Low Places: Conflicts arising from personal relationships with opposing counsel.

Blame it all on my roots,

I showed up in boots,

and ruined your black-tie affair.

 ~ Garth Brooks, Friends In Low Places

****************

 The most common inquiry that I receive is one in which a lawyer calls to discuss a potential conflict of interest.  Most often, the potential conflict involves a former client whose interests may be adverse to those of a new client.   Despite our small bar, it’s rare that I receive an inquiry involving a potential conflict arising from a lawyer’s personal relationship with opposing counsel.

So called “personal relationship” conflicts are important to understand.  And, thanks to ABA Formal Opinion 494, there’s now guidance to assist us.  Among others, the ABA Journal, the Professional Responsibility Blog, and Faughnan on Ethics reported the opinion’s release.

Before I get to the opinion, I’ll start with the rule.

In Vermont. Rule 1.7(a)(2) states that a conflict of interest exists whenever:

  • “there is a significant risk that the representation of one or more clients will be limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.” (emphasis added).

Don’t forget! Unlike conflicts involving current and/or former clients, personal interest conflicts are not automatically imputed to others in the conflicted lawyer’s firm.  They are imputed only if the prohibited lawyer’s personal interest presents “a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.”  V.R.Pr.C. 1.10(a).

So, what’s a personal interest conflict?  For years, I used an example that might be too simplistic:

  • Client wants to retain Lawyer.
  • Lawyer doesn’t know Opposing Party well, but Opposing Party is the coach of Lawyer’s child’s sports team.
  • Lawyer doesn’t want Child’s relationship with the coach to suffer.
  • So, Lawyer sits out the case, but another attorney in the same firm represents Client.

Another type of personal interest that might materially limit a lawyer’s representation of a client is the lawyer’s personal relationship with opposing counsel.  This is the type of conflict addressed by the recent advisory opinion.  It breaks such personal relationships into three categories: intimate relationships, friendships, and acquaintances.

Intimate Relationships.

Per the opinion, lawyers who are married, engaged to be married, or in an exclusive intimate relationship:

  • “must disclose the relationship to their respective clients and ordinarily must not represent the clients in the matter unless each client gives informed consent, confirmed in writing [and] the lawyers reasonably believe that they will be able to provide competent and diligent representation to each.”

This is consistent with the language in Comment 11 to V.R.Pr.C. 1.7.

Frankly, as those of you who know my status may have surmised, relationships are difficult enough for me. I can’t imagine navigating one in which my significant other represents a client’s adversary.  Alas, knowing me, I’d probably use it as an excuse to end the relationship.  And I’m not talking the attorney-client relationship.

Friendships

 This category is a bit trickier to analyze, especially in such a small state.  Here’s the quick answer:

  • “In sum, opposing lawyers who are friends are not for that reason alone prohibited from representing adverse clients.  The analysis turns on the closeness of the relationship.”  (emphasis in the original).

The opinion lists several types of friendships and indicates whether they are of a nature that would require disclosure and a client’s consent.

Among those for which disclosure and consent is advised are close friendships and friendships between lawyers who:

  • “exchange gifts at holidays and special occasions; regularly socialize together; regularly communicate and coordinate activities because their children are close friends and routinely spend time in each other’s homes; vacation together with their families; share a mentor-protégé relationship developed while colleagues . . . [or] share confidences and intimate details of their lives.”

Friendships that should be disclosed but likely do not require client consent for continued representation include those between lawyers who were classmates or who used to practice together and who stay in touch or occasionally get together.

Acquaintances

The opinion states that “[a]cquaintances are relationships that do not carry the familiarity, affinity or attachment of friendships.”  As such, while disclosing an acquaintanceship “may be advisable to maintain good client relations,” it is not required.  Examples include:

  • serving on boards or committees together;
  • going to the same gym or place of worship; and,
  • bumping into each other around town.

Conclusion

Again, the opinion is here.  Give it a read.  Otherwise, use good judgment.  Remember, even if a personal relationship with opposing counsel might not have a snowball’s chance in heck of materially limiting your representation of the client, it might make sense to disclose the relationship anyway.   I’ve seen situations in which a client who learns of the personal relationship after the fact considers the failure to disclose as evidence of the conflict.

