DUTY OF LOYALTY Flashcards
Define Duty of Loyalty
A lawyer has a duty of loyalty to their client that requires the lawyer to put the interest of their client above all other interests and to avoid any actual (current) or potential (future) conflicts of interest.
What is the general rule for concurrent conflict of interest and in what ways can conflict of interest rise?
A lawyer may not represent a client where there is a conflict of interest. A concurrent conflict of interest can arise several ways.
a. Between current clients: A concurrent conflict of interest exists if the representation of one client is directly adverse to another client.
b. Between a current client and another: A concurrent conflict of interest exists if there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client, a third person, or by a personal interest of the lawyer
Under what exemption may the lawyer represent different parties despite a conflict of interest?
A lawyer may still represent the client despite a concurrent conflict if:
- The lawyer reasonably believes that the lawyer will be able to provide competent and
diligent representation to each affected client, and - The representation is not prohibited by law, and
- The clients are not asserting a claim against each other in the same litigation (not
directly adverse), and - Each client gives informed consent, confirmed in writing (Cal. says informed
written consent).a. ABA informed consent, confirmed is writing means the informed consent (which can be oral) must later be transmitted to a writing (unlike the Cal. rule that also requires the “informed” part - the disclosures - to be in writing). b. Cal. informed written consent means that both the disclosures and the consent must be in writing.
Define the Cal. no risk limitation Rule
Even if there is NOT significant risk that lawyer’s representation of the client will be materially limited, a lawyer must still provide written disclosure of the relationship to the client and meet the above exceptions if:
- The lawyer has or knows that another lawyer in lawyer’s firm has any kind of relationship to a party or witness, or
- The lawyer knows or reasonably should know that another party’s lawyer is related
to lawyer, lives with lawyer, is a client of lawyer or their firm, or is in an intimate relationship with lawyer.
List all of the specific rules for conflicts [between clients] that fall under the Duty of Loyalty
- Insurance (Cal. only)
- Corporate/organizational client
- No aggregate settlements or guilty pleas
- Former Client
- Former government employee
- Current/ former government employee
- Imputed firm disqualification
State the rule for Duty of loyalty - Insurance (CA only)
Lawyers are permitted to represent both insurers and insureds whereby the insurer has the contractual right to unilaterally select counsel for the insured, resulting in no conflict of interest.
State the rule for the duty of loyalty- Corporate/organizational client
A lawyer employed by an organization or corporation
represents the organization/corporation and must act in the best interest of the organization/corporation.
Can a lawyer represent an organization’s individuals?
A lawyer may also represent the
organization’s officers, directors, employees, shareholders, or other constituents if the requirements for the exception to represent those with concurrent conflicts are met (see I.B.1.c. and d above).
Under what circumstances must a lawyer explain the identity of their client to constituents?
When a lawyer represents a corporation/organization, they must explain the identity of their client to constituents (i.e., officers, directors, employees, etc.) when the lawyer knows or should know that the organization’s interests are adverse to those of the constituents.
State the [Reporting Misconduct to a Higher Authority sub-rule] that falls under the Duty of LoyaltyCorporate/organizational client.
If the lawyer knows that an officer, employee, or other person associated with the organization is engaged in (or intends to engage in) action that (Cal. – lawyer knows or reasonably should know) is a
violation of a legal obligation or a law reasonably imputable to the organization and is likely to result in substantial injury to the organization, the lawyer shall report up, and refer the matter to a higher authority in the organization, unless the lawyer
reasonably believes that it is not in the best interest of the organization to do so (Cal.
requires that the duty of confidentiality be maintained unless death or substantial
bodily injury is likely – see I.E.2 below).
What to do when higher authority fails to act after reporting misconduct?
If the highest authority fails to take action and the lawyer reasonably believes the violation will result in substantial injury to the organization:
(i) ABA only: The lawyer may report out and reveal information, even if confidential, if such disclosure is necessary to prevent the injury.
(ii) Cal. only: The lawyer may not report out and disclose information outside the organization if it will violate the duty of confidentiality; rather the lawyer should urge reconsideration of the matter to the higher authorities within the organization, resign from representation, or withdraw from representation, unless death or substantial bodily injury is
likely – see I.E.2 below.
State the rule for the duty of loyalty - No aggregate settlements or guilty pleas:
A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients or, in a criminal case, an aggregate agreement as to guilt or pleas, unless each client gives informed written consent. Cal. says this does not apply to class actions.
State the rule for the duty of loyalty - former client
A lawyer who formerly represented a client in a matter shall not thereafter represent another person in the same or substantially related manner in
which that person’s interests are materially adverse to the former client unless the former client gives informed consent, confirmed in writing (Cal. informed written consent).
