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New York State Bar Association
Committee on Professional Ethics
Opinion #823 – 06/30/2008
Topic: Joint representation;
conflict of interest; withdrawal
Digest: A lawyer cannot
continue to represent joint clients in litigation if their strategies
significantly diverge. The lawyer can continue to represent one of
the joint clients in the litigation if the former client provides
informed consent to the future representation and the lawyer can
represent the current client zealously and competently. The lawyer is
required to comply with the court’s procedures for
withdrawal.
Code: DR
2-110(A)(1), (2); 4-101(C); 5-105(A), (B), (C); 5-108(A); EC 7-8,
7-9.
QUESTIONS
- May a law firm continue to represent joint clients
whose strategies significantly diverge in litigation?
- May a law firm continue to represent one of the
joint clients in the litigation after the conflict arises and, if so,
under what circumstances?
OPINION
- A law firm represents “X” and
“Y” in litigation. Prior to the firm’s
representation of these two clients, they were co-owners of a business,
which they then sold. The purchasers sued X and Y. At the
outset of the litigation, the interests of X and Y were
identical. X and Y interposed a counterclaim against the
purchasers.
- For unknown reasons, the plaintiff purchasers have
not vigorously pursued the litigation. X desires to pursue
the counterclaim aggressively. Y, however, has directed the lawyer
to do nothing and let things remain quiescent.
- A lawyer may represent multiple clients in the same
or related matters unless (i) the exercise of independent professional
judgment on behalf of one client will be or is likely to be adversely
affected by the lawyer’s representation of another client, or (ii)
the multiple representation would likely involve the lawyer in
representing differing interests.[1] In cases where
multiple representation would give rise to an adverse effect on
independent professional judgment or representation of differing
interests, a lawyer may undertake or continue the multiple
representation if a disinterested lawyer would believe that the lawyer
can competently represent the interest of each and if each consents to
the representation after full disclosure of the implications of the
simultaneous representation and the advantages and risks
involved.[2]
- We addressed the representation of joint clients
prior to contemplated litigation in N.Y. State 787 (2005). There,
the inquiring lawyer was retained to represent a woman on her personal
injury claim and her spouse on a derivative loss-of-services
claim. The husband subsequently abandoned the wife, and she
obtained a divorce. The lawyer and the wife lost contact with the
client/former husband. Prior to commencement of personal injury
litigation on behalf of the husband and wife, a settlement offer was
made to the wife, who wanted to accept it.
- We observed that if assisting the wife to procure the
settlement would prejudice the husband’s derivative claim, the
lawyer was required to withdraw from both representations:
Continuing to represent both parties would involve a
simultaneous representation of “differing interests.”
Specifically, the lawyer would be forced to choose between settling the
wife’s claim and thus barring the husband from pursuing his loss
of consortium claim, or advising the wife to reject the settlement offer
that she wishes to accept in order to preserve the husband’s
claim. In this situation the lawyer could proceed only with the
husband’s informed consent, which would require explaining to the
husband the risk that the loss of consortium claim may be
compromised.
The consent required under DR 5-105(C) could not be
obtained from the husband, who could not be located.
- Not every disagreement regarding the course to be
charted in litigation rises to the level of differing interests.
EC 7-7 provides, “In certain areas of legal representation not
affecting the merits of the cause or substantially prejudicing the
rights of the client, a lawyer is entitled to make
decisions.”[3] EC 7-8 states that,
in areas in which the client is to make the decision, the lawyer should
“exert best efforts to ensure that decisions of the client are
made only after the client has been informed of relevant
considerations.” But where joint clients, having received
appropriate advice, determine to pursue diametrically opposed
strategies, either of which is consistent with law and the
lawyer’s ethical responsibilities, a conflict of interest
exists. In the circumstances of this inquiry, moreover, the
conflict is not consentable, because the firm cannot simultaneously
pursue both clients’ objectives – a disinterested lawyer
could not conclude that the lawyer could competently represent the
interests of each client. Therefore, the firm cannot continue to
represent both clients in the matter.
- Whether the firm can continue to represent either X
or Y in the litigation is governed largely by DR 5-108(A), which
provides:
A lawyer who has represented a client in a matter
shall not, without the consent of the former client after full
disclosure: (1) Thereafter represent another
person in the same or a substantially related matter in which that
person’s interests are materially adverse to the interests of the
former client. (2) Use any confidences or secrets
of the former client except as permitted by section DR 4-101(C), or when
the confidence or secret has become generally known.
