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LEGAL ETHICS OF MULTIPLE PARTY REPRESENTATION
KEITH SELLENOFFICE OF LAWYER REGULATION
AGENDA
• ESSENTIAL CONSIDERATIONS– MODEL RULE 1.7– ARE YOUR MOTIVATIONS ACCEPTABLE– CAN YOU FULFILL YOUR DUTIES TO EACH CLIENT– ANTICIPATING CONFLICTS OF INTEREST– CONFLICTS IN A LITIGATION SETTING– CONFLICTS IN A NON-LITIGATION SETTING
AGENDA
• CONCURRENTLY REPRESENTING CLIENTS WITH CONFLICTING INTERESTS– SITUATIONAL ADVANTAGES AND DANGERS– WHEN IS IT PERMISSIBLE? PROHIBITED?– ADVANCE WAIVERS: ENFORCEABILITY AND
DRAFTING TIPS– MODEL RULE 2.2: LAWYER AS INTERMEDIARY
MODEL RULE 1.7
• Four-Step Method for Resolving Conflict of Interest Problems [Rule 1.7, Comment 2]– Clearly identify the client or clients– Determine whether a conflict of interest exists– Decide whether the representation may be
undertaken despite the existence of a conflict– If so, consult with affected clients and obtain
their informed consent confirmed in writing
STEP 1: IDENTIFY CLIENT(S)• Not a matter of the Model Rules, but of Agency
Law• Legal Standard: Restatement of the Law
Governing Lawyers, §14• A person manifests intent to the lawyer that
the lawyer provide legal services, and• The lawyer manifests consent to do so, or• The lawyer fails to manifest lack of consent and
reasonably should know the person reasonably relies on the lawyer to provide services
STEP 1: IDENTIFY CLIENT(S)• Organizations and Constituencies: Rule 1.13– Organization, acting through duly authorized
constituents– Rule 1.7 applies– Lawyer may have two roles: lawyer and constituent
• Organizations and Affiliates– Restatement of the Law Governing Lawyers, §121,
comment d.– Lawyer for a corporation is not normally also
considered to be the lawyer for an affiliate– Sometimes, however, a benefit or loss to an affiliate
would have a direct, adverse impact on the corporate client
STEP 1: IDENTIFY CLIENT(S)• Insurers– Insurer, Insured, or both– State Law or Ethics Rules govern
• Governmental Entities• Prospective Clients– Rule 1.18– Duties of confidentiality and loyalty are owed to
a prospective client– These duties may materially limit representation
of a current client
ANTICIPATING CONFLICTS• Conflicts may exist before undertaking new
representation [Comment 3]– Adopt reasonable screening measures,
considering the size of firm, type of practice, and litigation and non-litigation matters
– Identify the persons and issues involved before accepting the representation
• Conflicts may arise during representation [Comments 4 & 5]– Changes in corporate affiliations– Addition or realignment of parties in litigation
STEP 2: DETERMINE CONFLICTS• Standard [Rule 1.7(a)(1)]– Representation of one client– Will be directly adverse to another client
• Examples [Comments 6 & 7]– Advocating for one client against another client,
even in unrelated matters– Cross-examining a client who appears as a witness
adverse to a represented client– Cf: Representing clients with competing economic
enterprises in unrelated litigation– Representing a seller in business negotiations with
a buyer who is represented in an unrelated matter
STEP 2: DETERMINE CONFLICTS• Standard [Rule 1.7(a)(2)] – Significant Risk– That representation of one or more clients– Will be materially limited– By the lawyer’s responsibilities to another client, a
former client, a third person, a personal interest of the lawyer
• Responsibilities that may be materially limited– Loyalty– Confidentiality– Communication– Independent Advice
STEP 2: DETERMINE CONFLICTS• Examples of Material Limitation Conflicts [Comments
8 through 13]• Forming a joint venture• Former clients, Fiduciary roles [Trustee, Executor,
Corporate Director]• Personal interests– Lawyer’s conduct in question– Possible employment with opponent– Related business interests
