Opinion ID: 1175816
Heading Depth: 2
Heading Rank: 2

Heading: Open File Conflict.

Text: We have distinguished between the two basic types of conflict considered under DR 5-105(A). In In re Brandsness, supra , we defined these as the open file conflict and the closed file conflict. The former is concerned with conflicts in the representation of two present clients and the latter is concerned with conflicts that develop as a result of the representation of a present client and the past representation of a former client. The present case involves two contemporaneous legal actions. The first is the action filed against Welling on November 4, 1981, and the second is the action filed against Wright on November 19, 1981. The result is an open file conflict. We next move to the determination of the level of conflict: actual, likely, or unlikely. This determination becomes important because the level of conflict dictates the appropriate action by the lawyer. In re Johnson, supra, 300 Or. at 58, 707 P.2d 573. In In re Porter, 283 Or. 517, 523, 584 P.2d 744 (1978), we first distinguished between the levels of open file conflicts:    [I]f the representation of multiple clients is such that the lawyer's independent professional judgment on behalf of one client will be adversely affected (an `actual' conflict), or is likely to be adversely affected (a `potential' conflict), the representation is improper unless the exception provided in DR 5-105(C) applies. (Emphasis in original.) In later cases, we expanded this distinction and interpreted DR 5-105 to prohibit the representation of clients with actual conflicting interests; this prohibition exists regardless of the DR 5-105(C) exception. See In re Jans, 295 Or. 289, 295, 666 P.2d 830 (1983); In re Johnson, 300 Or. at 58-9, 707 P.2d 573. An actual conflict exists when the accused places himself in a position where the exercise of his independent professional judgment on behalf of one client would be adversely affected by the differing interests of the other [client]. In re Porter, supra, 283 Or. at 524, 584 P.2d 744. In Porter, we found an actual conflict where the accused undertook to represent 14 individuals at the preindictment stage of a single homicide case. While the accused had fully disclosed and explained to each client that there was a potential conflict of interest if any one of them should be criminally charged, he failed to recognize the existence of an actual conflict of interest. The actual conflict existed because of the differing interests of each of the clients. The accused could not freely advise any one client without weighing the disadvantages and consequences to the other clients. While it may be permissible for a lawyer to represent more than one interest in a transaction in some instances, the only ethical position for an attorney to adopt when substantially identical interests which he has represented become divergent is to represent neither [interest]. In re Banks, supra, 283 Or. at 475, 584 P.2d 284. In Banks, the two accused lawyers had represented the interests of a closely held family corporation. When intra-family confrontations developed one of the lawyers undertook representation of one faction against the corporation's chief executive in challenging an employment contract. We found this to be inappropriate. [T]he accused's firm represented both [the chief executive] and the corporation at the time the contract was drawn and    it could not subsequently, when the interests of its clients were in opposition, represent either one in a dispute over the application of the contract without the consent of both. 283 Or. at 478, 584 P.2d 284. The present case is analogous to In re Porter; the accused cannot prosecute the Welling case, an action to enforce the UBE franchise agreement, without considering the effect and consequences on the simultaneous case against Wright, an action to hold the franchise agreement invalid. Likewise, the present case is similar to In re Banks. Although the accused here did not initially draft the franchise contract, he was simultaneously involved in attempting to enforce its provisions and attempting to invalidate its provisions. When the accused accepted employment to prosecute the Welling case, he was representing the interests of Barnes and Thomason as franchisees and also Wright and UBE as franchisors. When these identical interests in enforcing the franchise agreement diverged, the accused should not have undertaken representation attempting to invalidate the franchise agreement. The accused created an actual conflict of interest by representing one client and then accepting employment from a second client in a position adverse to the other client. See In re Thorp, supra, 296 Or. at 680, 679 P.2d 857; In re Brownstein, 288 Or. 83, 87, 602 P.2d 655 (1979). In Johnson we concluded that the lawyer must have available some factual predicate suggesting a conflict of interest before he or she will be held accountable for a violation of DR 5-105. In re Johnson, supra, 300 Or. at 61, 707 P.2d 573. The accused in this case was aware, from the beginning of his work on the Welling case, that a conflict of interest could develop between the franchisee and the franchisor. This knowledge is evidenced by the accused's file memorandum on September 2, 1981. We have repeatedly held that where there is the slightest doubt as to whether or not the acceptance of professional employment will involve a conflict of interest between two clients    the employment should be refused. Wise, Legal Ethics 273 (2d ed. 1970), quoted with approval in In re Banks, supra, 283 Or. at 476, 584 P.2d 284, and In re Johnson, supra, 300 Or. at 60, 707 P.2d 573. We conclude that the accused had knowledge of the facts establishing an actual or likely conflict of interest in the representation of these two actions. We therefore find that a conflict of interest did occur and the accused is guilty of violating DR 5-105(A).