Does that make it a conflict?

No.

But as friendly an acquaintance as I am, nobody likes learning from me that a complaint has been filed against them.

Finally, yes.  I’m a fan of the third verse.

Garth Brooks - Friends in Low Places [Remix] by $WAMP BEAT$ on SoundCloud -  Hear the world's sounds

 

Conflicts, Confidences & Prospective Clients

Long ago, I investigated this disciplinary complaint:

  • Person met with Lawyer to discuss representation in a matter;
  • Person shared information about the matter with Lawyer;
  • Person opted not to retain Lawyer;
  • Litigation ensued;
  • Opposing Party retained Lawyer; and,
  • Lawyer represented Opposing Party in the same matter about which Person had consulted with Lawyer.

Back then, Vermont had yet to adopt V.R.Pr.C. 1.18, the rule that sets out a lawyer’s duties to a prospective client.  Thus, as disciplinary counsel, I was left to analyze whether Lawyer had violated the rule that prohibits concurrent representation of clients with conflicting interests or the rule that prohibits representing a client whose interests are materially adverse to those of a in the same or a substantially related matter.

At the time, the general legal principle was that prospective clients were “neither fish nor fowl” for the purposes of the ethics rules.  Thus, conceding that Person was not a current or former client, I argued that the spirit and intent of the conflicts rules rendered Lawyer’s representation of Opposing Party a violation.

Alas, a hearing panel of the Professional Responsibility Board disagreed. The panel concluded that my decision to charge Lawyer with a violation was not supported by probable cause.  Thus, complaint dismissed.

Not long thereafter we got to work on proposing & promulgating V.R.Pr.C 1.18.  It took effect on September 1, 2009.

Under the rule, a “prospective client” is a person who, in good faith, discusses with a lawyer the possibility of forming client-lawyer relationship.  If no relationship ensues, the lawyer’s duty of loyalty is relaxed, but the duty of confidentiality is not.

That is, the lawyer must maintain the prospective client’s confidences as if the person had retained the lawyer.  However, the lawyer may represent someone whose interests are materially adverse to the prospective client, even in a matter that is the same as or substantially related to the matter that was the subject of the consultation, as long as the lawyer did not receive information that “could be significantly harmful” to the prospective client. Depending on the steps that the lawyer took to avoid or minimize the receipt of disqualification, lawyer’s conflict might not be imputed to lawyer’s firm.

Earlier this week, the ABA’s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 492. The opinion addresses a lawyer’s obligations to prospective clients. The ABA Journal reported the opinion here.

In my view, the opinion provides clear and helpful guidance on (1) what constitutes a “consultation;” (2) the type of information that would be considered “significantly harmful” and thereby potentially disqualifying in a subsequent matter; and (3) the steps lawyers and firms can take to avoid receiving disqualifying information in an initial consultation.

I suggest reading it. Which is my way of saying that, as I ease back into blogging after the annual mini-hiatus that comes with the CLEs and training that take place this time of year, I’m not going to regurgitate an advisory opinion that is written far better than I could.

Aside: with the adoption of Rule 1.18, I assume that the prospective client has achieved fish or fowl status.  I’m not sure which.

Neither Fish Nor Fowl - Liz Sumner | Life Coach

Don’t remember? Doesn’t matter.

I’m on pace to receive approximately 1200 inquiries this fiscal year.  That number has remained steady over the past few years.

The most common inquiry topic?

As has remained steady since I switched to bar counsel in 2012, conflicts of interest.

I post today to (hopefully) disabuse lawyers of a notion often expressed in inquiries:  “but Mike, I don’t remember anything about the prior representation, so it can’t be a conflict.”

Caution

That is NOT the standard.

Rule 1.9 sets out a lawyer’s duties to former clients.  Here’s paragraph (a):

  • “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.”

The test, then, isn’t whether the lawyer remembers anything about the prior representation.  Rather, it’s whether the new person’s matter is the same as or substantially to the matter in which the lawyer formerly represented a client.

