumstances presented because, among other things, in both suits the plaintiffs would be on the same side of the central issue (the obligation of the District of Columbia to provide adequate transportation services); the plaintiffs were seeking different relief (in one case injunction, the other damages); success in one suit shouldn't interfere with the chances of success in the other; one case would be tried by a jury, the other by a judge; and any actual conflict was unlikely to escape notice, since both representations were public in nature. DC Ethics Opinion 269 (1997) addresses the disclosures that are appropriate when seeking consent to a simultaneous representation of a corporation and one of its constituents such as an officer or employee, or of multiple corporate constituents, that would otherwise violate Rules 1.7(b)(2) or (3). Appropriate disclosures in this context may include "the lawyer's pre-existing relationship with the two clients, whether one of the clients is an expected source of additional, unrelated legal work for the lawyer, and who will be paying the lawyer's fees." The disclosure "should also address the fact and consequences of a possible disqualification of the lawyer from further representation of the client in the event the dually-represented clients take positions actually adverse to each other in the same matter," consequences including "the inconvenience, expense and possible legal risk associated with the need for the client to retain new counsel." Opinion 269 also discusses the disclosures called for in connection with securing consent for a lawyer to withdraw from representing one of two clients in a matter who have become adverse and continue to represent the other client in that matter. There must be disclosure to the to-be-discontinued client of the consequences of granting consent and disclosure to the ongoing client of any limitations on that client's continued representation. "Perhaps the most significant area to be addressed in disclosures to both clients is how the lawyer's confidentiality obligation to the client to be terminated will be protected, and how the representation of the continuing client will be affected by the lawyer's continuing confidentiality obligation to the terminated client."
DC Ethics Opinion 268 (1996) states that, while the consent of both clients is required to proceed with representations that would otherwise violate Rule 1.7(b)(1), the consent required to proceed with a representation that would otherwise violate Rule 1.7(b)(2) or (3) may be of only one of the clients involved, depending on "the nature of the issues, the amount of money at stake, and the likelihood that either client would otherwise be substantially and foreseeably affected by the outcome of the other's matter." This had been implicit in the holding of DC Ethics Opinion 232 (1992).
DC Ethics Opinion 265 (1996), dealing specifically with positional conflicts, states that general prospective waivers are "often, by definition, not fully informed, since the precise nature of the future conflict may not be known at the time." Such waivers may not be enforceable, "especially where the client is not a sophisticated consumer of legal services and therefore not well equipped to foresee the future costs and benefits of such a decision."
Written disclosures are not required in order for consents to be effective, but are "desirable." DC Ethics Opinion 257 (1995). See also DC Ethics Opinions 248 (1994), n. 7; DC Ethics Opinion 86 (1980); Comment [20] to DC Rule 1.7.
The disclosure required for informed consent from a client with respect to an arrangement that would otherwise violate Rule 1.7(b)(4) under which an insurance company refers clients to a law firm and the law firm's interest in receiving continuing referrals might affect the lawyer's advice or representation on matters affecting the insurance company includes the percentage of the law firm's total fees that it receives from the referrals. DC Ethics Opinion 253 (1994). Citing In re James, 452 A.2d 163, 167 (DC 1982), cert. denied, 460 U.S. 1038 (1983), the Opinion holds that full disclosure requires "a detailed explanation of the risks and disadvantages to the client." DC Ethics Opinion 248 (1994) addresses the disclosures required for informed consent by two persons, who allege that they were denied the same job as a result of improper discrimination, to representation by the same lawyer for the liability phase of their case. The lawyer would have to set forth "the possible risks, consequences, and costs of joint representation, including the risk that each client may need new counsel at a later phase of the proceeding, and that even with the clients' consent the court may disqualify" the attorney. The lawyer would have to disclose "the various ways in which the clients' interests could come into conflict, the possible hampering of both their respective claims if they were to agree not to take conflicting positions, the possible added cost and disruption if it were necessary for either or both to get new counsel later, and the complications concerning compensation if a contingent fee were contemplated." The lawyer would also have to caution that bifurcation of the proceeding might not occur, that relief issues could arise at any stage in settlement discussions, and that having confidences of both clients could prelude the lawyer's continuing as attorney for only one. See also DC Ethics Opinion 217 (1991) ("frank discussion of Rules 1.9 and 1.6").
Opinion 248 also cites Griva v. Davison, 637 A.2d 830, 846 (DC 1994), for the proposition that a client is not necessarily precluded from withdrawing a consent that was granted at a time when no conflict existed if an actual conflict later arises (though neither the opinion nor Griva specifically addresses whether consent can be withdrawn if the potential future conflict and its potential consequences were fully disclosed at the time of the original consent).
DC Ethics Opinion 165 (1986) held that consent to representation of multiple clients must be renewed after further disclosure if there are material changes in the pertinent circumstances.
DC Ethics Opinion 163 (1986) held that while consent should normally precede a representation, it could be retroactive when reasonable conflict-detection procedures did not surface the issue.
DC Ethics Opinion 158 (1985) stated that, where consent of a former client is sought to a representation that would otherwise violate what is now Rule 1.9, disclosure to the former client should include what issues may arise as to which that client's confidences could be useful, and "in most cases the former client should be cautioned that he may wish to obtain or consult a new lawyer before consent is provided." DC Ethics Opinion 143 (1984), endorsed in Comment [6] to DC Rule 1.7, allows a lawyer to represent both parties to an uncontested divorce where the parties have agreed on the terms for divorce and other special circumstances, described under 1.7:310 below, are present, and where there is consent by both spouses after full disclosure. The lawyer "must affirmatively caution each potential client that consent to joint representation will disable a lawyer from providing either client with separate or confidential advice with respect to a number of issues that one or the other may not have considered." The Opinion specified a number of such issues, and said that the lawyer must not merely list such issues, but must give the potential clients enough information to ensure that "they understand the significance of the advice as to separate issues of which they will be deprived." The lawyer must also advise the spouses as to the emotional and cost impact of a withdrawal by the lawyer, should conflicts arise. The disclosures must be to each spouse separately.
DC Ethics Opinion 140 (1984), discussed the disclosures required in order for a driver and a passenger in a suit against the second driver concerning an automobile collision to consent to joint representation.
DC Ethics Opinion 86 (1980) stated that the disclosures necessary in order for a client to consent to continued representation in litigation by an attorney who is sued for conduct in the litigation include discussion of the possibility that the suit may affect the attorney's vigor in pursuing the client's case or inclination to suggest settlement.
Full disclosure, for purposes of obtaining consent to a conflict, requires the attorney to call any "possible problem of impaired judgment -- not simply the underlying facts -- to the attention of his or her client, insofar as such possibility is reasonably foreseeable." DC Ethics Opinion 68 (1979).