- Here, the firm’s continued representation of X
in this matter, who wishes to pursue the counterclaim aggressively,
could be materially adverse to the interests of Y, who prefers that
nothing be done, apparently in an effort not to arouse sleeping
dogs. Similarly, the firm’s continued representation of Y
may be materially adverse to X, if achieving Y’s goal (no action)
would be expected to require the lawyer to take action inconsistent with
X’s goal of vigorous prosecution of the counterclaim. In
either case, unless the clients validly consented in advance to
continuing representation of one of them in the event of a conflict
emerging, the firm needs to obtain the informed consent of the former
client after full disclosure. Insofar as necessary to avoid
misunderstanding, the firm should explain that the former client is
under no obligation to consent to allow the firm to represent the other
client and “that no negative consequences will attend [a] denial
of consent.”[4]
- Likewise, while there generally are no confidences
between co-clients,[5] to the extent that the
lawyer has acquired, under an understanding of confidentiality,
information not known to the proposed continuing client, “[t]he
former client must also be informed that she has the right to insist
that all of her confidences and secrets or specific confidences and
secrets be held inviolate.”[6] In that
circumstance, the firm must also consider whether it can competently
represent the interest of the continuing client while keeping the former
client’s confidence. Any restriction placed on the firm by
the former client to preserve certain information protected as a
confidence or secret may present a compromising influence that may
prevent the firm from representing the current client competently and
zealously.[7]
- In withdrawing from representing X and/or Y, the firm
must comply with the court’s procedures pertaining to
withdrawal.[8] In seeking to withdraw, the firm must take steps
“to the extent reasonably practicable to avoid foreseeable
prejudice to the rights of the client[s], including giving due notice to
the client[s], allowing time for employment of other counsel, delivering
to the client[s] all papers and property to which the client[s are]
entitled and complying with applicable laws and rules.”[9]
CONCLUSION
- A lawyer cannot continue to represent joint clients
in litigation if their strategies significantly diverge. The
lawyer can continue to represent one of the joint clients in the
litigation if the former client provides informed consent to the future
representation and the lawyer can represent the current client zealously
and competently. The lawyer is required to comply with the
court’s procedures for withdrawal.
(3-08)
[3]
EC 7-9 adds, “In the exercise of the lawyer’s professional
judgment on those decisions which are for the lawyer’s
determination in the handling of a legal matter, a lawyer should always
act in a manner consistent with the best interests of the
client.”
[4]
N.Y. County 716 (1996).
[5]
See, e.g., Allegaert v.
Perot, 565 F.2d 246, 250 (2d Cir. 1977) (“Neither Walston nor
anyone connected with it could have thought . . . that any information
given to the law firms conceivably would have been held confidential
from the primary clients of the firms.”); Moritz v. Medical
Protective Co., 428 F. Supp. 865, 872 (W.D. Wis. 1977)
(“communications by either client to [the lawyer] concerning the
subject matter of the . . . suit . . .
were not privileged as to the other client and were not confidences. . .
. Nor were they ‘secrets’ within the meaning of Canon
4.”); Restatement (Third) of the Law Governing Lawyers § 60
cmt. l (2000) (“Sharing of
information among the co-clients with respect to the matter involved in
the representation is normal and typically expected.”).
[6]
N.Y. County 716 (1996); see N. Y. State
555 (1984) (lawyer may not disclose to one joint client confidential
communications from the other joint client relating to the subject
matter of the representation, absent express or implied
consent).
Attorneys who represent joint clients in the same matter should, in
advance of the joint representation, reach an agreement with the joint
clients as to the sharing of confidential information. See
Restatement (Third) of the Law Governing Lawyers § 60, cmt l (2000) (“Co-clients . . . may explicitly
agree to share information. Co-clients can also explicitly
agree that the lawyer is not to share certain information, such as
described categories of proprietary, financial, or similar information
with one or more other co-clients . . . .”); ABA Model Rule 1.7
cmt. 31 (“The lawyer should, at the outset of the common
representation ... , advise each client that information will be shared
and that the lawyer will have to withdraw if one client decides that
some matter material to the representation should be kept from the
other.”). As recently noted by the ABA’s Committeee on
Ethics and Professionalism, “[c]larifying expectations at the
onset of the representation is always preferable in these situations,
and may affect the ability of the lawyer to continue representing one or
the other client after difficulties arise.” ABA Formal
Opinion 08-450, n.21.
[7]
See ABA Formal Opinion 08-450, at 1 (“a conflict of
interest arises when the lawyer recognizes the necessity of revealing
confidential information relating to one client in order effectively to
carry out the representation of another”).
[8]
DR 2-110(A)(1) (“If permission for withdrawal from employment is
required by the rules of a tribunal, a lawyer shall not withdraw from
employment in a proceeding before that tribunal without its
permission.”); see, e.g., CPLR
321(b) (change or withdrawal of attorney).
Related Files
Joint representation; conflict of interest; withdrawal (Adobe PDF File)
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