Duty of Loyalty and Conflicts of Interest

Question 1

IMPUTATION OF CONFLICTS

Answer 1

General Rule: when one lawyer can’t take on a matter due to COI, the conflict is imputed to the firm and other lawyers are barred from taking on the matter

Exceptions: COI is not imputed when

(1) Conflict is personal to the lawyer and wouldn’t materially limit representation of the client by other lawyers at the firm
(2) conflict is based on specific scenario and lawyer is properly screened and affected party given notice

Question 2

CURRENT-CLIENT CONFLICT

Answer 2

A conflict w/ a current client exists if:

(1) The representation of one client will be directly adverse to another client who the lawyer represents
(2) There is a significant risk that the representation of the client will be materially limited by the lawyer’s own interest or by the lawyer’s responsibilities to another client, a former client, or a third person.

Question 3

STEPS FOR RESOLVING A CURRENT-CLIENT CONFLICT

Answer 3

If a current-client conflict exists, the lawyer may still undertake the representation if all of the four conditions are satisfied:

(1) the lawyer reasonably believes they can competently and diligently undertake the representation despite conflict
(2) the representation is not prohibited by law
(3) the representation does not involve asserting a claim by one client against another client represented by the same lawyer in the same matter
(4) each affected client gives informed consent, confirmed in writing

CA: factor 4 under CA Rules is narrower. There must be informed written consent meaning both the disclosure and the consent are in writing (not merely confirmed in writing)

Question 4

WRITTEN DISCLOSURE REQUIREMENT FOR LAWYER’S RELATIONSHIPS (CALIFORNIA ONLY)

Answer 4

Even when a significant risk of material limitation is not present, there must always be written disclosure to the client if the following relationships exist:

(1) the lawyer (or another in the firm) has a legal, business, financial, professional, or personal relationship with, or responsibility to, a party witness in the client’s matter
(2) the lawyer (or another in the firm) is an immediate family member of, lives with, or is in an intimate personal relationship with, another party’s attorney in the client’s matter

Question 5

BUSINESS TRANSACTIONS WITH/PECUNIARY INTERESTS ADVERSE TO CLIENT

Answer 5

A lawyer must not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or money interest that is adverse to a client unless all conditions satisfied:

(1) terms are fair to the client
(2) terms/lawyer’s role in the transaction are fully disclosed to the client in writing
(3) the client is advised in writing that they should get independent advice from a lawyer before entering into the arrangement
(4) the client gives informed consent, in writing that the client signs

Question 6

MISUSE OF CLIENT’S CONFIDENTIAL INFORMATION

Answer 6

A lawyer must not use confidential information to a client’s disadvantage, unless the client gives informed consent or some exception to the duty of confidentiality applies. (This rule also prohibits using information against former and prospective clients, unless the information has become generally known.)

Question 7

SUBSTANTIAL GIFTS FROM CLIENTS

Answer 7

ABA: a lawyer must not (1) solicit a substantial gift from a client or (2) prepare an instrument on behalf of the client giving a substantial gift to the lawyer (or lawyer’s relatives). Doesn’t apply if client is related to the lawyer.

CA: a lawyer must not (1) solicit a substantial gift from a client. A lawyer may prepare an instrument that creates a substantial gift to the lawyer or lawyer’s relative, even where the client is not related to the recipient, if the client has been advised by an independent lawyer who has provided a certificate of independent review.

Question 8

FINANCIAL ASSISTANCE TO CLIENT GENERAL RULE

Answer 8

ABA: A lawyer must not provide financial assistance in connection with pending or contemplated litigation unless it’s within an exception.

CA: A lawyer must not provide financial assistance in connection with all contexts (not just litigation) unless within an exception.

Question 9

FINANCIAL ASSISTANCE TO CLIENT EXCEPTIONS

Answer 9

(1) The lawyer may advance court costs and litigation expenses (CA allows any expenses), and the repayment may be contingent on the outcome of the case
(2) If the client is indigent, the lawyer may pay the court costs and litigation expenses outright.
(3) ABA ONLY: A lawyer representing an indigent client pro bono may provide modest gifts to the client for food, rent, transportation, medicine, and other basic living expenses. However, the lawyer must not: (A) promise or imply the availability of such gifts; (B) seek or accept reimbursement from the client or anyone affiliated with the client; or (C) publicize or advertise a willingness to provide such gifts to prospective clients.

