Conflicts of Interest Flashcards
Enforcement of Conflict Rules
Conflicts of interest may result in both:
- Litigation sanctions – (disqualification)
- Disciplinary sanctions – (Censure, Disbarment)
Conflicts of Interest >
Lawyers Personal Interests
Lawyer as a Witness
Acquiring Interest in Client’s Property
Financial Assitance to Client
Business Transactions w/ Client
(+ Story Rights)
LAWYER’S PERSONAL INTERESTS (Personal disqualification; NOT CONTAGIOUS)—a lawyer MUST NOT REPRESENT A CLIENT if the representation may be materially limited by the lawyer’s personal interest –UNLESS
- Lawyer reasonably believes that she can provide competent and diligent representation to the affected client
- Representation is not prohibited by law, and
- Client gives informed consent, confirmed in writing
RELATED Lawyers– (NOT CONTAGIOUS)
- CAN be waived by informed consent of each client;
SEXUAL relations with client– (NOT CONTAGIOUS)
- Exception—pre-existing relationship
- CANNOT BE WAIVED by informed consent of client
- If the client is an organization, the lawyer for the organization is prohibited from having a sexual relationship with a constituent of the organization who supervises, directs, or regularly consults with the lawyer with regard to the organization’s legal matters.
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Lawyer as WITNESS—a lawyer may not represent a client if the lawyer is likely to be a necessary witness UNLESS
- Testimony relates to an uncontested issue
- Testimony relates to the value of the legal services rendered in the case, or
- Disqualification of the lawyer would work a substantial hardship on the client
Other lawyers in firm as Witness
- A lawyer is generally permitted to act as an advocate in a trial in which another lawyer in the lawyer’s firm is likely to be called as a necessary witness.
- UNLESS the conflict-of-interest rules otherwise preclude the attorney from doing so, in which case informed consent, confirmed in writing is required
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Acquiring Proprietary interest in subject matter of litigation—PROHIBITED.
- Exception –Lawyer acquires a LIEN granted by law to secure payment of a fee
FINANCIAL ASSISTANCE to client— PROHIBITED
- UNLESS Court Costs and litigation expenses
- Although the client usually remains ultimately liable for them, repayment may be made contingent on the outcome of the case.
- Repayment of Court Costs need not be required for indigent clients.
Indigent Client— Lawyer may give the indigent client modest gifts for food, rent, transportation, medicine, or other BASIC living expenses. (not cigarrettes)
The lawyer MAY NOT:
- (i) promise or imply the availability of such gifts PRIOR to retention,
- (ii) seek or accept REIMBURSEMENT from the client or anyone affiliated with the client, or
- (iii) PUBLICIZE a willingness to provide such gifts to prospective clients.
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Entering into BUSINESS TRANSACTION with client—a lawyer must not enter into a business transaction with a client or knowingly acquire any interest adverse to a client UNLESS
- (i) Terms are fair and reasonable to client,
- (ii) the client is advised in writing of the desirability of seeking independent counsel and given an opportunity to do so, and
- (iii) the client consents in writing after full written disclosure of terms and lawyer’s role
RULE DOES NOT APPLY TO
- Standard commercial transactions for products or services the client generally markets to others
STORY RIGHTS
- a lawyer is prohibited from negotiating or acquiring such rights prior to the conclusion of the representation
Soliciting gifts / Preparing instruments— Lawyer is PROHIBITED from Soliciting OR Preparing an instrument that gives a substantial gift to the LAWYER or a person related to the lawyer
- UNLESS the Lawyer is RELATED TO CLIENT
UNSOLICITED GIFTS – Lawyer MAY ACCEPT if the transaction is fair
- Simple gift – such as a present given at a holiday or as a token of appreciation is permitted.
- Substantial gift – the rule does not prohibit the lawyer from accepting it, but such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent.
Promise to Limit Malpractice Recovery
- A lawyer is prohibited from making an agreement PROSPECTIVELY limiting malpractice liability to a client before malpractice occurs, UNLESS the client is represented by an independent lawyer in making the agreement
Conflict of Interests Among Clients >
PROSPECTIVE clients
CURRENT Clients
Conflicts involving PROSPECTIVE clients—a lawyer cannot represent a client with interests materially adverse to a prospective client’s in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person
Exception
- BOTH affected and prospective clients give informed consent, confirmed in writing
- Contagious UNLESS properly screened. (lawyer limited the information acquired, was timely screened, and the prospective client was promptly given written notice)
Solicited Information only
- Conflict exists if the attorney SOLICITS information from a prospective client
- An unsolicited communication from a prospective client does not trigger this conflict.
