The Duty of Loyalty to your Client (e.g. conflict of interest)

Question 1

What is the black letter law regarding the duty of loyalty?

Answer 1

You have a duty of loyalty to your client. If an interest of another client, yourself, or a third party materially limits or is adverse to loyal representation, you have a conflict of interest.

Question 2

What types of conflicts must you be aware of?

Answer 2

Potential and actual.

Question 3

What if you have an evolving fact pattern, e.g. a potential conflict that becomes an actual conflict after representation begins?

Answer 3

IRAC each as distinct issues.

Question 4

What if you are ignorant to a conflict?

Answer 4

You are still responsible.

Question 5

What is the exception to the duty of loyalty when ignorant as to a conflict?

Answer 5

Short-term legal services under a court, agency, or non-profit program, where you are responsible only if you actually know of a conflict.

Question 6

What is imputed disqualification? What is different in CA?

Answer 6

Any group of lawyers that work closely together or share responsibilities share each others’ conflicts.

CA only disqualifies an attorney, but does not discipline

Question 7

What are the exceptions to imputed disqualification?

Answer 7

When one lawyer’s conflicts arise from previous government service or work for adverse parties at a previous firm, representation by her colleagues may be allowed with safeguards such as screening.

Question 8

What are the exceptions to imputed disqualification under CA law?

Answer 8

Relaxes imputation of conflicts that are purely personal to the lawyer and for short-term legal services under non-profit or court programs.

Question 9

What should you consider when thinking about remedies for a conflict?

Answer 9

Refuse to take the case, advise multiple clients to get separate counsel, and withdraw

Question 10

What can you do to screen a lawyer?

Answer 10

Put up an ethical wall to cure imputed disqualifications. Client consent may be required.

Question 11

What are the three genres of conflicts?

Answer 11

Those that are never permitted, sometimes permitted, and always permitted.

Question 12

When is a conflict always permitted?

Answer 12

When facts indicate a conflict, but fall outside of the rules or exceptions. You should flag and dispose of these.

Question 13

What is the approach for a conflict that is sometimes permitted?

Answer 13

Conduct a case-by-case analysis of three elements.

Question 14

What are the three elements for conducting a case-by-case analysis of sometimes permitted conflicts?

Answer 14

1. Reasonably believe you can represent everyone effectively despite the potential or actual conflict (CA does not require the belief to be objectively reasonable); and
2. You inform each affected client (But note, if duty of confidentiality prevents you from fully disclosing information and the client needs to understand the conflict, then consent may not be possible); and
3. The client consents, confirmed in writing (CA permits certain conflicts that are personal to the lawyer to be merely disclosed to the client in writing)
   Note; Some imputed conflicts will also require screening to be reasonable.

Question 15

Can you represent opposite sides of the same matter?

Answer 15

No.

Question 16

Your law firm represents Texaco in labor matters, although you have do no work for it. Lundwall, a former Texaco employee asks you to help him sue Texaco for cutting off his benefits. Can you? Explain.

Answer 16

Never, imputed disqualification means you represent Texaco. It is unreasonable to represent both.

Question 17

What is the rule regarding opposing a current client in another matter?

Answer 17

A representation adverse to a current client in another matter requires all clients consent.

Question 18

What is the CA statutory exception to opposing a client in another matter?

Answer 18

There is no conflict when a lawyer represents a policyholder and his insurance company as joint clients, where the insurer’s interest in each matter is only as an indemnity provider.

Question 19

NorCal InsCo retains your firm to represent Driver 1 in a tort case. May you now represent Driver 2 in a case against Driver 3 and NorCal InsCo, Driver 3’s insurer?

Answer 19

Yes b/c NorCal is only an indemnity provider in both. This falls into the CA statutory exception.

Question 20

What if you need to argue both for and against certain positions, such as health care law, in two different appeals, is that okay?

Answer 20

likely yes, positions do not usually create conflicts, but if either client would be disadvantaged you must obtain consent.

Question 21

What is the result if you are representing multiple clients in the same matter, or acting as an intermediary?

Answer 21

These situations raise significant risks that your service may become materially limited as a result of the others’ interest. These potential conflicts generally require disclosure and consent.

Question 22

What are some examples of representing multiple clients in the same matter?

Answer 22

A corporation and any of its directors, employees, officers, shareholders

Both spouses in an uncontested divorce or drafting wills.

Question 23

Kevorkian’s insurance company hires you to defend him and it in a malpractice action. Later, Kevorkian tells you he used medically “unorthodox practices” on the plaintiff that are not covered by his malpractice insurance policy. Discuss the situation and what the best remedy is.

Answer 23

Began as a potential conflict which is okay with reasonable consent, evolved into an actual conflict.

The best remedy is to withdraw from both representations and advise them to get separate counsel. Because this is now a direct conflict.

At a minimum you must at least withdraw from representing the insurance company because you have relevant, confidential information from Kevorkian that you cannot use in pursuing undivided loyal representation of the insurance

Question 24

What is the problem with dual representation in criminal cases?

Answer 24

May impede the 6th Amendment guarantee of effective assistance of counsel.

Question 25

What should you always look for in multiple client representation?

Answer 25

Confidentiality breaches.

Question 26

What problem arises in representing new clients in matters related to former clients’ matters?

Answer 26

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

Question 27

What is the rule regarding new clients matters and former clients matters?

Answer 27

You cannot take a new client with interests materially adverse to a former client without the former’s consent.

Question 28

Kevin asks you to represent him in his divorce from Britney, but your senior partner once represented Britney in a business deal. Is this okay?

What if your senior partner had only represented Britney in a real estate venture in which she was a limited partner?

