LEGAL ETHICS OF MULTIPLE
PARTY REPRESENTATION
KEITH SELLEN
OFFICE 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 attorneyclient 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 nonconsentable 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