CURRENT Clients In general, a lawyer must not represent a client if doing involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
- Representation of one client would be DIECTLY ADVERSE to the interests of another client; or
- There is a significant risk that the representation of the client will be MATERIALLY LIMITED by the lawyer’s personal interests or responsibilities to another client, a former client, or a third person.
A lawyer MAY REPRESENT a client IN SPITE of a concurrent conflict of interest if:
- The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
- The representation is not prohibited by law;
- The representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
- Each affected client gives informed CONSENT, confirmed in WRITING.
1) DIRECTLY ADVERSE – A lawyer must not represent a client if doing so would be directly adverse to the interests of another client UNLESS, among other things, EACH affected CLIENT gives informed CONSENT, confirmed in WRITING
- Same Lawsuit (C v C) – NEVER under any circumstances
- Unrelated Matters – Need EACH affected CLIENT to give informed CONSENT, confirmed in WRITING, or else a lawyer also may not act as an advocate in one matter against a person the lawyer represents in some other matter, even if the matters are wholly unrelated.
- Cross-examining a client who appears as a witness in an unrelated lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit. REQUIRES CONSENT of the EACH CLIENT.
- Only economically adverse – NO Conflict – competing economic enterprises (two baseball teams, for example) in unrelated litigation, does NOT ordinarily constitute a conflict of interest and thus does NOT REQUIRE consent of the respective clients.
2) Material limitation—Even if clients are not directly adverse, a lawyer cannot represent a client if there is a significant risk that the representation will be materially limited as a result of the lawyer’s other responsibilities or interests. Requires CONSENT.
- The mere possibility of subsequent harm, though, does not require disclosure and consent. The lawyer must evaluate the likelihood that a difference in interests will occur and, if so, whether it will materially interfere with the lawyer’s independent professional judgment in considering alternatives that reasonably should be pursued on behalf of the client. If so, Requires CONSENT.
- Example: a lawyer is asked to represent several persons seeking to form a partnership, the lawyer is likely to be materially limited in her ability to recommend or advocate all possible positions that each partner might take because of the lawyer’s duty of loyalty to the others.
Conflict of Interests Among Clients >
FORMER and Current Client
FORMER Clients—The representation of a current client is PROHIBITED if it is
- MATERIALLY ADVERSE to a former client’s interest
- in the SAME or a SUBSTANTIALLY RELATED MATTER
UNLESS the lawyer obtains the former client’s informed CONSENT, confirmed in WRITING.
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subject to CONSENT!
Lawyer switches private firms
- Limitation on LAWYER—Can’t represent a new client with materially adverse interests in substantially related matter to one of the old firm’s client matter (if laywer acquired material confidential information about old client)
- Limitation on FORMER FIRM—Firm’s lawyers cannot represent a person with interests materially adverse to those of a client represented by the formerly associated lawyer if any lawyer remaining in the firm has material confidential information about the same or substantially related matter
Former Government LAWYER
- Prior Matter as Gov. Lawyer (GOV. WRITTEN CONSENT) – Cannot represent a client in a matter in which the lawyer participated personally and substantially as a government lawyer, UNLESS the GOV’T AGENCY gives informed consent, confirmed in writing. (REGARDLESS of whether the new client’s interests are adverse to the government)
- Cannot represent a private client whose interests are adverse to a person about whom the lawyer acquired confidential information while working for the government
- Limitation on NEW FIRM (screen) – If a former government lawyer is disqualified from representation, no lawyer in the firm can represent a client in a matter in which the former government lawyer is disqualified unless the lawyer is timely SCREENED from participation in the matter and receives no fee from the matter, and written notice is promptly provided to the government agency
Current government lawyer
- General conflict rules apply – relating to current and former clients.
- Prior Matter in Private Practice (GOV. WRITTEN CONSENT) – In addition, the government lawyer is NOT PERMITTED to participate in a matter in which the lawyer participated personally and substantially while in private practice or non-governmental employment, UNLESS the appropriate GOVM’T AGENCY gives its informed, written CONSENT.
- Negotiation for private employment PROHIBTED – A current government lawyer is not generally permitted to negotiate for private employment with any person who is involved as a party or as lawyer for a party in a matter in which the lawyer is participating personally and substantially. There is an exception that allows for a lawyer serving as a law clerk to negotiate for private employment, but only after the law clerk has notified the judge or other adjudicative officer for whom the clerk works.