Answer 28

Imputed disqualification applies. It may be okay, but
it depends on the nature of the work done.

Good cross-over, likely okay b/c Britney was only a limited partner and you therefore gained little knowledge into her.

Question 29

What if you once defended Britney against copyright infringement charges, gaining access to her private recording notes. Can you use that knowledge now to represent Christina in an infringement action against Britney? State the rule.

What if you leave your firm, can it now represent Christina?

Answer 29

No, using non-public confidential information against
a former client is unreasonable without consent.

Not if (i) the matters are substantially related or the same, and (ii) any remaining lawyer has confidential information

Question 30

What is the rule about using non-public confidential information against a former client?

Answer 30

It is unreasonable without consent,.

Question 31

If you go to a new firm, when will your conflicts not extend to your new colleagues?

Answer 31

IF you: (i) are timely and effectively screened, (ii) receive no direct part of the fee, and (iii) your former client receives notice, and (iv) periodic certifications of compliance with these conditions

Question 32

What is the ABA rule for government lawyers now in private practice, working on the same matter?

Answer 32

It bars government lawyers who work personally and substantially on a matter from working on the same matter later in private practice without the government’s consent.

Question 33

You’ve left the EEOC where you worked on regulations prohibiting religious discrimination. At your new firm, can you litigate the meaning of those regulations?

Answer 33

Yes, regulations are not a matter.

Question 34

What is a matter?

Answer 34

Specific disputes between specific people over specific issues.

Question 35

When may a past government lawyer’s new private firm colleagues be excepted from imputed disqualification?

Answer 35

If you are 1) screened off; and 2) you do not share any part of the fee in the matter (pre-arranged salaries or partnership shares are okay); and 3) your former government employer is informed.

Question 36

Do the rules regarding past government lawyers apply to clerks, judges, arbitrators, etc.?

Answer 36

Yes.

Question 37

Under CA law can a prosecutor in a case work on the defense side later?

Answer 37

No.

Question 38

What is the law regarding gifts from a client?

Answer 38

You must not solicit a substantial gift from a client, or draft the legal instrument for a client who is not your close relative, if it provides a substantial gift to you or your relative.

Question 39

Can you limit your liability as to ethical or professional violations when entering a client relationship?

Answer 39

No.

Question 40

Can you limit your liability as to malpractice when entering into a relationship with a client?

Answer 40

No, unless under ABA rules, the client is independently represented in making the agreement. *CA prohibits malpractice limits.

Question 41

Under the ABA, can you buy the rights to a client’s rights to his story? What about under CA law?

Answer 41

Not before the representation has ended.

CA law: maybe, it is discouraged, but tolerates this if the judge is satisfied that the client clearly understands and consents.

Question 42

Can you loan or give advances to your client (ABA)?

Answer 42

The ABA forbids financial assistance, except for litigation expenses for indigent clients, and the advance of litigation expenses in contingent fee cases.

Question 43

Can you give loans or advances to your client (CA)?

Answer 43

CA forbids promising to pay a prospective client’s debts, but allows loans to a client in all matters for any purpose with a written loan agreement

Question 44

Can a lawyer use information covered by the duty of confidentiality to a client’s disadvantage?

Answer 44

No, violates both the duty of confidentiality and duty of loyalty.

Question 45

May you enter into business transactions with a client or obtain an interest adverse to her?

Answer 45

Yes, but only if (i) the terms are fair to the client, (ii) disclosed in an understandable writing, (iii) the client has an opportunity to consult and outside lawyer, and (iv) your client provides written consent (or in CA, written disclosure)

Question 46

What is the mnemonic regarding business transactions or gaining adverse interests with a client?

Answer 46

First Discuss Over Coffee. Fair, disclosed, opportunity for council, consent (written)

Question 47

In representing a start-up company, its law firm agrees to accept as payment 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 47

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

Question 48

May a lawyer sit on the board of a non-profit organization?

Answer 48

Yes

Question 49

May a lawyer sit on the board of a corporate client?

Answer 49

Yes, although it is strongly discouraged, because it is likely to compromise duties of loyalty and confidentiality.

Question 50

Can a lawyer ever appear in court as counsel and a witness in the same trial? ABA rule.

Answer 50

ABA bars your appearance as counsel and a witness unless (i) his testimony is uncontested or (ii) regarding the nature and value of services rendered or (iii) if your distinctive value to the case means withdrawal would impose substantial hardship on the client. If the testimony might create prejudice, the client’s consent is required and the conflict is imputed to colleagues.

Question 51

Can a lawyer even appear in court as counsel and a witness in the same trial? CA law.

Answer 51

Yes, he may testify in any bench trial, and if the client consents in a jury trial.

Question 52

Can you oppose a party represented by your relative?

Answer 52

Yes with client consent. CA law also includes other intimates such as shackmates, but only requires written disclosure. CA also requires disclosure of any legal, business, or personal relationship with any party or witness in the same matter.

Question 53

To whom is your sole duty?

Answer 53

Your client and not any third party.

Question 54

Can you receive payment from third parties?

Answer 54

With client consent

Question 55

When representing a corporation, whose interest should you act in?

Answer 55

The corporation’s and not the directors, officers, etc.

Question 56

What law governs securities lawyers?

Answer 56

Federal law.

Question 57

You are in-house counsel at Reron. You discover that the COO materially violated securities law. What must you do?

Answer 57

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

Question 58

Can you disclose confidential information to the SEC in a securities case?

Answer 58

Yes to prevent fraud, perjury, or substantial injury to the organization or investors, or to rectify financial injury from a violation that involved your services.