Griva v. Davison, 637 A.2d 830, 845 (DC 1994), held that a lawyer's disclosure obligation in seeking consents to dual representation is not satisfied by the fact that one client consults his own counsel. "Where dual representation creates a potential conflict of interest, the burden is on the attorney involved in the dual representation to approach both clients with an affirmative disclosure so that each can evaluate the potential conflict and decide whether or not to consent to continued dual employment." A client's inaction does not qualify as affirmative consent.
Avianca, Inc. v. Corriea, 705 F. Supp. 666, 681 (DDC 1989), held that it was inadequate disclosure to a corporation for a lawyer to disclose business relationships potentially adverse to the corporation only to corporate officers involved in those business relationships.
"Full disclosure means just that -- affirmative revelation by the attorney of all the facts, legal implications, possible effects, and other circumstances relating to the proposed representation. A client's mere knowledge of the existence of his attorney's other representation does not alone constitute full disclosure." Financial General Bankshares, Inc. v. Metzger, 523 F. Supp. 744, 771 (DDC 1981), vacated, 680 F.2d 768 (DC Cir. 1982).
DC Ethics Opinion 92 (1980), rejecting some ethics authorities that treat governmental entities as incapable of consent, held that if a governmental entity can grant consent as a matter of the general law, the consent is effective under the ethics rules. DC Ethics Opinions 268 (1996) and 50 (1978) treated governmental entities as capable of giving consent.
See DC Comments [23] and [24] to Rule 1.7, and the discussion of Rule 1.10 below.
DC Rule 1.7(d), added in 1996, provides that a lawyer need not withdraw from a representation because of conflicts under Rule 1.7(b)(1) that arise unforeseeably, so long as there is no violation of Rules 1.7(b)(2)-(4).
DC Ethics Opinion 292 (1999) addressed what it termed the "thrust upon" provision of DC Rule 1.7(d) in circumstances where a current client ("Client A") represented by a law firm in a longstanding ERISA litigation became adverse by reason of its merging with a company that was adverse in pending administrative proceedings before the FCC to two other current clients (Clients "B" and "C") that the law firm was representing in those proceedings. The merger was subject to approval by the FCC in a separate proceeding, and Clients B and C (represented by the law firm) filed comments in that proceeding that, while not flatly opposing the merger, sought the imposition of conditions that would protect the interests they were seeking to advance in the earlier proceedings in which they were represented by the law firm.
The law firm sought consent of all three clients for continuation of all these representations. Clients B and C granted the consent, but client A would consent only to the law firm's continued representation of clients B and C on matters where they were not adverse to client A. Nor would client A agree to allow the law firm to withdraw from its representation in the ERISA litigation (which antedated both of the other representations). Client A and the law firm then jointly requested an opinion from the Legal Ethics Committee on the applicability of DC Rule 1.7(d) in the circumstances.
The resulting Opinion noted that the circumstances presented two distinct conflicts, both raising issues as to the applicability of Rule 1.7(d). The first was presented by Client A's becoming, by reason of the merger, an adverse party in the specific proceedings in which the law firm was already representing Clients B and C, a conflict falling squarely under DC Rule 1.7(b)(1). This, the Opinion observed, involved a "straightforward" application of the Rule: "The law firm's representation of Clients B and C in [the] ongoing proceedings . . . is precisely the situation that Rule 1.7(d) sought to address." Since there was no conflict under any of the other subparagraphs of DC Rule 1.7(b), the Opinion concluded that Rule 1.7(d) clearly meant that the law firm need not withdraw from those representations.
The second conflict, raising a more difficult issue under Rule 1.7(d), arose from the law firm's representing Clients B and C in the administrative proceeding regarding the merger. That proceeding was clearly a new, and technically separate, proceeding from the ones in which the law firm was already representing Clients B and C. The law firm contended, however, that its efforts on behalf of those clients constituted a single representation comprising "a series of efforts to pursue a single objective in multiple forums." Whether single or multiple representations were involved was critical, since under Rule 1.7(d) the time at which the foreseeability of a conflict is tested is at the "outset" of a representation. The Opinion concluded that in the particular circumstances presented, the representations of Clients B and C were single, continuous representations, so that under Rule 1.7(d) the law firm need not withdraw from its representation of them in the merger proceeding. The Opinion summarized its reasoning as follows:
It is probably impossible to state a single rule that addresses all situations in which "thrust upon conflicts" claims are raised. However, we believe that for purposes of applying Rule 1.7(d), the concept of "representation" contains enough flexibility to extend beyond a single discrete proceeding to multiple proceedings that raise a particular identifiable issue or issues and involve common facts, legal theories, claims, defenses and parties. For purposes of Rule 1.7(d), the "onset [sic] of representation" will be deemed to occur when the law firm first begins to provide legal services that involve the same facts, legal theories, claims, defenses and parties. If the conflict of interest was not reasonably foreseeable at that point, the law firm can continue its representation without client consent even if a conflict with another firm client is triggered by a subsequent legal proceeding. The "thrust-upon" provision of DC Rule 1.7(d) is also addressed in DC Ethics Opinion 317 (2002) (discussed under 1.7:240, above). 1.7:270 Positional Conflicts
DC Ethics Opinion 265 (1996) addresses whether positional conflicts violate Rules 1.7(b)(2)-(4). The Opinion substantially follows ABA Formal Opinion 93-377 (1993). It holds that the test for positional conflicts, as for other conflicts under Rules 1.7(b)(2)-(4), is whether "an objective observer can identify and describe concrete ways in which one representation may reasonably be anticipated to interfere with the other." In the case of positional conflicts, this requires considering such issues as "the relationship between the two forums," "the centrality in each matter of the legal issue," "the directness of the adversity between the positions on the legal issue," "the extent to which the clients may be in a race to obtain the first ruling on a question of law that is not well settled," and "whether a reasonable observer would conclude that the lawyer would be likely to hesitate" in either representation or "be less aggressive on one client's behalf because of the other representation." The Opinion rejects the notion that prohibited positional conflicts can occur only in appellate courts, and states that positional conflicts are waivable.
Estate of Heiser v. Islamic Republic of Iran 466 F.Supp.2d 229 (DDC 2006) was a suit by families and estates of American servicemen killed in a bomb attack in Saudi Arabia, against the government of Iran and various Iranian organizations, alleging that they had provided material support and assistance to Hezbollah, which had carried out the bombing. One of the many issues dealt with in this lengthy decision was an apparent positional conflict on the part of the law firm representing the plaintiffs in the action. The issue arose because that firm had represented the Government of Sudan, a defendant in a separate matter in which Iran was one of the defendants, and the firm might take a position in that other matter that was directly contrary to the arguments it made on behalf of the plaintiffs in this case. The Court recognized that DC Rule 1.7 forbids a lawyer, without informed consent of both clients, to represent one client in a matter if the position taken by that client is adverse to the position taken by another client, and quoted DC Ethics Opinion 265 [discussed immediately above] for the proposition that “the lawyer may not, without informed consent of all parties, accept simultaneous representation of both clients where such representation creates a substantial risk that representation of one client will adversely effect [sic] the representation of the other.” 466 F.Supp.2d at 259. The Court found that there was no such conflict, and noted that the firm representing the plaintiffs had realized that its representation of the Sudan was likely to present a positional conflict and had terminated its participation in the representation of Sudan. Id. See also DC Ethics Opinion 253 (1994), n. 7.