Imputed Disqualification
Contagious conflicts – If a lawyer is in conflict with representation of a client, NO LAWYER IN THE FIRM may represent the client. UNLESS
- Client CONSENTS, informed, and confirmed in writing, OR
- The conflict is BASED ON the lawyer’s PERSONAL interest. (e.g., related OC, sex with clients).
Lawyers who share office facilities
- The test for determining if lawyers who share office facilities are considered associated for purposes of imputation of conflicts of interest is whether there are reasonably adequate measures to protect confidential client information so that it will not be available to other lawyers in the shared office.
Incoming Lawyer— Issues may arise when a new lawyer is contagious with a conflict
- The incoming lawyer will not give the law firm a conflict as long as there is instant screening
Screening
- NO INFORMATION is passed between the incoming lawyer and the firm;
- The lawyer is apportioned NO PART of the fee; and
- The affected client must be afforded NOTICE, but consent is NOT required
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EXCEPTIONS to IMPUTED DISQUALIFICATIONS
- Lawyer’s conflict-of-interest is NOT IMPUTED IF:
Waiver
- Lawyer reasonably believes competent representation can be provided
- representation is not prohibited by law
- client is not asserting claim against another client in same proceeding and
- client gives informed consent to waiver, confirmed in writing
Nonlawyer employees – (eg, paralegal’s) conflict is not imputed if:
- firm screens nonlawyer employee from representation of its client
Lawyer changes firms – Lawyer’s conflict from previous firm is not imputed if new firm:
- screens lawyer from representation of current client & related fee
- gives former client written notice of conflict and
- provides former client with certification of compliance with MRPC
Personal interest – Conflict based on personal interest (eg, close familial or sexual relationship) is NOT IMPUTED IF:
- firm’s representation by other lawyers at the firm is not materially limited by conflict
CONFLICTS BASED ON LAWYER’S SERVICE AS THIRD-PARTY NEUTRAL
(judge or other adjudicative officer, law clerk, arbitrator, mediator or other third-party neutral)
GENERAL
- A lawyer may not represent anyone in connection with the SAME MATTER in which the lawyer participated PERSONALLY and SUBSTANTIALLY as a judge or other adjudicative officer, law clerk, arbitrator, mediator or other third-party neutral, unless ALL PARTIES to the proceeding give informed CONSENT, confirmed in WRITING.
Personal and substantial Participation
- Participation on the merits or in settlement discussions = YES.
- Incidental administrative responsibility that did not affect the merits of the case = NO
SAME matter
- Conflicts based on service as a third-party neutral apply ONLY to representation in connection with the same matter in which the lawyer participated as a judge, law clerk, or third-party neutral.
- The conflict does NOT arise with respect to substantially related matters to the matter in which the lawyer participated as a third-party neutral.
Exception for Partisan Arbitrators
- An arbitrator selected as a partisan of a party in a multi-member arbitration panel is not prohibited from subsequently representing such party.
Disqualification of Firm unless:
- (i) the disqualified lawyer is timely screened from any participation in the matter and gets no part of the fee; and
- (ii) written notice is promptly given to the parties and any appropriate tribunal to enable them to determine if the ethics rules have been met.
Negotiating for Employment
Government lawyers, agency lawyers, arbitrators, mediators, and third-party neutrals cannot negotiate for employment with a party if that party is involved in a matter in which the lawyer participates.
- Exception—Law Clerks can seek employment with parties before the court, provided they tell the judge.
Accepting Payment from Third Party
A lawyer cannot accept payment from a third party for representation of a client UNLESS:
(1) the client gives informed CONSENT
- informed consent—i.e., consents after receiving adequate information about the material risks of the proposed course of conduct and reasonably available alternatives
(2) there is NO INTERFERENCE with the lawyer’s PROFESSIONAL JUDGMENT or the CLIENT-LAWYER RELATIONSHIP, and
- Impermissible Interference– WORK control, INFORMATION control, SETTLEMENT control
(3) the lawyer PROTECTS CONFIDENTIAL INFORMATION relating to the representation of the client.
Organization as a Client
The lawyer represents the ORGANIZATION, not its constituents.
- Joint representation of organization and its constituents IS permissible.
Bad behavior of organization – If a lawyer KNOWS (actual knowledge) of a violation of law that may be imputed to the organization and likely to result in SUBSTANTIAL INJURY to the organization, the lawyer should take measures including referring the matter to the highest organizational authority (BOD)
- If the organization does not correct the matter, the lawyer MAY resign.
- “Noisy withdrawal” is allowed (confidential information disclosed)