• Personal relationships• Sexual relationships• Person paying fees on behalf of a client
STEP 2: DETERMINE CONFLICTS• Conflicts in Litigation [Comments 23 & 25]• Representing opposing parties in the same
litigation • Representing co-plaintiffs or co-defendants– Discrepancies in parties’ testimony– Incompatibility of positions– Different possibilities of settlement or liability– Class representation: Unnamed members not
normally considered under 1.7(a)(1)
STEP 2: DETERMINE CONFLICTS• Conflicts in Litigation [Comment 24]• Inconsistent legal positions ordinarily ok, if– Different tribunals– Different times– Different clients
• Material limitation conflict if– Decision for one client– Will create a precedent– Weakening a position of another client
STEP 2: DETERMINE CONFLICTS
• Non-Litigation Conflicts [Comment 26]• Material Limitation Considerations–Duration and intimacy of lawyer’s
relationship with the client or clients involved– Functions being performed by the lawyer– Likelihood that disagreements will arise–The likely prejudice that would result
STEP 2: DETERMINE CONFLICTS• Non-Litigation Conflicts [Comments 7 & 8]• Direct Adversity: May not represent both
Buyer & Seller in a transaction• Material Limitation: Formation of Joint
Ventures, Consider:– The likelihood that a difference in interests will
arise, and– Whether a difference would materially interfere
with the lawyer’s professional judgment
STEP 2: DETERMINE CONFLICTS• Non-Litigation Conflicts• Material Limitations [Comments 27 & 28]– Preparing wills for family members– Confusion regarding the identity of the client:
estate or personal representative– Negotiations involving clients– Antagonistic versus generally aligned interests– Organizing a business for clients– Arranging a property distribution in settlement of
an estate
STEP 2: DETERMINE CONFLICTS• Non-Litigation Conflicts• Organizations and Affiliates [Comment 34]– Client does not ordinarily include parent or
subsidiary– Expectations of the client may prevail
• Material limitations may still exist– Potential Adverse Effects– Protecting Confidences and Privileges
STEP 2: DETERMINE CONFLICTS• Non-Litigation Conflicts -Organizations• Lawyer also a Constituent [Comment 35]– Advice on actions of the constituency, e.g. board of
directors– Advice regarding applicability of attorney-client
privilege• Considerations– Frequency of situations– Intensity of conflict– Effect of resignation from board– Possibility of obtaining other counsel– Recusal from one or other role
STEP 3: DECIDE WHETHER REPRESENTATION IS PERMISSIBLE
• Are your motivations appropriate• Standard: Rule 1.7(b)(1) through (4)• May provide competent and diligent
representation to each affected client• Representation is not prohibited by law• No assertion of a claim by one client against
another client in the same litigation• Each client gives informed consent,
confirmed in writing
STEP 3: DECIDE WHETHER REPRESENTATION IS PERMISSIBLE
• May you provide competent and diligent representation to each affected client?
• Loyalty Considerations [Comment 6]– Effects of advocating against a client– Feelings of betrayal–Potential damage to attorney-client
relationship• Consequences of these effects
STEP 3: DECIDE WHETHER REPRESENTATION IS PERMISSIBLE
• May you provide competent and diligent representation to each affected client?
• Confidentiality & Communication Considerations [Comments 6, 30, 31]– Cross-examining a client– Attorney-client privilege may not be protected– Duty of confidentiality may conflict with duty to use
information to pursue interests of the other client– Requests by one client in common representation
not to disclose relevant information to the other client
STEP 3: DECIDE WHETHER REPRESENTATION IS PERMISSIBLE
• May you provide competent and diligent representation to each affected client?