DC Comments [21]-[26], discussed under 1.7:290, immediately below, supplement Rule 1.13 by addressing the application of Rule 1.7 in corporate-family situations.
1.7:290 Identity of Client for Conflicts Purposes
DC Comments [21]-[26] to DC Rule 1.7 address corporate families. Thus Comment [13] states the general proposition that per Rule 1.13 representation of a corporation does not normally preclude a representation adverse to an affiliate (e.g., parent or subsidiary) of that corporation. Comment [14] recognizes, as did ABA Formal Opinion 92-365, that there may be de facto representation of an affiliate if the lawyer representing the corporation had received confidences from it in circumstances where it thought the lawyer was acting for it. Comment [15] also recognizes that there are circumstances where one corporation is effectively the "alter ego" of another corporation, so that if one is a client, so is the other; and that the same applies in the case of a corporation wholly owned by a single individual. Comment [16] goes on to say in substance that if a representation adverse to an affiliate of a corporate client seeks a result that is "likely ultimately to have a material adverse effect on the financial condition" of the client, the representation is forbidden by paragraph (b)(3) of the Rule. Comment [17] then observes that all of the preceding Comments here discussed are subject to contrary understanding between the client and the lawyer. And finally, Comment [18] observes that in all the cases discussed the lawyer must consider carefully whether the consent of the second client is required by paragraph (b)(2) or paragraph (b)(3).
DC Ethics Opinion 268 (1996) holds that, for purposes of conflicts analysis, the client of a lawyer doing volunteer work for city government is not necessarily the entire city, but can be a particular agency. The answer turns on the understanding with the government (which should ideally be clearly defined at the outset in writing), as well as the expectations of the lawyer's other clients. The Opinion holds that the governmental client may properly be regarded as the entire city in a matter "that plainly has City-wide impact or public importance, so that it can fairly be said to implicate the interests of the City generally"; statements in the Opinion suggest that any suit against the Mayor or the City Council, or "attacking some City-wide program or regulation," may be in this category. Opinion 268 reversed DC Ethics Opinion 92 (1980) which treated the entire city as the client. See also DC Ethics Opinion 62 (1979), approving federal lawyers' volunteering to represent children in Superior Court, at least where the "particular organizational element of a specific agency or department" of which the lawyer is an employee does not have an adverse interest in a proceeding in the Court.
DC Ethics Opinion 163 (1986) treats a law firm obtaining advice on behalf of an unidentified client as the client for conflicts purposes.
DC Ethics Opinion 71 and 78 (1979), citing Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir.), cert. denied, 439 U.S. 955 (1978), hold that the individual members of a trade association should not be regarded as clients of an attorney for the trade association for conflicts purposes if they did not impart confidences to the attorney and did not understand that the attorney was representing them individually as well as the association.
DC Ethics Opinion 328 (2005) [discussed in more detail in 1.13:500, below], states that when a lawyer represents a constituent of an organization personally, the entity is not a client in a “literal or automatic sense,” but that the lawyer must examine the “de facto relationships that arise out of the representation” when considering a new representation that would be adverse to the organization, particularly if the lawyer has had access to the organization’s confidential material.
· Commentary: ABA/BNA §§ 51:101, 51:301, ALI-LGL §§ 128-131, Wolfram §§ 7.1-7.3
DC Rule 1.7(b)(1) "is designated to ensure that an attorney will act with undivided loyalty to all existing clients." Undivided loyalty is "a fundamental tenet of the attorney-client relationship." The exception in Rule 1.7(d) is to be read narrowly, as applying only to an existing matter in which another client subsequently becomes involved, not a new matter for one client adverse to another client. DC Ethics Opinion 272 (1997).
DC Rules 1.7(b)(2) and (3) cover multiple representations where, even though "parties are nominally aligned together, there may be a risk that the representation of one will adversely affect the representation of the other," such as where, in litigation, "one client may wish to settle a matter" while the other "may not [wish to settle] and might perceive his/her litigation position to be prejudiced by a settlement by the other client." DC Ethics Opinion 269 (1997) (discussing issues relating to representation of a constituent and a corporation in the same matter).
DC Ethics Opinion 268 (1996) held that a lawyer can do volunteer work for a city government client and represent another client adverse to the city government client in a non-substantially-related matter, so long as both clients consent (and there is no violation of Rules 1.7(b)(2)-(4) on the particular facts). As discussed under 1.7:290 above, the Opinion holds that the governmental client, for purposes of conflicts analysis, is not necessarily the entire city, but can be a particular agency. Opinion 268 overruled DC Ethics Opinion 92 (1980), which required consents of all of lawyer's clients in matters adverse to the city, and even those potentially having matters adverse to the city, and which also held that the lawyer could not be adverse to the particular agency for which the lawyer was doing volunteer work, even on an unrelated matter and with consent, and could not be adverse to any city agency on a "closely related" matter.
DC Ethics Opinion 259 (1995) held that, as under DC substantive law a lawyer retained by a personal representative or conservator in connection with a decedent's or ward's estate represents the personal representative or conservator and not the estate, the lawyer cannot bring an action adverse to the personal representative or conservator without consent.
DC Ethics Opinion 240 (1993) addressed the applicability of Rule 1.7 to representations by lawyers in the DC Corporation Counsel's Office in Social Security Act Title IV-D child support proceedings of two custodial parents seeking child support from the same respondent. Only the discussion of Rule 1.7(a) remains fully pertinent after the 1996 amendments.
DC Ethics Opinion 163 (1986) stated that, in order for a lawyer to represent one client in a matter adverse to another client unrelated to the subject of the lawyer's representation of the latter client, there must not only be consent of both clients; there must also be "no realistic prospect that information conveyed" to the lawyer "by either client in the course of the matter in which it is represented will have any relevance to or utility in the other matter." It was such a risk of misuse of confidential information, the Legal Ethics Committee explained, that accounted for the outcome in DC Ethics Opinion 131 (1983), which held that an attorney could not, even with consent, simultaneously represent a class of agency officials claiming employment discrimination and an agency employee challenging the judgment of one of the class members. See also Martin v. Potomac Electric Power Co., 1989 U.S. Dist. LEXIS 15407 (DDC 1989).
DC Ethics Opinion 94 (1980) held that it is permissible for an attorney employed by one organization to provide services to a related organization that pays the first organization for the attorney's services, but that there must be consent of both where "it is possible that interests will differ and that professional judgment will be affected, however slightly." The clients can agree up front that if a conflict arises the lawyer will withdraw from one representation and continue the other; but sometimes withdrawal from both may be required because of an undue risk that confidences and secrets will be used or revealed.
