The Duty of Loyalty to Your Client: Conflicts of Interest

Question 1

You have a duty of loyalty to…

Answer 1

your client.

Question 2

If an interest of another client, yourself, or a third party creates a significant risk of materially limiting your representation—or your representation of one client is directly adverse to another—you have a….

Answer 2

concurrent conflict of interest.

Question 3

On the exam, watch for evolving fact patterns where a risk of conflict ripens into a direct conflict, and..

Answer 3

“IRAC” each as distinct issues.

Question 4

Your ignorance of a conflict is no excuse, unless:

Answer 4

it arises from short- term legal services under a court, agency, or non-profit program.

Question 5

This term means that lawyers associated together, e.g., in a firm, share each other’s conflicts.

Answer 5

Imputed disqualification

Question 6

Conflicts are imputed when…

Answer 6

You know or reasonably should know of a colleague’s conflict.

Question 7

Failing to check for a colleague’s conflicts can be…

Answer 7

an ethics violation.

Question 8

What’s the exception to the colleague’s conflict rule?

Answer 8

If your colleague’s previous government service or work for adverse parties at a previous firm conflicts her out of specific work, you may still be allowed to take that work with safeguards such as screening her behind an “ethical wall”.

Question 9

These types of conflicts are not imputed to colleagues.

Answer 9

Purely personal conflicts

Question 10

On the exam, if there is more than one lawyer in the facts…

Answer 10

check for shared conflicts.

Question 11

Remedies for a conflict will depend on the nature of the case. You might:

Answer 11

1. refuse to take the case;
2. advise multiple clients to get separate counsel;
3. withdraw.

Question 12

The many overlapping conflicts rules fall into three categories:

Answer 12

OK, maybe OK, and never OK.

Question 13

What are representation OK conflicts?

Answer 13

Facts that might seem like a conflict, but fall outside of the conflicts rules or into an exception. Flag and dispose of these red herrings.

Question 14

Under the maybe OK category, many conflicts may be tolerated if a case by case factual analysis establishes three elements:

Answer 14

1. you reasonably believe you can represent everyone competently and diligently despite a current conflict;
2. you consult with each affected client.. If your duty of confidentiality prevents you from fully disclosing information the client needs to understand the conflict, then consent may not be possible; and
3. the client consents, confirmed in a writing, e.g. an email to the client memorializing her oral consent.

Question 15

When are conflicts never OK?

Answer 15

If representation is prohibited by law, or if the representation involves assertion of a claim by one client against another client that you represent in the same case pending before a tribunal.

Question 16

A representation adverse to a current client in a different matter requires…

Answer 16

All clients’ consent.

Question 17

You may argue for and against something (i.e. a certain law’s application)in two different cases. But, if either client would be disadvantaged….

Answer 17

you must obtain consent.

Question 18

Representing multiple clients in the same matter raises significant risks that your service for one may become materially limited as a result of the others’ interest. These potential conflicts generally require…

Answer 18

disclosure and consent.

Question 19

Dr. Kevorkian’s insurance company hires you to defend him and it in a malpractice action. This presents a risk of material conflict, but is OK with…

Answer 19

reasonable consent.

Question 20

Now, however, Kevorkian tells you that the medically “unorthodox practices” he used on the plaintiff were not covered by his malpractice insurance policy. Now Kevorkian and his insurance company are directly adverse to each other over coverage.

Best remedy for this direct conflict?

Answer 20

Withdraw from both and advise them to get separate counsel. You must at least withdraw from representing the insurance company because you have relevant, confidential information from Kevorkian that you must not use against him. Thus, you cannot fully pursue loyal representation of the insurance company.

Question 21

Always look for __________________________ in multiple client representation.

Answer 21

confidentiality breaches

Question 22

If confidential information from a former client might be relevant to a new client’s matter, you may be violating your continuing duties of confidentiality and loyalty to…

Answer 22

your former client.

Question 23

You cannot take on a new client with interests materially adverse to a former client without….

Answer 23

The consent of both.

Question 24

Kris asks you to represent him divorcing Kim, but your senior partner once represented Kim in a business deal. Is this okay?

Answer 24

Yes, but it depends on the nature of the work done.

Question 25

What if you once defended Kim against trademark infringement charges, gaining access to her private files. Can you use that knowledge now to represent Paris in an infringement action against Kim?

Answer 25

No.

Question 26

Use of non-public confidential information against a former client is…

Answer 26

unreasonable without consent. —Ask: Do the representations overlap in function, scope or information?

Question 27

If you were a government lawyer who worked personally and substantially on a matter, you cannot work on that same matter in later private practice without…

Answer 27

the government’s consent.

Question 28

As an Equal Employment Opportunity Commission lawyer, you litigated a fair pay claim against Halliburton. At your new firm, may you represent Halliburton in that case without the EEOC’s consent?

Answer 28

No, that’s a “matter”.

Question 29

What if you wrote regulations defining “fair pay” at the EEOC. Can you litigate the meaning of those regulations at your new private firm?