CA:

(3) after the lawyer is hired, they may lend their client money for any purpose if the client gives them a written promise to repay the loan.
(4) with the client’s consent, the lawyer may pay, or agree to pay, the client’s expenses to a third party from funds collected for the client as a result of the representation.

Question 10

AGGREGATE SETTLEMENT AGREEMENTS

Answer 10

A lawyer must not participate in the making of an aggregate settlement agreement unless:

(1) the lawyer discloses to each client the existence and nature of all the claims or pleas involved and the participation of each person in the settlement; and
(2) each client gives informed consent to the agreement in a writing signed by the client.

Question 11

COMPENSATION FROM SOMEONE OTHER THAN CLIENT

Answer 11

ABA: A lawyer must not accept compensation for representing a client from a third party unless: (1) The client gives informed consent; (2) there is no interference with the lawyer’s independence of professional judgment or the lawyer-client relationship; and (3) Confidential information relating to the representation of the client remains protected.

CA: Requires informed written consent from the client. BUT disclosure and consent are not required at all if: (1) nondisclosure or the compensation is otherwise authorized by court order; or (2) the lawyer is rendering legal services on behalf of a public agency or nonprofit org

Question 12

SETTLING EXISTING MALPRACTICE CLAIM

Answer 12

A lawyer must not settle a claim or potential claim for malpractice liability with an unrepresented client or former client without (1) advising that person in writing that independent counsel is desirable, and (2) giving that person a reasonable chance to consult with independent counsel.

Question 13

PROSPECTIVELY LIMITING LIABILITY FOR MALPRACTICE

Answer 13

ABA: A lawyer must not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement.

CA: California rule does not permit prospectively limiting liability for malpractice in any circumstance.

Question 14

ACQUIRING LITERARY OR MEDIA RIGHTS CONCERNING CLIENT’S CASE

Answer 14

ABA: Lawyer may only acquire literary or media rights to a story based in substantial part on information relating to the lawyer’s representation of a client AFTER the client’s legal matter is entirely completed, appeals and all.

CA: No specific rule regarding timing. Treated as a pecuniary interest adverse to a client.

Question 15

PROPRIETARY INTEREST IN CAUSE OF ACTION

Answer 15

ABA: A lawyer must not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may: (1) acquire a lien authorized by law to secure the lawyer’s fee or expenses, and (2) contract with a client for a reasonable contingent fee in a civil case.

CA: No specific rule. A lawyer’s acquisition of an ownership interest in the subject of the representation is treated as a pecuniary interest adverse to a client and must meet the requirements of that rule.

Question 16

SEXUAL RELATIONSHIP WITH CLIENT

Answer 16

ABA: Must not have a sexual relationship with a client unless the relationship predates the lawyer-client relationship.

CA: Same as ABA but also has an exception for when the lawyer and client get married or enter a registered domestic partnership.

Question 17

USING CONFIDENTIAL INFORMATION TO FORMER CLIENT’S DISADVANTAGE

Answer 17

A lawyer must not reveal a former client’s confidential information or use such information to the former client’s disadvantage without consent (unless it has become generally known or an exception to the duty of confidentiality applies).

Question 18

OPPOSING FORMER CLIENT IN SAME OR SUBSTANTIALLY RELATED MATTER

Answer 18

A lawyer must not represent one client whose interests are materially adverse to those of a former client in a matter that is the same or “substantially related” to a matter in which the lawyer represented the former client—unless the former client gives informed consent, confirmed in writing.

Question 19

SUBSTANTIALLY RELATED MATTER Definition

Answer 19

Two matters are “substantially related” if:

(1) they involve the same transaction or legal dispute, or
(2) there is a substantial risk that confidential factual information that would have normally been obtained in the prior representation would materially advance the client’s position in the subsequent matter.

Question 20

OPPOSING CLIENT OF FORMER FIRM IN SAME OR SUBSTANTIALLY RELATED MATTER

Answer 20

If a lawyer’s former firm represented a client in a matter and the lawyer had acquired material confidential information about the matter while working at the firm, the lawyer must not subsequently represent another person in the same or a substantially related matter adverse to the former firm’s client, unless the former firm’s client gives informed consent, confirmed in writing.