BCCI Holdings (Luxembourg), S.A. v. Clifford, 964 F. Supp. 468, 487-82 (DDC 1997), found that it would violate DR 5-105 for a lawyer to represent a bank holding company and the company that unlawfully acquired control of it, without consent.
The mere fact of representing two clients that are adverse in some other matter unrelated to either representation, or are competitors, is not a conflict, "unless circumstances are such that the attorney's independent judgment will be or is likely to be affected adversely." Curtis v. Radio Representatives, Inc., 696 F. Supp. 729, 736 (DDC 1988).
Whether a client is a current or former client, and the "hot potato" question -- i.e., when it is permissible to terminate a representation so as to convert a client from current to former status for purposes of conflicts analysis -- are addressed in 1.9:200 below.
An attorney may, with the informed consent of both, represent two persons who allege they were denied a job as a result of improper discrimination if the representation is limited to establishing liability. DC Ethics Opinion 248 (1994). The Legal Ethics Committee expressed the view that the risk that conflicts would develop in the course of the litigation is so great that genuinely informed consent seems unlikely, but declined to say that the joint representation is altogether prohibited. For a similar but less pessimistic holding, see DC Ethics Opinion 217 (1991).
DC Ethics Opinion 243 (1993) holds that Rule 1.7(a) absolutely bars a lawyer from representing a divorcing husband and wife who seek assistance in reaching agreement as to the terms of their divorce. The Legal Ethics Committee found that Rule 2.2, the rule concerning the lawyer as intermediary, is "basically designed for `joint venture'- type situations," not joint representations where adverseness is inescapable. In contrast, DC Ethics Opinion 143 (1984), which is specifically endorsed in Comment [6] to DC Rule 1.7, holds that a lawyer can represent both parties to an uncontested divorce where the couple is childless, the spouses have relatively equal employment status and educational backgrounds, they have agreed on the terms for the divorce, they want counsel solely to implement those terms at the lowest possible cost, and they have consented to joint representation after full disclosure of the limitations the arrangement entails and the possible pitfalls. Even then, joint representation is impermissible if the lawyer has represented one of the spouses previously "and has become informed of client confidences or secrets potentially relevant to the divorce proceeding which he would not be in a position to disclose to the other client." If a conflict emerges, the lawyer must withdraw from both representations. There must also be consent of both spouses after full disclosure, as to which see the discussion of Opinion 143 under 1.7:240 above.
DC Ethics Opinion 157 (1985), applying former DR 5-105, indicated that, with disclosure of the potential that the clients will later come to take adverse positions and the attorney will have to withdraw from representing all of them, an attorney can represent both the promoters of and the investors in a tax shelter in asserting common positions in an IRS proceeding. However, this is not permissible if it is "clearly unavoidable" that the clients will become adverse. DC Ethics Opinion 165 (1986) states that if a different attorney, acting on behalf of different investors as the named plaintiffs, then brings a purported class action suit against the promoters, the attorney must at least disclose this development and its potential implications, and obtain the clients' direction as to continued joint representation.
DC Ethics Opinion 156 (1985) held that a lawyer may not simultaneously represent a child as a court-appointed guardian ad litem and prospective adoptive parents of the child in an adoption proceeding, even if there is no known conflict between the child and the prospective parents. The guardianship appointment presupposes a need for separate representation. The child is incapable of consent, and the lawyer cannot provide disinterested consent as guardian to the lawyer's own employment by the prospective parents. The whole issue in the adoption proceeding is "whether the interests of the child and the prospective parents are so common as to permit adoption," and it would be improper to prejudge this issue as a predicate for consent.
DC Ethics Opinion 154 (1986) held that a lawyer may represent multiple applicants in FCC cellular radio license lotteries, with full disclosure and consent of all the clients. If a conflict develops, the lawyer can represent one client against the other if there was consent and permission to use confidences and secrets at the outset. See also, to similar effect, DC Ethics Opinion 54 (1978). This holding seems more carefully considered than the statements in, e.g., Opinion 157, supra, and Opinion 140, infra, that a lawyer must withdraw from all representations if a conflict emerges.
DC Ethics Opinion 140 (1984) discussed in detail the circumstances in which an attorney can represent both a driver and a passenger in a suit against the second driver concerning an automobile collision. Generally, the co-clients must not have become adverse to each other and must make an informed decision to forgo claims against each other. If conflicts emerge, the attorney may have to withdraw from both representations. See also In re Thornton, 421 A.2d 1 (DC 1980).
DC Ethics Opinion 136 (1984) held that an attorney may represent, with the consent of both, a police officer in a probate matter and the defendant in an unrelated automobile tort case in which the police officer is the investigating officer and may be a witness for the defendant, or at least "likely would not be subject to any especially probing cross-examination" by the lawyer. The lawyer is not required to disclose the representation of the police officer to the court or opposing counsel in the tort case. Lawyers with the same legal services organization cannot represent both parties in a contested divorce action. Borden v. Borden, 277 A.2d 89 (DC 1971). Rule 1.7(b)(1) is violated when a lawyer acts as counsel for a plaintiff class while suing individual class members, and the lawyer's suggestion that those individuals be excluded from the class violates Rule 1.7(b)(2). Lewis v. National Football League, 146 FRD 5, 11 (DDC 1992).
1.7:315 Insured-Insurer Conflicts [see 1.8:720]
In In re Ponds, 888 A.2d 234 (DC 2005), the Court approved a thirty-day suspension of a lawyer who had been found by the Board on Professional Responsibility to have violated provisions of the Maryland Rules corresponding to DC Rules 1.7(b)(4) and 1.16(a)(1). The respondent had been retained to represent the defendant on a charge of conspiracy to import and distribute cocaine, in the Federal District Court in Maryland. His client pled guilty, and the court after due inquiry accepted the plea, but before the sentencing hearing, the defendant wrote a letter to the respondent accusing him of having coercing him into the guilty plea but also asking respondent to assist him in withdrawing the guilty plea; and the defendant sent a copy of this letter to the judge, along with a request for a hearing on his request to withdraw the guilty plea. At the sentencing hearing, the judge first heard the defendant on his request to withdraw the guilty plea, and denied the request, and although the respondent did not participate in that exchange, he did represent the defendant in the sentencing hearing. This was found by the Board to have violated Rule 1.7 because the defendant’s charge that he had coerced the guilty plea gave respondent a personal interest that conflicted with the interests of his client; and since the continued representation violated that Rule, Rule 1.16(a)(1) required his withdrawal. DC Rule 1.7(b)(4)’s prohibition of a lawyer’s representing a client in a matter in which the lawyer’s judgment may be affected by duties to other parties, absent client consent, played a role in the determination of whether a defendant convicted in a criminal case might have a valid claim of ineffective assistance of counsel in McCrimmon v. United States, 853 A.2d 154 (DC 2004). The ineffective assistance claim rested on the fact that the defendant’s court-appointed counsel had had a conversation with a man who was interested in retaining him in an unrelated criminal matter, who turned out to have been involved in the crime in which the defendant was involved and had pled guilty and become a “crucial” prosecution witness in the defendant’s trial. The legal issue was whether by reason of that conversation, defendant’s counsel had an “actual conflict” within the meaning of Cuyler v. Sullivan, 446 U.S. 335 (1980). On appeal, the Court of Appeals reasoned that information the witness had imparted to the lawyer in that conversation would not be protected by the attorney-client privilege, since the witness had waived that privilege by admitting his guilt in a plea bargain, and had told the prosecutor the information that might be used in impeaching him as a witness. The Court also noted, however, that that information would constitute “secrets” within the meaning of DC Rule 1.6, both by embarrassing the witness and possibly by prejudicing him as well. 853 A.2d at 163. In addition, the Court observed that Rule 1.7(b)(4) might also apply, since it prohibits a lawyer from representing a client in a matter in which the lawyer’s judgment may be affected by duties to other parties unless the client consents. Id. The Court remanded the case to the trial court for a determination of whether the defendant’s lawyer believed that he was ethically restrained in cross-examining the witness; if so, its impact, if any, on the defendant’s consent, and whether it affected the defensive strategy in the cross-examination, so as to have created an “actual conflict” resulting in ineffective assistance of counsel.