Answer 29

Yes, because regulations are not a “matter.”

Question 30

May other members of your firm work on Halliburton’s case?

Answer 30

Yes, if three conditions are met:

1. You are screened off
2. You do not share any part of the fee in the matter (pre-arranged salaries or partnership shares are OK), and
3. Your former Government employer is informed.

Question 31

Judges, clerks, arbitrators, and other third party neutrals who worked on a matter will require consent of…

Answer 31

all parties to a judicial proceeding before taking an adversary role in the matter.

Question 32

You must not solicit a substantial gift from a client, or draft a legal instrument for a client who is not your close relative, if it…

Answer 32

provides a substantial gift to you or your relative.

Question 33

You cannot limit your client’s right to…

Answer 33

report you for professional misconduct or to cooperate in an investigation.

Question 34

You cannot limit your malpractice liability when you enter into a relationship with your client, unless…

Answer 34

you are an employee of the client (e.g., in-house counsel) and the client is independently represented in making the agreement.

Question 35

Halfway through his criminal trial, Defendant offers to sell you rights to his story to raise some needed cash. Can you accept?

Answer 35

No, not before your representation has ended.

Question 36

Use of confidential information to a client’s disadvantage violates the duties of both loyalty and confidentiality, unless…

Answer 36

the client consents.

Question 37

Financial assistance to your client is forbidden, except for:

Answer 37

1. advances of court costs and fees in a contingent fee arrangement, or
2. court costs and litigation expenses for an indigent client.

—Proper expenses include court fees, evidence and investigation costs, witness fees and expenses and medical exams.

Question 38

You may enter into business with a client or obtain an interest adverse to hers only if:

Answer 38

1. the terms are Fair to the client,
2. Disclosed in understandable writing,
3. the client is advised to consult an Outside lawyer, and
4. your client provides Consent in writing.

(first discuss over coffee)

Question 39

A law firm agreed to do employment law work for a start-up company in return for “payment” in the form of shares of stock equal to the value of its services. Assuming that the work is valued reasonably, and the transaction is documented, may it do so?

Answer 39

Yes, if it is fair and reasonable under the circumstances known to the lawyerwhen the interest was acquired.

(Be cautious if the investment is by individual firm members, or if the acquisition is a major asset that might distort the firm’s advice to the company, e.g., regarding disclosure of bad news.)

Question 40

Service on the Board of Directors of a non-profit legal services organization is allowed. There is also no bar to sitting on the Board of a…

Answer 40

corporate client, but it is now discouraged, because it is likely to compromise loyalty and confidentiality.

Question 41

Attorney is a member of the Board of Directors of World Bucks, Inc. World’s CEO, asks Attorney to defend him in an investigation of his alleged embezzlement of company money. May Attorney represent him?

Answer 41

No. Attorney has a fiduciary duty to the corporation in her personal capacity as a member of the Board. World and the CEO are in direct conflict, so Attorney cannot be looyal to both.

Question 42

You should not have any financial interest in the subject of your work, but…

Answer 42

contingency fees or liens on your client’s property to secure your fees are okay.

Question 43

The Rules bar you from appearing in the same trial as counsel and as a witness not on your client’s behalf, unless:

Answer 43

1. your testimony is uncontested
2. your testimony is about your legal services rendered, or
3. if your distinctive value to the case means withdrawal would impose hardship on the client. If your testimony might prejudice the client, consent is required.

(not imputed to colleagues)

Question 44

You can’t oppose a party represented by your relative without client consent. “Close relations” include:

Answer 44

immediate family, i.e. your parent, child, sibling, and spouse.

(not imputed to colleagues)

Question 45

Your sole duty is to your client, not to…

Answer 45

any third party.

Question 46

Payment for your services from a third party is permitted. However:

Answer 46

1. You must have informed client consent.
2. Confidences cannot be shared, and
3. You must retain independence.

Question 47

For organiztional clients, a lawyer must act in the best interest of the…

Answer 47

entity, even if an officer, employee, or other associated person acts to the contrary.

Question 48

These laws govern securities lawyers.

Answer 48

Federal laws

Question 49

You are in-house counsel at Reron. You discover the Chief Operating Officer materially violated securities laws. What must you do?

Answer 49

You must report the matter to the CEO or Chief Legal Counsel. If they do not respond, you must go to the highest authority in the company.

Question 50

In the realm of securities laws, if you reasonably believe it necessary to prevent fraud, perjury or substantial injury to the organization or investors, or to rectify financial injury from a violation that involved your services, then you may…

Answer 50

disclose confidential information to the Securities Exchange Commission without client consent.

Question 51

In representing a non-public company, you must on the one hand minimize disruption, and minimize the risk of revealing information to outsiders. If the organization’s highest authority insists on actions likely to result in substantial injury to the organization, you may…

Answer 51

resign or decline to represent it in that matter.

Question 52

On the other hand, if the organization intends to commit a crime reasonably certain to result in substantial financial injury to another, you must…

Answer 52

reveal the organization’s intention.