Whether matters are “substantially related” is a blog for another day. Or, you can call me.  Or, you can read Comment [3] to Rule 1.9.  For now, I want to focus on a single point:

  • if the new person’s matter is the same as or substantially related to the former client’s matter, hard stop.

Says who?

The Vermont Supreme Court.

In 1997, the Court issued an opinion in State v. Crepault.  Among other things, the Court considered the defendant’s argument that her conviction should be reversed for two reasons, one of which was the State’s alleged failure to disclose that the prosecutor had formerly represented the defendant in a substantially related matter.

In short, the Court concluded that the criminal prosecution was substantially related to a matter in which the prosecutor had formerly represented the defendant.  Then, the Court stated:

  • “Once a substantial relationship between the matters is found, ‘the court need not inquire whether the attorney in fact received confidential information, because the receipt of such information is presumed.'” (citation omitted).

In other words, don’t remember? Doesn’t matter.

Why?

Well, the Court answered that too.

  • “The purpose of the presumption is to avoid ‘put[ting] the former client to the Hobson’s choice of either having to disclose his privileged information in order to disqualify his former attorney or having to refrain from the disqualification motion altogether.’ ”  (citation omitted).

So, when someone asks you to represent them in a matter in which their interests are materially adverse to those of a former client, if the two matters are substantially related, Rule 1.9(a) applies and you need the former client’s informed consent, confirmed in writing, to proceed with the representation of the new client.  It matters not whether you remember anything about the prior representation.

I can hear you now.  “Ok, Mike.  But what if the two matters aren’t substantially related?”

My friends, please.

As a blogger, answering that question poses a conflict of interest! I can’t put all my content into a single post!  So, ’tis a blog for another day.

For now, if two matters are substantially related, don’t forget:

Don’t remember? Doesn’t matter.

 

 

Conflicts & nonlawyer staff

This situation arose this week via inquiry:

  • Mike – we’ve been approached by a prospective client who is getting divorced.  The spouse’s business deals are a significant issue in the divorce.  Our paralegal used to work at the firm that is representing the prospective client’s spouse. The paralegal may have worked on some business deals for prospective client’s spouse.  Can we represent the prospective client in the divorce?

What say ye?

  • A.  No. Paralegal has a conflict and it’s imputed to every lawyer in the caller’s firm
  • B.  Yes.
  • C.  Yes, because even if paralegal has a conflict, it is not imputed to the lawyers in the caller’s firm. Of course, paralegal must not have any involvement with the divorce or share information about spouse’s business deals.
  • D.  Mike, the answer is “C,” but you probably shared some practical reasons for the caller to think twice about representing the prospective client.

Rule 1.10 is our rule on imputed conflicts.  Per Rule 1.10(a), most of a lawyer’s conflicts are imputed to all other lawyers in the same firm.  Essentially, if Mike can’t represent potential client, neither can any of the lawyers in Mike’s firm.

There are exceptions.  And one covers Mike’s paralegal.

Here’s the first line of Comment [4] to Rule 1.10:

  • “The rule in paragraph (a) also does not prohibit representation by others in the law firm where the person prohibited from involvement in a matter is a nonlawyer, such as a paralegal or legal secretary.”

The Comment continues:

  • “Such persons, however, ordinarily must be screened from any personal participation in the matter to avoid communication to others in the firm of confidential information that both the nonlawyers and the firm have a legal duty to protect.”

This is not a new development in the law of lawyering.  Indeed, the oldest available advisory opinion from the VBA’s Professional Responsibility Committee is Opinion 78-02. In it, the Committee opined:

  • “A firm is not disqualified from handling a case because a paralegal employed in the firm formerly was enrolled in a paralegal training clinic which provided representation to an opposing party in litigation handled by the firm even though the paralegal had some involvement in that representation as long as the paralegal has no present involvement in the case and conveys no confidential information to firm attorneys.”

So, here again is the question I asked above:

What say ye?

  • A.  No. Paralegal has a conflict and it’s imputed to every lawyer in the caller’s firm
  • B.  Yes.
  • C.  Yes, because even if paralegal has a conflict, it is not imputed to the lawyers in the caller’s firm. Of course, paralegal must not have any involvement with the divorce or share information about spouse’s business deals.
  • D.  Mike, the answer is “C,” but you probably shared some practical reasons for the caller to think twice about representing the prospective client.