Question 21

EFFECT OF INCOMING LAWYER’S CONFLICT ON NEW FIRM

Answer 21

ABA: If a lawyer who moves to a new firm is disqualified from representing a client because of a conflict with a former client, the new firm may be disqualified as well unless (1) the lawyer is properly screened and (2) does not share fees from the matter, and (3) the former client is given notice to ensure compliance.

CA: screening and notice will only cure the imputation if the disqualified lawyer did not substantially participate in the same or substantially related matter while at their prior firm.

Question 22

FIRM OPPOSING CLIENT OF DEPARTED LAWYER

Answer 22

A lawyer’s former firm is generally NOT prohibited from representing a person with interests materially adverse to those of a client of the formerly associated lawyer that is not currently represented by the firm, unless:

(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
(2) remaining lawyer(s) in the firm have protected confidential information that is material to the matter.

Question 23

OPPOSING PROSPECTIVE CLIENT IN SAME OR SUBSTANTIALLY RELATED MATTER

Answer 23

ABA: A lawyer who obtains confidential information during a consultation with a prospective client must not later represent a client adverse to the prospective client in the same or substantially related matter if the information could be significantly harmful to the prospective client, unless both the client and prospective client provide informed consent, confirmed in writing.

CA: Same as ABA but a conflict exists if the lawyer obtained information that is “material” to the current matter; it does not need to be “significantly harmful” to the prospective client.

Question 24

PRIVATE WORK FOLLOWING GOVERNMENT WORK ON SAME MATTER

Answer 24

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.

Imputation to others at the firm will be cured if the disqualified lawyer is screened and does not share in the fee, and the government agency is given written notice to ensure compliance.

Question 25

CONFLICT BASED ON INFORMATION GAINED DURING GOVERNMENT SERVICE

Answer 25

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.

Imputation to others at the firm will be cured if the disqualified lawyer is screened and does not share in the fee.

Question 26

GOVERNMENT WORK FOLLOWING PRIVATE WORK ON SAME MATTER

Answer 26

A current public employee must not participate in a matter in which they participated personally and substantially while in private practice or nongovernmental employment UNLESS the appropriate government agency gives informed consent, confirmed in writing.

Question 27

PRIOR INVOLVEMENT IN MATTER AS JUDGE, LAW CLERK, OR THIRD-PARTY NEUTRAL

Answer 27

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 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.

CA: also includes prior service as a mediator or settlement judge. Imputation can’t be cured

Question 28

GOVERNMENT EMPLOYEE OR THIRD-PARTY NEUTRAL NEGOTIATING FOR PRIVATE EMPLOYMENT

Answer 28

A lawyer who is a government employee or acting as a third-party neutral must not negotiate for private employment with any party or lawyer in a matter in which the lawyer is participating personally and substantially (there is an exception for law clerks as long as the judge is notified).

Question 29

MEMBERSHIP IN LEGAL SERVICES ORGANIZATIONS

Answer 29

A lawyer may serve as a director, officer, or member of a legal services organization even though the organization serves persons whose interests are adverse to the lawyer’s regular clients.

However, the lawyer must not knowingly participate in a decision or action of the organization if:

(1) Doing so would be incompatible with the lawyer’s obligations to a client under the general conflict of interest rules; or
(2) Doing so would adversely affect the representation of one of the organization’s clients whose interests are adverse to those of a client of the lawyer.

Question 30

LAW REFORM ACTIVITIES AFFECTING CLIENT INTERESTS (ABA ONLY)

Answer 30

When a lawyer is working on a law reform project and is asked to participate in a decision that could materially benefit one of the lawyer’s clients, the lawyer must disclose that fact (but need not identify the client).

California does not have a counterpart rule.

Question 31

QUICK-ADVICE PROGRAMS

Answer 31

A lawyer may participate in a quick-advice program sponsored by a court or nonprofit organization. The RPC generally apply to the lawyer-client relationship, but the conflicts of interest rules are relaxed. Because a lawyer in this situation has no time to run a standard conflicts check, the conflicts rules relating to current and former clients do not apply unless the lawyer actually knows that giving the quick advice creates a conflict of interest.