Avoid hot water by understanding Hot Potatoes

Ever consider dropping a client so as to be able to represent a different client?  It happens more often than you might think.

Figuratively, dropping a client like a hot potato can lead a lawyer into hot water.

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For the purposes of conflicts, the rules identify three types of clients.  Respectively,

The rules don’t treat all client conflicts equally.  The rule on current clients is more strict than the rule on former clients, which, in turn, is more strict than the rule on prospective clients.

For example, Rule 1.7(a)(1) states that it is a conflict for a lawyer to take any action that is directly adverse to another client.  The rule ensures that lawyers remain loyal to clients.

With respec tot the duty of loyalty, Rule 1. 7 is much broader than “a lawyer can’t represent both sides to the same action.”  As Comment [6] states, “absent consent, a lawyer may not act as an advocate in one matter against a lawyer the person represents in some other matter, even when the matters are wholly unrelated.” 

By contrast, the duty of loyalty to a former client is somewhat more relaxed.  Rule 1.9 prohibits a lawyer from representing someone who is adverse to a former client “in the same or a substantially related matter.”

So, imagine this scenario:

  • Lawyer represents Client A in Matter 1.
  • Client B asks Lawyer to sue Client A in Matter 2,
  • Matters 1 & 2 are wholly unrelated to each other.

Clearly, Rule 1.7(a)(1) prohibits Lawyer from suing a current client (A) on behalf of another client (B) even if the matters are wholly unrelated.

However, what if Lawyer “fires” A as a client?  Rule 1.7 would no longer apply since A would no longer be a “current client.”  Further, Lawyer would argue that Rule 1.9, the rule on former client conflicts, doesn’t apply since Matter 2 is not “the same as or substantially related” to Matter 1.

This is the so-called “hot potato” doctrine.  That is, Lawyer dropped Client A like a “hot potato.”

There’s been a lot written on the “hot potato” doctrine.  As Attorney Bill Freivogel noted in this this post, most courts will disqualify Lawyer from representing B against A.

In 2009, the Philadelphia Bar Association’s Professional Guidance Committee issued “The Hot Potato Rule and Conflicts of Interest.”  Analyzing a situation quite similar to the hypo that I presented above, the Committee concluded:

  • “Absent compliance with Rule 1.7(b), which includes informed consent from both clients, the inquirer can not represent Company A because the matter is directly adverse to the interests of the inquirer’s current client, Company B.  Moreover, the ethical violation cannot be avoided by the inquirer terminating his representation of Company B.  As noted in International Longshoremen’s Ass’n. Local Union 1332 v. International Longshoremen’s Ass’n., 909 F.Supp. 287, 293 (E.D. Pa. 1995), ‘[A]n attorney may not drop one client like a ‘hot potato’ in order to avoid a conflict with another, more remunerative client.’ ”

There are exceptions to the “hot potato” doctrine.  One is the so-called “thrust upon” exception.  That is, if a conflict is “thrust upon” a lawyer through no fault of the lawyer’s, it’s okay to drop a client like a hot potato.  Both the New York City Bar Association and the D.C. Bar Association have issued advisory opinions on the “thrust upon” exception.

In conclusion, think twice before you drop a client like a hot potato in favor of another client.

Why?

Because no matter what Snoop might say, when it comes to clients, it’s not always a good idea to drop ’em like they’re hot.

 

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