DC Ethics Opinion 232 (1992) held that a lawyer whose firm represents, in a matter unrelated to the criminal case, a suspect in a criminal case can represent a witness in the case in invoking the Fifth Amendment with the consent of only the witness. This does not involve taking a position adverse to the other client in a matter within the meaning of Rule 1.7(b)(1), but consent of the witness is required by Rule 1.7(b)(2) because of the potential that the lawyer would be tempted to counsel the witness against inculpating the suspect. Consent of both clients is required to bargain over inculpatory testimony by the witness, which involves taking a position adverse to another client in a matter within the meaning of Rule 1.7(b)(1).
DC Ethics Opinion 296 (2000) addressed a situation that underscores the importance, when a lawyer undertakes a joint representation of two clients with potentially differing interests in the subject matter of the representation, of there being a clear understanding in advance (and preferably in writing) as to the potential impact of joint representation of the lawyer's duties to maintain client confidences (under Rule 1.6) and to keep each client reasonably informed (under Rule 1.4). The Opinion pointed out that absent a clear understanding that there would be no confidences imparted to the lawyer by one client that could not be shared with the other, the lawyer's inability to share a confidence of one client with the other might present a conflict requiring withdrawal from the representation of both. It also pointed out that although the particular situation addressed involved a joint representation of two clients, the applicable analysis was very close to that which would have been prevailed under Rule 2.2 had the law firm been acting as intermediary rather than advocate. The inquirer in this instance was a law firm that had been retained by an employer to obtain a visa for an alien employee, but after doing so had been informed by the employee that she had fabricated the credentials that qualified her for the visa. Upon learning of the fabrication, the law firm sent the employee a letter confirming that neither it nor the employee had known of the fabrication, and withdrawing from representation of the employee. The specific question put by the inquirer was whether it was allowed or required to inform the employer (which had signed the petition that was filed with the INS) of this fabrication. The Opinion observed that the retainer agreement did not address the impact of the joint representation on client confidences, nor seek consent for the Firm to share confidences of one client with the other. It also observed that a joint representation does not ipso facto imply such consent. In consequence, observing that although the information about the falsification that was reported by the employee to the law firm may not have been a "confidence" within the meaning of Rule 1.6 (since the employee had not reported it in the context of asking for legal advice), it was nonetheless at least a "secret" which the law firm could not share with its other client without the client's consent. The Opinion then counseled that the firm should seek the employee's consent to disclosure of the fabrication, but emphasized that if explicit consent was not forthcoming, the firm could not disclose the employee's falsification to the employer. The Opinion noted the harshness of the result, given that "the Employer who is also a client is left employing a dishonest worker whose visa has been fraudulently obtained pursuant to a petition signed by the Employer under penalty of perjury," but the firm's obligation to preserve the employee client's secrets prevailed over its obligations to the employer client. Assuming that disclosure could not be made, the Opinion pointed out, the firm would have a conflict under Rule 1.7(b)(2) requiring it to withdraw from continued representation of the employer by reason of Rule 1.16(a)(1). Finally, the Opinion addressed the issue of what the firm could tell the employer client (assuming it could not disclose the employee's fabrication) by way of explaining why it was terminating the representation, stating that there were at least two bits of information the firm could impart: the fact that it had also terminated the representation of the employee, and "what ethical provision led to the termination" -- here evidently referring to the termination with respect to the employer, and therefore pointing to Rules 1.7 and 1.16. The Opinion also took note in this connection of the "noisy" withdrawal contemplated by Comment [9] to Rule 1.6, and pointed out that the firm might disavow the INS petition; but it could only do this if there was a reasonable basis to expect that, absent such a disavowal, harm would arise from future reliance on the petition. DC Ethics Opinion 327 (2005) addressed how issues addressed in Opinion 296, immediately above, play out when joint clients agree in advance to share information they provide to a in connection with the representation and underscored the importance of explaining in advance the potential effects of such an agreement. Opinion 327 held that when joint clients have entered into such an agreement, a law firm has an affirmative obligation to disclose any information obtained from one client bearing on the representation that might affect the interests of the non-disclosing clients once the firm learned the information, even if it knows that the disclosing client did not wish to reveal the information to the other clients.
The inquirer was a law firm representing several clients that previously had been jointly represented by a different law firm. The prior firm’s retainer agreements with the joint clients had set forth the understanding that information the clients provided for use in connection with the representation “may be shared” with the firm’s other clients in the same matter. The prior firm had withdrawn from representing the several clients after apparently having learned confidential information from one of the jointly represented clients, and it continued to represent only that one client. The inquiry arose when the prior firm refused to comply with the inquiring firm’s request to disclose all information relevant to its prior representation of the several clients, including the confidential information that had led to its withdrawal.
The Opinion held that the retainer agreement’s provision that information “may be shared” with other clients in the same matter constituted consent to the prior firm’s disclosure of confidential information obtained during the course of the representation that may be relevant or material to its representation of other clients in the same matter. It further held that where the disclosing client had consented to such disclosure, disclosure to the other clients was required under Rule 1.4.
The Opinion also addressed what a lawyer should do when a client that has otherwise consented to disclosure of confidential information to co-clients seeks to withdraw consent for a specific disclosure. The Opinion explained that if the client informs the lawyer of its intent before disclosing the confidential information, the lawyer must explain that he or she would be obligated to disclose the information. It also asserted that the lawyer can generally withdraw from representing the disclosing client and continue to represent the others. However, if the lawyer obtains the confidential information, he or she must reveal the information to the other clients, even if the lawyer knows that the disclosing client did not want the information revealed, because the duty to communicate relevant information attaches at the moment the lawyer learns the information.