• Independent Advice [Comments 1 & 8]– Independent judgment essential to attorney-
client relationship– The lawyer must be able to consider,
recommend, and carry out all possible courses of action that would benefit each client
– Cannot foreclose alternatives that would otherwise be available
STEP 4: OBTAIN INFORMED CONSENT
• Informed Consent Definition: Rule 1.0(e)• Agreement by a person• To a proposed course of conduct• After the lawyer has communicated• Adequate information and explanation• About the material risks• And the reasonably available alternatives• Each client must consent [Comment 18]
STEP 4: OBTAIN INFORMED CONSENT• Inform each of the implications of common
representation• Disclosures necessary for informed consent may
require the other client’s consent [Comment 19]• Disclose the affects of joint representation on loyalty• Disclose the affects on confidentiality [Comment 31]
– Right to be informed– Use of information for benefit of each– Advice that all relevant information will be shared– Withdrawal may be required
• Advise that the attorney-client privilege may not attach [Comment 30]
STEP 4: OBTAIN INFORMED CONSENT
• Document consent in writing • Executed by or provided to client–WI requires client signature
• At the time or within a reasonable time after consent
• The writing serves to document informed consent in the event of subsequent disputes
CONCURRENTLY REPRESENTING CLIENTS WITH CONFLICTING INTERESTS
• SITUATIONAL ADVANTAGES AND DANGERS
• WHEN IS IT PERMISSIBLE? PROHIBITED?• ADVANCE WAIVERS: ENFORCEABILITY
AND DRAFTING TIPS• MODEL RULE 2.2: LAWYER AS
INTERMEDIARY
SITUATIONAL ADVANTAGES
• Avoid costs of separate representations [Comment 19]
• Potential to resolve intra-client disputes, without the need for separate representation, by developing mutual interests [Comment 28]
SITUATIONAL DANGERS• Inability to keep information confidential or to
preserve the attorney-client privilege [Comment 19, Comment 30]
• The potential that consent will be revoked by one client [Comment 21]
• Potential that the resolution of intra-client disputes will later fail [Comment 28]
• Potential that joint representation will fail, resulting in additional cost, embarrassment, and recrimination [Comment 29]
• Lawyer will be forced to withdraw from representing both clients [Comment 29]
WHEN PERMISSIBLE? PROHIBITED?
• Rule 1.7(b)(1) through (4)• May provide competent and diligent
representation to each affected client• Representation not prohibited by law• No assertion of a claim by one client against
another client in the same litigation• Each client gives informed consent,
confirmed in writing
WHEN PERMISSIBLE? PROHIBITED?• Providing competent and diligent representation • Centra, Inc. v. Estrin, 538 F.3d 402 (6th Cir. 2008)
– Lawyer’s firm represented Centra in a project to build a bridge connecting the Cities of Detroit and Windsor
– Lawyer represented the City of Windsor, which was opposed to the building of the bridge
– Centra sued the lawyer for breach of contract, breach of fiduciary duties, and malpractice
– District Court found implied consent because Centra knew of the lawyer’s adverse representation
– Court of Appeals reversed: Conflict was not consentable– Reasonable lawyer would not conclude it could represent
both clients– Clients’ interests were fundamentally antagonistic
WHEN PERMISSIBLE? PROHIBITED?
• The representation is not prohibited by law [Comment 16]
• Some states prohibit joint representation of defendants in a capital case
• Some representations by former government officials are prohibited by law
• Some states do not allow a government entity to consent to a conflict of interest
WHEN PERMISSIBLE? PROHIBITED?
• No assertion of a claim by one client against another client in the same litigation
• Ex Parte Osbon, 888 So.2d 1236 (Ala. 2004)– Divorce Case– Lawyer subpoenaed opponent’s mental health
records– Lawyer’s partner responded on behalf of mental
health agency– Conflict was not consentable– Lawyer was disqualified from representation
WHEN PERMISSIBLE? PROHIBITED?• No assertion of a claim by one client against
another client in the same litigation • Vinson v. Vinson 588 S.E.2d 392 (Va. Ct. App.
