4. Conflicts of Interest

Question 1

Can a lawyer represent a client who will be directly advesrse to another current client?

Answer 1

No, a lawyer must not represent a client if the representation will be directly adverse to another current client, unless (i) the lawyer reasonably believes he can competently and diligently represent them both, and (ii) both clients provide informed consent, confirmed in writing.

Question 2

Does a direct adversity conflict exist when a lawyer represents one client in a matter adverse to another current client (who is being represented in unrelated matters)?

Answer 2

Yes, direct adversity exists when a lawyer represents one client in a matter adverse to another current client, even where the lawyer represents the clients in unrelated matters.

This is true in both litigation and transactional matters (e.g., representing the new client in the sale of his home to the current client).

Question 3

Can a lawyer represent two directly adverse clients in the same transactional matter?

Answer 3

Yes, the lawyer can represent both clients in the same transactional matter if the lawyer reasonably believes that she can competently and diligently represent each affected client despite the conflict, and each client gives informed consent confirmed in writing.

Note: A lawyer must never be on opposite sides of the same litigation (or other proceeding pending before a tribunal).

Question 4

Are unnamed members of a class ordinarily regarded as clients for the purposes of direct adversity?

Answer 4

No, unnamed class members ordinarily are NOT regarded as clients for purposes of the “direct adversity” conflicts rule.

Thus, a lawyer who represented a class can generally sue unnamed class members in an unrelated matter without obtaining their consent.

Question 5

When can a lawyer not take inconsistent positions in separate cases? When will it create a conflict?

Answer 5

Generally, a lawyer may take inconsistent legal positions in different tribunals at different times on behalf of different clients, and that on its own doesn’t create a conflict of interest. However, a conflict exists if there is a significant risk that a lawyer’s action on behalf of one client will materially limit the lawyer’s representation of another client in a different case: for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client.

Question 6

What is the rule for business transactions with clients?

Answer 6

A lawyer must not enter into a business transaction with a client unless:

(i) the transaction and terms under which the lawyer acquires the interest are fair and reasonable to the client;

(ii) the terms are fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client;

(iii) the client is advised in writing that they should seek the advice of independent legal counsel on the transaction (if they don’t already have counsel in the transaction), and is given a reasonable opportunity to do so; [However, it’s not required that the client actually seek advice from independent counsel] and

(iv) the client gives informed consent in a signed writing.

Question 7

When does the rule for business transactions and adverse financial interests do not apply?

Answer 7

The rule for business transactions and adverse financial interests does not apply to:

(i) an ordinary fee agreement between a lawyer and client, or

(ii) standard commercial transactions in which the lawyer buys goods or services that the client routinely markets to the public.

Question 8

Can a lawyer accept property (e.g., stocks) in lieu of money?

Answer 8

Sometimes….
* A lawyer must not take a proprietary interest in a cause of action or in the subject matter of litigation the lawyer is conducting for a client.
* However, in non-litigation matters, a lawyer may accept property, such as stocks, in lieu of money as long as the requirements for a business transaction are met.

Question 9

Can a lawyer receive substantial gifts from clients?

Answer 9

A lawyer must not solicit a substantial gift from a client or prepare an instrument giving the lawyer, or the lawyer’s relative, any substantial gift from a client except when the client is related to the donee.

Question 10

Can a lawyer ask her client to be made the executor of his estate?

Answer 10

The conflicts rule for gifts from clients doesn’t prohibit a lawyer from seeking to have herself or her colleague named as executor of an estate or counsel to the executor or to some other fee-paying position.

There may be a general conflict, though, if the lawyer’s interest in obtaining the appointment will materially limit the lawyer’s judgment in advising the client concerning the choice of an executor or other fiduciary. In that situation, the lawyer would need to get the client’s informed consent, confirmed in writing, and explain her financial interest as well as the availability of alternative candidates for the position.

Question 11

Can a lawyer provide clients financial assistance in connection with pending or contemplated legislation?

Answer 11

A lawyer must not provide financial assistance to a client in connection with pending or contemplated litigation. This includes gifts, loans, and even guaranteeing a third party’s loan to the client

Exceptions:
* First, a lawyer may advance court costs and other litigation expenses on any client’s behalf, and repayment may be contingent on the outcome of the case.
* Second, a lawyer may simply pay the court costs and litigation expenses for an indigent client, without any provision for repayment, so it would be proper to pay an indigent client’s expert witness fees outright.
* Third, a lawyer who is representing an indigent client pro bono can provide the client with modest gifts for basic living expenses.

Question 12

Can a lawyer acquire literary/media rights from a client?

Answer 12

A lawyer must not acquire literary or media rights to a story based in substantial part on information relating to the lawyer’s representation of a client (e.g., a lawyer representing a client in a pending murder trial must not acquire rights to a book about the case).