DC Ethics Opinion 49 (1978) held that, if both clients desire it, an attorney can represent two companies in reducing a contract between them to writing where they have directly negotiated its terms, even though there remains a potential for disagreements as to details.
Griva v. Davison, 637 A.2d 830, 844 (DC 1994), holds that "a law firm ethically can represent several individuals in creating a partnership after obtaining their informed consent pursuant to Rule 1.7(c)." The firm can also represent the partnership and one or more of its individual partners as to matters affecting the partnership, so long as there is no conflict of positions.
Hendry v. Pelland, 73 F.3d 397, 401 (DC Cir. 1996), found that it was improper for a lawyer to represent joint owners of property in connection with the sale of the property, where the owners disagreed as to objectives and the lawyer did not discuss possible conflicts with them.
Avianca, Inc. v. Corriea, 704 F. Supp. 666, 678-82 (DDC 1989), found it was improper for a lawyer to represent two companies likely to compete for the same business opportunities, and to side with one against the other when their interests did collide.
DC Ethics Opinion 159 (1985), applying former DR 5-105(B) to a question that would now be governed by Rule 1.7(b)(1), held that an attorney for a cooperative association could not represent one member of the association's board against the entire board, because the board is the association for conflicts purposes. For further discussion of this Opinion, see 1.7:500 below. See also DC Ethics Opinion 259 n. 4 (1995).
Griva v. Davison, 637 A.2d 830, 840 n.10 (DC 1994), holds that "a lawyer of an entity cannot represent constituents of an entity when such representation may prejudice the interests of that entity, or when it is unclear what constituents represent the interest of the entity and thus a dispute between constituents makes it impossible to know what the entity's interest are." See also Financial General Bankshares, Inc. v. Metzger, 523 F. Supp. 744, 765 (DDC 1981), vacated, 680 F.2d 768 (DC Cir. 1982) (lawyer for corporation must "remain neutral in the face of a corporate client's factional conflict").
A lawyer for a corporation can sue corporate employees for whom he provided free legal services on unrelated matters. Fielding v. Brebbia, 479 F.2d 195 (DC Cir. 1973). See also Egan v. McNamara, 467 A.2d 733, 738-39 (DC 1983).
· Primary DC References: DC Rule 1.7(b)(4) · Background References: ABA Model Rule 1.7, Other Jurisdictions
· Commentary: ABA/BNA § 51.901, ALI-LGL § 134, Wolfram § 8.8
1.7:410 Insured-Insurer Conflicts [see also 1.8:720]
A lawyer hired by an insurance company to represent an insured must be loyal to the insured and must not allow the lawyer's relationship with the insurance company to hinder the representation. DC Ethics Opinion 173 (1986) (applying former DR 5-105(B) and (C) and DR 5-107(B)).
DC Ethics Opinion 259 (1995) stated that, under DC substantive law, a lawyer retained by a personal representative or conservator in connection with a decedent's or ward's estate represents the personal representative or conservator and not the estate.
· Commentary: ABA/BNA § 51:501, ALI-LGL §§ 125-127, Wolfram § 8.11
DC Rule 1.7(b)(4) was the principal basis for a disciplinary proceeding in In re Evans, 902 A.2d 56 (DC 2006), where the lawyer’s conflict of interest arose by reason of the lawyer’s representing a client in a matter in that involved a business in which he had a personal financial interest -- a situation specifically addressed by Comment [36] (formerly [25]) to DC Rule 1.7. The respondent in that case owned a title company, and also engaged in a law practice that included probate and real estate matters. His title company was contacted to close a real estate loan, but when it appeared that the property to be encumbered was not owned by the borrower but instead belonged to the unprobated estate of the borrower’s deceased mother-in-law, the respondent undertook to represent the borrower in initiating a probate proceeding to secure the borrower’s title to the property. He undertook this engagement without advising the borrower of his conflict of interest or getting her informed consent to his proceeding with the engagement despite the conflict of interest, thus violating DC Rule 1.7(b)(4). He then proceeded, in the course of the engagement, to commit a number of errors and omissions, presumably as a result of his conflicting interests, that were found both to have been prejudicial to the administration of justice, in violation of Rule 8.4(d) [more fully discussed under 8.4:500, below] and to have manifested insufficient competence, in violation of Rule 1.1(a) and (b) [more fully discussed under 1.1:210, above].
DC Ethics Opinion 334 (2006) addressed an inquiry by a lawyer who had been approached about selling the lawyer’s own media rights related to a representation. The Opinion held that the situation was governed by Rule 1.7(b)(4), not Rule 1.8(c), and thus while the potential for a conflict of interested existed, such a transaction was not absolutely precluded. The Opinion explained that a transaction would be more problematic if its value to the lawyer might vary depending on the lawyer’s subsequent actions in the representation. The Opinion emphasized the difficulties involved in obtaining truly informed consent when the lawyer’s strategic and tactical decisions might affect the value of the transaction and stated that it would be highly advisable for the client to obtain advice from independent counsel or for the lawyer to obtain objective advice about his or her ability to proceed with the representation.
In re Hager, 812 A.2d 904 (DC 2002) involved a number of ethical violations relating to a case in which the lawyers representing the plaintiffs in a potential class action made a side deal with the defendant, unknown to their clients, under which the defendant paid them $225,000 as attorneys fees and expenses, the lawyers agreed never to represent anyone with related claims against the defendant and to keep totally confidential and not to disclose to anyone all information learned during their investigation relating to the case, and all the parties agreed not to disclose most of the terms of the settlement, even to the lawyers' clients. Hager and another lawyer (who was not admitted in DC and so not subject to professional discipline there) had been retained by two health professionals to pursue legal action against Warner-Lambert Co. with respect to its head-lice shampoo Nix, on the ground that it was not effective because a Nix-resistant strain of head lice had evolved. The clients' objective was to protect the public from the product and to compel the company to change its labeling and advertising. The lawyers entered into a contingent fee agreement with the two plaintiffs, undertaking to investigate potential grounds for a class action suit, and specifying that one requirement of such a suit would be that there be 100 class representatives. When 90 consumers/potential class members had been identified, the lawyers commenced negotiations with Warner-Lambert, and a little over a month later arrived at a settlement agreement with the company, most of whose terms were not disclosed to, let alone agreed by, their clients or to the 90 potential members of the class. The principal terms of the agreement were:
1. The lawyers would not assert any Nix-related claims against Warner-Lambert on anyone's behalf, including their clients. 2. Warner-Lambert would stop asserting that Nix was 99% effective, add a money-back guarantee on the label, and form a scientific panel to study lice resistance to Nix. 3. Warner-Lambert would provide full purchase price refunds to the 90 potential class members/consumers. 4. Warner-Lambert would pay the lawyers $225,000 for investigating and negotiating potential claims about Nix. 5. None of the consumers' claims against Warner-Lambert would be released. 6. The lawyers would maintain in strictest confidence all information obtained in connection with their work on the matter. 7. Both the lawyers and Warner-Lambert would maintain in strictest confidence the content of the agreement except that the consumer could be informed of their refund rights, the change in the Nix effectiveness claim, the money-back guarantee, and the scientific panel.