2003)– Lawyer’s fee agreement said he represented both
husband and wife in a divorce– Husband moved to set aside an MSA favorable to
the wife and to disqualify the lawyer– Lawyer represented wife on the motions– Court affirmed sanctions for costs against the
lawyer
WHEN PERMISSIBLE? PROHIBITED?• Each client gives informed consent, confirmed in
writing [Centra, Inc. v. Estrin, 538 F.3d 402 (6th Cir. 2008)]
• District Court found implied consent• Court of Appeals reversed • Knowing Estrin represented Windsor was
insufficient information • A lawyer has a duty of full disclosure• Full disclosure requires communication of the
nature of the conflict, and an understanding of the reasons why it may be desirable for each to have independent counsel
WHEN PERMISSIBLE? PROHIBITED?• Each client gives informed consent• Iowa Disciplinary Board v. Clauss, 711 N.W.2d
1 (2006)– Lawyer represented both creditor and debtor– Both consented with a three sentence waiver– Purpose was to pursue debtor’s unrelated claims– Lawyer recovered substantial funds for the
debtor and received his fees– Lawyer did not provide any funds to the creditor– Court found the consent insufficient
WHEN PERMISSIBLE? PROHIBITED?• Specific Circumstances• Not permissible when not possible to make
the disclosure necessary to obtain informed consent [Comment 19]
• May be permissible to take inconsistent legal positions with informed consent [Comment 24]
• Not permissible in negotiations when interests are fundamentally antagonistic [Comment 28]
WHEN PERMISSIBLE? PROHIBITED?• Specific Circumstances• May be permissible when interests in
negotiations are generally aligned [Comment 28]
• Not permissible where one client asks the lawyer not to disclose relevant information to the other [Comment 31]
• May be permissible if clients agree in advance the lawyer will keep certain information confidential [Comment 31]
ADVANCE WAIVERS• Client must be informed of the reasonably foreseeable
ways the conflict could have adverse effects• Client must understand the material risks that the
waiver entails• The more comprehensive the waiver, the more likely it
is effective• The more experienced and sophisticated the client, the
more likely the waiver is effective• Independent representation regarding the waiver is
helpful• Advanced consent is ineffective when a non-
consentable conflict arises
ADEQUATE ADVANCE WAIVER• Visa v. First Data, 241 F.Supp. 2d 1100 (N.D. Cal.,
2003)• Defendant First Data moved to disqualify the
firm representing Visa on grounds that firm also represented First Data in other matters
• When First Data sought to retain the firm, the firm required a prospective waiver to allow the firm to represent Visa in any future dispute
• Visa had been a long standing client of the firm
ADEQUATE ADVANCE WAIVER• The court upheld the waiver• The waiver identified the future adverse client• The waiver informed First Data that the
representation could include litigation• Adverse representation would be permitted only
where the firm did not possess confidential information of First Data that related to the transaction
• The firm would implement a screen, and did so
INADEQUATE ADVANCE WAIVER• Worldspan, L.P. v The Sabre Group, Inc, 5 F.Supp. 2d
1356 (N.D. Ga., 1998)• Firm began representing Worldspan in 1992 and
continued to do so• Firm obtained a prospective waiver in 1992• Worldspan consented to prospective representation
of adverse clients– If unrelated to work done for plaintiff– If confidential information is not used to disadvantage of
plaintiff
• Firm informed plaintiff of potential adverse clients at time of waiver
INADEQUATE ADVANCE WAIVER• Court found the prospective waiver insufficient and
disqualified the firm from representing The Sabre Group
• The passage of time required informed consent to be exceedingly explicit
• Current litigation [1998] involved directly adverse litigation, which the waiver did not disclose
• Current litigation involved a client the firm was not representing at the time of consent
LAWYER AS INTERMEDIARY
• Model Rule 2.2 was deleted• Rule 1.7 applies• Multiple Parties in Negotiation [Comment 28]• May not represent parties with fundamentally
antagonistic interests• May be permissible with informed consent where
clients are generally aligned• May be permissible with informed consent to
establish or adjust a relationship between clients on an amicable and mutually advantageous basis
LAWYER AS INTERMEDIARY
• Comments 32 & 33• Lawyer must clarify the non-partisan role and
greater responsibility of the clients• Lawyer must disclose any limitations on the
scope of the representation required by the joint representation
• Each client is entitled to loyal and diligent representation