However, a lawyer may acquire these rights after the client’s legal matter is entirely completed, appeals and all.

Furthermore, the rule doesn’t apply to literary or media rights that aren’t substantially based on information relating to the representation. (note: the laywer must meet requirements for business transactions with a client)

Question 13

Can a lawyer represent a client when the representation is paid for by a third party?

Answer 13

A lawyer may accept compensation from a third person for representing a client, as long as:

(i) the client gives informed consent,

(ii) the third person doesn’t interfere with the lawyer’s independence or the representation of the client, and

(iii) the arrangement doesn’t compromise the client’s confidential information.

Question 14

Is a lawyer subject to discipline for engaging in a sexual relationship with a client?

Answer 14

Yes, unless the relationship existed prior to the representation

Note: Even if the exception applies, there still may be a general “material limitation” conflict if the relationship will affect the representation.

Question 15

Under what circumstances must a client provide informed consent in a SIGNED writing?

Answer 15

• business transactions with a client
• aggregate settlement agreements

Question 16

Can a lawyer represent a client whose interests are materially adverse to those of a former client?

Answer 16

No, a lawyer must not represent one client whose interests are materially adverse to those of a former client in a matter that is** substantially related** to a matter in which the lawyer represented the former client, unless the former client gives informed consent, confirmed in writing.

Matters are “substantially related” if: (i) they involve the same transaction or legal dispute, or (ii) there is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the new client’s position.

Question 17

When is a matter “substantially related”?

Answer 17

Matters are “substantially related” if: (i) they involve the same transaction or legal dispute, or (ii) there is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the new client’s position.

Question 18

May a lawyer represent a client whose interests are materially adverse to a former client for whom the lawyer routinely handled a specific type of problem?

Answer 18

Yes, if a lawyer routinely handled a type of problem for a former client, the lawyer may later oppose that former client in a factually distinct problem of the same general type.

Question 19

May a lawyer work on a case in which the lawyer’s former firm represented a client in the matter?

Answer 19

A lawyer whose firm formerly represented a client in a matter and who acquired protected confidential information or information pertaining to the representation may not thereafter represent another person in the same or a substantially related matter if that person’s interests are materially adverse to those of the former client, unless the former client gives informed consent, confirmed in writing.

However, there is no conflict if the lawyer didn’t not acquire confidential information while at the former firm.

Note: If a lawyer who is disqualified from representing a client joins a new firm, the new firm may be disqualified as well unless the lawyer is properly screened. Proper screening means the disqualified lawyer doesn’t work on the case, discuss it with those who do, or have access to case files. It also requires that the disqualified lawyer doesn’t share fees from the matter, and the former client is given notice (along with periodic certifications of compliance with the screening procedures). Alternatively, the former client can give informed consent, confirmed in writing.

Question 20

What is the rule regarding conflicts arising from consultations with prospective clients?

Answer 20

A lawyer who obtains confidential information during a consultation with a prospective client must not later represent a different person in the same or a substantially related matter if the confidential information could significantly harm the prospective client in the matter, unless the prospective client gives informed consent, confirmed in writing.

Question 21

What is the rule regarding conflicts arising from government lawyers entering private practice?

Answer 21

A lawyer who leaves government service and enters private practice must not represent a private client in a matter in which the lawyer participated personally and substantially while in government service, unless the government agency gives informed consent, confirmed in writing.

“Matter” = a specific set of facts involving some specific parties.

Note: This conflict rule applies even where the lawyer is not taking a position adverse to the government agency.

Question 22

What is the rule regarding use of “confidential government information”? What information does that include?

Answer 22

Rule: Except when expressly permitted by law, a government lawyer who receives confidential government information about a person must not later represent a private client whose interests are adverse to that person, when the information could be used to the material disadvantage of that person.

The rule covers only information actually received by the government lawyer, not information that could be fictionally imputed to the lawyer.

**“Confidential government information” ** means information that is gained under government authority and which the government is prohibited from revealing, or has a privilege not to reveal, and which is not otherwise available to the public. If information is available to the public through a channel like the Freedom of Information Act, it isn’t considered confidential government information.

Question 23

May a lawyer represent a private client in a matter in which the lawyer has participated while serving as a judge/adjudicative officer/etc.?

Answer 23

A lawyer must not represent a private client in a matter in which the lawyer has earlier participated personally and substantially while serving as a judge or other adjudicative officer (e.g., a referee or special master) or as a law clerk to such person, or as an arbitrator, mediator, or other third-party neutral, unless all parties to the proceedings give informed consent, confirmed in writing

Note: An arbitrator who is selected as a partisan of a party in a multi-member arbitration panel may subsequently represent that party (not expected to be neutral)