On the basis of the foregoing circumstances, Hager was found to have violated not only Rule 1.7(b)(4), as explained below; but in addition Rule 1.2(a) (failure to abide by clients' decision as to whether to accept an offer of settlement); Rule 1.4(a) (failure to keep clients informed); Rule 1.8(e) (accepting compensation from other than the client without the client's consent); Rule 1.16(a) (failure to withdraw when representation involves violation of the Rules); Rule 1.16(d) (failure to protect clients' interests on withdrawal); Rule 5.6(b) (agreement restricting right to practice); and Rule 8.4(c) (engaging in dishonesty, fraud, deceit, or misrepresentation).
The conflict of interest that violated Rule 1.7(b)(4) was termed by the Court "a classic conflict of interest -- [respondent's] interest in maximizing his fee versus his clients' interest in maximizing the amount paid to them." Id. at 913. The Court pointed out that the conflict in itself did not necessarily preclude the lawyer's continuing and concluding the negotiations, because "if that were true, plaintiffs' lawyers would find it difficult, if not impossible, to engage in settlement negotiations once the subject of attorney fees had been broached." Id. What was needed and lacking here, however, was client consent. The respondent argued that there had been no actual conflict of interest because he had obtained full relief for his clients and didn't divert to himself any monies that would otherwise have gone to the clients. In response to this, the Court asserted that "Obtaining the best possible outcome for one's clients is never a viable defense to charges of ethical misconduct; the ends do not justify the means." Id. at 913-14. The Court also asserted that the fundamental fallacy in respondent's argument lay in its premise that the lawyer has the right to decide what is best for the client: "It is the client, not the lawyer, who decides whether full or acceptable relief has been obtained." Id. at 915. Here, the clients hadn't been informed of, let alone agreed to, the settlement the respondent had negotiated.
DC Ethics Opinion 300 (2000) considered the possible applicability of Rule 1.7(b)(4) (along with Rules 1.5 and 1.8) to a lawyer's accepting an ownership interest in a corporate client as compensation for legal services. The Opinion is more fully described under 1.5:400, above.
DC Ethics Opinion 306 (2001) (more fully discussed under 5.7:200 below), which addressed the ethical responsibilities of a lawyer who is also a licensed insurance broker, pointed out that if such a lawyer sold insurance products to a client there could be an issue under Rule 1.7(b)(4) by reason of the lawyer's having a personal interest in the transaction which could affect the lawyer's professional judgment on behalf of the client.
DC Ethics Opinion 269 (1997) stated that the lawyer for a corporation may be affected, in representing a corporate constituent such as an officer or employee at the corporation's expense, by the lawyer's personal interest in continuing referrals from or work for the corporation, in which case the representation can be undertaken only with the corporate constituent's informed consent. A criminal lawyer charged with possession of marijuana cannot, absent consent, represent clients being prosecuted by the same office. DC Ethics Opinion 257 (1995). The test in the District under Rule 1.7(b)(4) is an objective one: whether "an objective observer might reasonably believe" that the lawyer's professional judgment on behalf of clients would be colored by the lawyer's personal situation. An objective observer would be concerned that a lawyer in this situation might either become less aggressive in order to curry favor or excessively aggressive out of resentment or anger.
DC Ethics Opinion 253 (1994) found that Rule 1.7(b)(4) may be violated, absent informed consent, by an arrangement under which a lawyer receives client referrals from an insurance company and leases space and receives financing from the insurance company, where the representations may involve providing advice or taking positions adverse to the insurance company or taking positions with which the insurance company disagrees.
DC Ethics Opinion 252 (1994) held that Rule 1.7(b)(4) precludes a lawyer's both acting as guardian ad litem for a child in an abuse and neglect proceeding and representing the child in a tort claim unless a different guardian ad litem is appointed for the tort matter, because of the lawyer's personal interest in the level of the fee for the tort matter. Even if a different guardian is appointed, the lawyer "must be vigilant about potential conflicts" between the two representations.
DC Ethics Opinion 245 (1993) held that Rule 1.7(b)(4) bars a lawyer from accepting a commission from a service provider that the lawyer recommends to the client, such as a registered agent, unless the client consents and the payment is turned over to the client.
DC Ethics Opinion 231 (1992) held that Rule 1.7(b)(4) does not prevent a member of a law firm from taking actions as a legislator that could be adverse to firm clients, where there is no allegation that this adversely affects firm lawyers' professional judgment on behalf of clients. The Legal Ethics Committee states that it need not decide whether, if there were such an allegation of adverse effect, the rule would apply on a theory that a lawyer's role as a legislator involves responsibilities to or interests in a third party or the lawyer's own interests.
Even though Rule 3.7(a) only addresses representation at trial, a lawyer who will be called upon to testify as a witness at a pre-trial hearing "should carefully consider" whether Rule 1.7(b)(4) bars representation of the client at the hearing because "the lawyer's professional judgment" on behalf of the client "may be adversely affected" by the lawyer's "role as a witness." DC Ethics Opinion 228 (1992).
DC Ethics Opinion 210 (1990) held that an attorney handling federal Criminal Justice Act cases who applies for a job in the U.S. Attorney's Office must disclose to clients the potential that the pendency of the job application could adversely affect the attorney's judgment and performance and the risk of prejudice as a result of the attorney's withdrawal to take the new position, and must secure client consent to continued representation. This duty arises when the lawyer decides to seek the position. A conflict does not arise with respect to criminal cases the lawyer is handling that are prosecuted by the local, as opposed to the federal, prosecutor's office, however.
DC Ethics Opinion 204 (1989) held that a lawyer could not comment on the lawyer's own behalf in an agency rulemaking proceeding if, at the time the comments are submitted, the lawyer also represents parties with respect to applications or planned applications before the agency that could be prejudiced if the lawyer's comments are adopted and applied to those applications. The decision was under former DR 7-101(A)(3) and related provisions of the Code, but the Legal Ethics Committee indicated that it would reach the same conclusions under then-proposed Rule 1.7. Comment [3] to Rule 1.7 indicates that Rule 1.7(a) should be understood to codify Opinion 204, including the notion that a rulemaking whose outcome may be applied retroactively to a pending case is the same "matter" as that case.
The following Opinions applied DR 5-101(A), the predecessor to DC Rule 1.7(b)(4):
DC Ethics Opinion 195 (1988) held that a lawyer could not take a client's assignment of a patent, with the right to sell it, as security for the lawyer's fees for pursuing the patent. This would tend to place the lawyer's interest in a quick sale of the patent for just enough to cover the lawyer's fees in opposition to the client's interest in maximizing the value of the patent.
