Conflicts of Interest Flashcards
Imputation of Conflicts of Interest
Generally, when a lawyer can’t take on a matter because of a conflict, the other lawyers in their firm also cannot. All conflicts are generally imputable unless specifically noted.
Exceptions: Conflict is uniquely personal to DQ’d lawyer and wouldn’t materially limit client’s representation by other lawyers in the firm; screening and notice; client waives imputed conflict.
Direct Adversity COI
Generally, can’t represent a client if they will be directly adverse to another client represented by the lawyer, whether in the same or separate matter. Mere economic adversity, however, isn’t enough.
CA: Lawyer retained by insurance company to represent the insured also represents the insurance company. Lawyer can’t file direct action against same insurer in unrelated case without their consent. By statute, no duty of loyalty to insurer when their interest in each matter is only as an indemnity provider and not as a direct party.
Material Limitation COI
Generally, cannot represent a client if there’s a significant risk that the representation will be materially limited by the lawyer’s own interest or by the lawyer’s responsibilities to another client, former client, or third party.
CA: Even when a significant risk of material limitation isn’t present, the following always require written disclosure to the client: (1) where lawyer/firm has a legal, business, financial, personal, or professional relationship with, or responsibility to, a party or witness in the client’s matter; and (2) where the lawyer/firm is the immediate family of, lives with, is an intimate personal relationship with, or is a client of the form of another party’s attorney in the client’s matter. If the relationship creates a significant risk of material limitation, informed written consent is required.
Resolving Direct Adversity and Material Limitation Conflicts
May still take the representation if:
(1) Lawyer reasonably believes they can competently and diligently represent the client despite the conflict (objective standard of “reasonably prudent and competent lawyer”)
(2) Representation isn’t prohibited by law
(3) Representation doesn’t involve asserting a claim by one client against another represented by the same lawyer in the same proceeding (NEVER consentable); and
(4) Each affected client gives informed consent confirmed in writing. [CA requires informed written consent]
Business Transactions with Clients [FDOC]
Can’t enter into a business transaction with a client, or knowingly acquire ownership, possessory, security, or proprietary interest adverse to client unless:
(1) Terms are fair to client;
(2) Terms and lawyer’s role in the transaction are fully disclosed to client in a writing the client can reasonably understand;
(3) Client advised in writing to seek independent advice from outside attorney being agreeing; and
(4) Client gives informed consent in signed writing.
Gifts from Clients
Can’t solicit substantial gift from client for attorney or attorney’s relative, or prepare an instrument on behalf of a client giving a substantial gift to attorney or attorney’s relative. Rule doesn’t apply if the client is related to the gift recipient.
CA: May prepare instrument if client is advised by independent attorney who provided certificate of independent review.
Financial Assistance to Clients
Cannot provide financial assistance to client for pending/contemplated litigation except:
(1) May advance court costs/litigation expenses and repayment can be contingent on outcome;
(2) If client is indigent, may pay court costs/expenses outright;
(3) If client is indigent and pro bono, may give modest gifts for basic living expenses but can’t promise/imply such gifts, seek reimbursement, or advertise/publicize such gifts.
CA: Applies to all situations, not just litigation. Allows payment of any expenses incurred in promoting/protecting client interests. Prohibits “buying” potential clients with promises to pay debts. With client consent, attorney may agree/pay clients expenses to third party from funds collected for client from representation.
Aggregate Settlements
Can’t participate in making an aggregate settlement agreement unless: (1) attorney discloses to each client the existence and nature of all claims involved and the participation of each person in the settlement, and (2) each client gives informed consent in signed writing.
Accepting Compensation from Someone Other than the Client
Can’t accept compensation for representation from someone other than the client unless: (1) client gives informed consent, (2) no interference with attorney’s independence of professional judgment, and (3) confidential info is protected.
CA: Requires informed written consent, but not required if nondisclosure or other compensation otherwise authorized by court, or attorney is rendering services on behalf of a public agency or nonprofit org offering legal services to the public. Can obtain consent after the fact in emergency.
Settling Existing Malpractice Claim
Can’t settle claim/potential claim for malpractice liability with an unrepresented or former client without (1) advising them in writing that independent counsel is desirable, and (2) giving them a reasonable chance to obtain counsel.
Agreements to Limit Liability
Can’t make an agreement prospectively limiting liability to client for malpractice liability unless client is independently represented in making it.
NEVER allowed in CA.
Acquiring Media/Literary Rights in Litigation
Can’t acquire rights to story based in substantial part on information regarding the current representation of a client, but may do so after the matter is entirely completed (appeals and all).
CA: Treated as a business transaction. Generally, discourages contracts during proceedings, but OK if judge is satisfied that client consents and understands.
Acquiring Proprietary Interest in Litigation
Can’t acquire proprietary interest in a cause of action or subject matter of litigation conducted for a client, but may: (1) acquire a lien authorized by law to secure lawyer’s fee/expenses, and (2) contract with client for a reasonable contingent fee in civil cases, limited to litigation matters.
CA: Treats as business transaction.
Participating in Foreclosure or Sale (CA Only)
In connection with probate, foreclosure, receiver’s, trustee’s, or judicial sale, lawyer cannot: (1) directly/indirectly purchase property in an action or proceeding in which such lawyer (or any other lawyer with whom they’re personally or professionally affiliated) is acting as a lawyer for a party or as executor, receiver, trustee, administrator, guardian, or conservator; or (2) represent the seller in an action/proceeding in which the purchaser is a spouse/relative of the lawyer or another in their firm, or an employee of the lawyer/firm.
Sexual Relationships with Clients
Can’t have sexual relationship with client unless it predated the attorney-client relationship. Where client is an organization, rule applies to relationships with a constituent of the org who supervises the attorney’s work or consults with them about the org’s legal matters. No imputation of conflict.
CA: Additional exception where attorney and client are married/RDP.