State the rule for the duty of loyalty - Former government employee
A lawyer who has formerly served as a government employee shall not represent a client in connection with a matter in which the lawyer participated personally and substantially as a government employee unless the governmental agency gives informed consent, confirmed in writing (Cal. informed
written consent).
The same standard applies to lawyers who served as judges, adjudicative officers, law
clerks, arbitrators, mediators, or other third-party neutral persons, but all parties must give informed consent, confirmed in writing (Cal. informed written consent).
State the rule for the duty of loyalty - Current government employee
A lawyer currently serving as a government employee
shall not participate in a matter in which the lawyer participated personally and substantially while in private practice unless the government agency gives its informed consent, confirmed in writing (Cals. informed written consent).
State the rule for the duty of loyalty - Imputed firm disqualification
A conflict for one attorney in a firm is imputed to all
other attorneys in the firm, resulting in their disqualification, unless:
- The conflict is based on a personal interest of the disqualified (Cal. says prohibited) lawyer and does not present a significant risk of materially limiting the representation by the other firm attorneys, or
- The conflict is based on a former client at a prior firm, the conflicted lawyer is timely screened behind an ethical wall from any participation in the matter, the former client is provided written notice and a description of the screening procedures, and
a. ABA only: The client is given certifications of compliance with the ethics rules and screening procedures upon request), and
b. Cal. only: The prohibited lawyer did not substantially participate in the same or a substantially related matter.
- A client can waive any imputed disqualification with informed consent, confirmed in writing (Cal. informed written consent).
State the rule for the duty of loyalty - Lawyer leaves firm
When a lawyer has terminated an association with a firm, the firm
may thereafter represent a person with interests materially adverse to those of a former client represented by the formerly associated lawyer unless:
- The matter is the same or substantially related, and
- Any remaining lawyer has confidential information that is material to the matter.
- This conflict can be waived if each affected client gives informed consent, confirmed
in writing (Cal. informed written consent).
What are the specific rules for conflict between client and a third part?
A lawyer shall not accept
compensation from third parties to represent the client unless:
- The client gives informed consent (Cal. requires informed written consent at or before
the time of the agreement or as soon as reasonably practicable, unless court ordered, - There is no interference with the lawyer’s independent professional judgment or with the lawyer-client relationship, and
- Information relating to the representation remains confidential.
List the Specific rules for conflicts between a client and the lawyer’s personal interest?
- Lawyer’s personal relationships and beliefs
- Sexual relations with clients
- Business transactions with clients
- Solicitation of gifts
- Proprietary interest (ABA)
- Literary/Media Rights (ABA)
- Financial assistance/advances to clients
- Limiting malpractice liability
- Settlement of claims
State the following rule –> [Lawyer’s personal relationships and beliefs]
When a lawyer is related to opposing counsel, has a past or current relationship with opposing counsel, or has a personal belief that may interfere with their current representation, apply the general rule and its exceptions above (see I.B.1.).
Define the [Sexual Relations with clients] rule
ABA rule: A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed before the lawyer-client relationship
commenced.
California follows the ABA rule and clarifies that the above rule does not apply to sexual relations with the lawyer’s spouse or registered domestic partner.
a. California defines sexual relations as including sexual intercourse or the touching of an intimate part of another person for the purpose of sexual arousal, gratification, or abuse.
Define the [Business transactions with clients] rule:
A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, pecuniary, or similar
interest adverse to the client unless:
- The terms are fair and reasonable to the client, and
- The terms are fully disclosed in writing to the client in an understandable manner
(Cal. also requires that the lawyer’s role in the transaction be fully disclosed in writing), and - The client is advised in writing to seek independent counsel (or in Cal. that the client is actually represented by an independent lawyer of the client’s choice), and
- The client gives informed written consent to the essential terms and the lawyer’s role (and per the ABA whether the lawyer is representing the client in the
transaction). - Exception: A lawyer can acquire a lien to secure the lawyer’s fees or contract with a client for a reasonable contingency fee in a civil case.
Define the [Solicitation of gifts] rule.
A lawyer shall not solicit any substantial gift from a client or
prepare an instrument that gives the lawyer, or a person related to the lawyer, a gift unless the lawyer/person is related to the client.
- If allowed, the gift must be fair and made without undue influence.
- Cal. additional exception: A lawyer may accept a gift if the client has been advised by an independent lawyer who has provided a certificate of independent review.
Define the [Proprietary interest (ABA)] rule
A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation unless to:
- Acquire a lien to secure the lawyer’s fees, or
- Contract with a client for a reasonable contingency fee in a civil case.