DC Ethics Opinion 177 (1986) held that the fact that a lawyer had previously been the supervisor of a governmental decisionmaker could constitute a personal interest that would reasonably affect the lawyer's exercise of professional judgment. The discussion has a flavor of a subjective test -- whether the lawyer actually feels there would be an effect -- that is probably no longer applicable under the objective-observer approach of Comment [7] to Rule 1.7. A similar tenor of subjectivity is found in DC Ethics Opinion 169 (1986), holding that a lawyer could continue to represent an employer-client while also pursuing employment-related claims against it if the lawyer could "reasonably conclude that he will nonetheless be able to fulfill his responsibilities to the client."
DC Ethics Opinion 170 (1986) held that a prepaid legal services arrangement, under which a lawyer received a limited monthly fee and the client had a right to unlimited phone advice, could create a conflict between the lawyer's personal financial interest and the duty of competent and zealous representation.
DC Ethics Opinion 159 (1985) held that a lawyer for a cooperative association could be barred, absent consent, from representing one member of the association's board in a matter adverse to another, "particularly influential" board member because the lawyer "might justifiably fear retaliation by the association, i.e., retaliation by the board," and this could impair the lawyer's professional judgment.
DC Ethics Opinion 144 (1984) held that an attorney who seeks a Criminal Justice Act appointment may not withdraw when the case is assigned to a judge who regularly declines to grant compensation in excess of the statutory limit for cases that are not unusually extended or complex. This is not a situation in which the lawyer's professional judgment would be impaired by the lawyer's own financial interest; the lawyer takes the appointment knowing the fee is determined by statute and judicial discretion.
DC Ethics Opinion 138 (1984) held that a lawyer could refer a client to a bank for a loan to cover the lawyer's services, and could pay the bank $25 for speedy processing of the loan application and notice if the loan was rejected. However, the lawyer could have no interest in the bank and had to be satisfied that the credit arrangements were fair and in the client's interest.
DC Ethics Opinion 133 (1984) held that a lawyer serving as a hearing examiner for the District of Columbia could not represent a private client in a suit against the City in a related area, absent the private client's informed consent.
DC Ethics Opinion 126 (1983) held that it was not necessarily an impermissible conflict for a lawyer to represent a client in defending against an allegation that the client failed to comply with a court order to contribute to the lawyer's fee. In each situation, the lawyer would have to "determine whether his or her financial interest in receiving the payment will affect or reasonably be expected to affect the exercise of his or her professional judgment on behalf of the client."
DC Ethics Opinion 112 (1982) held that government lawyers could not be members of a public employees' union that is the principal adversary of the attorney's employing agency, where "the success of the organization can affect their own financial and other employment interest." On the other hand, a government lawyer may contribute to organizations that oppose the government on various issues, so long as the contribution is not in support of a specific case in which the lawyer is on the other side. See also DC Ethics Opinion 57 (1978) (lawyer whose firm practices before agency can make a donation to public interest law firm that practices before agency, even if the public interest law firm is adverse to the lawyer's firm, so long as the donation will not be used in the adverse matter, and even if the lawyer's client objects).
DC Ethics Opinion 101 (1981) addressed an inquiry from a lawyer employed by a federal agency that maintained a Board of Contract Appeals, whose judges are similar to administrative law judges, as to whether the lawyer was subject to any ethical inhibition under the Code against appearing before the Board by reason of the lawyer's having represented three of the judges in a civil damage suit whose appeal was pending. The Opinion concluded that there was no such ethical inhibition on the lawyer, but suggested that "as a matter of prudence and professional etiquette, albeit not ethical mandate," it might be well to raise with the judges the question of possible recusal or notification to opposing counsel. To similar effect, see DC Ethics Opinion 114 (1982), where the lawyer was in private practice, not government employ, and had represented some 40 officials of a government agency in attempting to prevent adverse reclassification of their civil service grade.
DC Ethics Opinion 86 (1980) held that a lawyer sued for conduct in the course of litigation could continue to represent the client in the litigation with the client's consent.
DC Ethics Opinion 48 (1978) held that client consent is required for a lawyer who is a DC Human Rights Commissioner to handle discrimination cases before federal courts or agencies, because of the risk that the lawyer might have to withdraw if a case is referred to the DC agency, and because of the potential that the lawyer could benefit from steering the client away from the DC agency even though pursuing a local administrative remedy might be preferable to bringing a federal case.
O'Neil v. Bergan, 452 A.2d 337, 345 (DC 1982), held that it is proper for a member of a law firm to represent the firm in defending against a claim against it.
BCCT Holdings (Luxembourg), S.A. v. Clifford, 964 F.Supp. 468, 482 (DDC 1997), held that it would violate DR 5-101(A) for a lawyer to accept undisclosed and unrecorded non-recourse loans from a client.
United States v. Harris, 846 F. Supp. 121 (DDC 1994), found that Rule 1.7(b)(4) was violated where a lawyer had an intimate relationship, undisclosed to her client or the court, with an adverse witness she cross-examined.
In Palumbo v. Tele-Communications, Inc., 157 FRD 129 (DDC 1994), a lawyer took a minority stock interest in a corporation as a fee for a successful discrimination suit against the corporation, and later sat on the corporation's board. In these circumstances, Rule 1.7(b)(4) barred the lawyer from handling a subsequent class action against an affiliated entity alleging discrmination by that entity, as well as by the corporation of which he had been a director, because of the lawyer's potential interest in minimizing his own responsibility as a former director, his loyalty to the company of which he had been a director, and his potential role as a witness for the defense.
Financial General Bankshares, Inc. v. Metzger, 523 F. Supp. 744 (DDC 1981), vacated, 680 F.2d 768 (DC Cir. 1982), held that a lawyer's promoting and acting for a group attempting to acquire control of a corporation, including selling his own shares to the group, while at the same time representing the corporation, without disclosure and consent, violated DR 5-101(A), which has the effect of requiring that any privileges otherwise accruing to a shareholder be subordinated to the lawyer's fiduciary obligations. See also Fielding v. Brebbia, 399 F.2d 1003 (DC Cir. 1968).
United States v. McDonnell Douglas Corp., 1980 U.S. Dist. LEXIS 12901 (DDC 1980), rejected suggestions that DR 5-101(A) might be violated by representation, by the counsel representing a corporation at the pre-indictment stage of a criminal investigation, of individual defendants and potential trial witnesses, as well as the corporation, either on the theory that the lawyer's pecuniary interest in the future business of the individuals might cause the lawyer to represent the corporation inadequately, or on the theory that the lawyer might not aggressively cross-examine the individuals later for fear of disclosing their confidences.
Bachman v. Pertschuk, 437 F. Supp. 973 (DDC 1977), held that a lawyer employed by a federal agency could not act as counsel for a plaintiff class, of which he was a member, in bringing a racial discrimination action against the agency. The court relied, among other things, on the lawyer's divided loyalties and the potential for misuse of his employer's confidences, and on the risk that the lawyer might devote disproportionate attention to issues relevant to the subgroup of the plaintiff class to which he belonged and might favor that subgroup in settlement.