Under the rule, “C” is correct.  However, there are practical reasons that the caller should think twice about handling the prospective client’s divorce. So, “D” is the best answer.

Using the hypo as a construct, here are two practical considerations that I often share with lawyers who call to discuss potential conflicts.  There might be others.

  1. Even if it isn’t a conflict, do you want to deal with spouse filing a disciplinary complaint against you?
  2. Even if it isn’t a conflict, if the other side moves to disqualify you and your firm, it will cost the prospective client time and money.

Conflicts can be tough.  Don’t hesitate to call if you want to talk one through.

See the source image

 

 

Joint Representation of Multiple Clients

I’m guessing that many lawyers can relate to Athos.

In general, people only ask for advice, [Athos] said, that they may not follow it or if they should follow it that they may have someone to blame for having given it.”

~ Alexandre Dumas, The Three Musketeers

Image result for the 3 musketeers book

Still, there are times when advice is required no matter how it will be received.  One such time is prior to undertaking to represent multiple clients in the same matter.  Indeed, when it comes to joint representation, a lack of timely communication on the lawyer’s part could lead to the exact opposite of “All for one and one for all.”

Today, I’m NOT talking about representing multiple clients who have agreed to waive a conflict.  Rather, I’m talking about a joint representation that does not involve a conflict of interest.

The discussion flows from the New York City Bar Association’s Committee on Professional Ethics Formal Opinion 2017-7.  The opinion outlines the disclosures that a lawyer should make when a joint representation does not involve a conflict.

And there’s the first important point: even if no conflict exists, there are still disclosures that should be made prior to undertaking a joint representation.  Why? Because Rule 1.4(b) requires a lawyer to “explain a matter to the extent reasonably necessary for the client to make informed decisions regarding the representation.”

You might ask “well if there’s no conflict, what do the clients need to know before agreeing that I can represent both of them?”

How about this? Whether to agree to the joint representation in the first place.

Before I move on, let’s clarify “joint representations in which there is no conflict.”  Per the opinion, a “joint representation” refers to “a lawyer or law firm’s representation of two or more clients in a single matter on a coordinated basis.”  For example:

  • representing more than one plaintiff or defendant in the same matter;
  • representing 2 or more people who are forming a LLC;
  • representing spouses in their estate planning; or,
  • representing co-lenders or co-investors.

So, what disclosures are required?  Per the opinion, “it depends.”

I’d joke about the answer, but it’s the exact answer I’ve provided countless times both in this space and at my “live” seminars.  The nature of the joint representation will drive the disclosures that should be made up front.  Still, there are certain disclosures that likely should be made in any joint representation.   And, not only are they listed in the NYCBA advisory opinion, they’re outlined in Comments 29 thru 33 to Vermont Rule 1.7.

The disclosure/discussion includes:

An explanation from the lawyer as to how the lawyer will treat information communicated by any single one of the multiple clients.  On this, both the opinion and Comment 31 to Vermont’s rule are clear:

  • “the lawyer should, at the outset, of the common representation . . . advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other.”

As the opinion notes, while Comment 31 is directed at a situation in which a lawyer obtains informed consent to represent clients with conflicting interests, “ensuring that the joint clients understand this is no less important where the lawyer concludes at the outset that the joint clients’ interests do not and are not likely to differ.”

Why is this important?  Two reasons: the attorney-client privilege & conflicts.

Attorney-Client Privilege.  Per Comment 30 to Vermont Rule 1.7, “the prevailing rule is that as between commonly represented clients, the privilege does not attach.” In other words, as stated in the NYCBA opinion, “the lawyer must be satisfied that the joint clients understand that information that would otherwise be protected by the attorney-client privilege as against third parties will not be protected by the attorney-client privilege as between the clients if they later become adverse to each other.”

Conflicts.  A lawyer has a conflict whenever there’s a significant risk that the representation of one client will be materially limited by duties to another. For instance, you likely have a conflict if, while representing multiple clients in the same matter, one asks you to keep from the other information related to the matter.

Which brings me to the next & final disclosure: how a conflict will be resolved.  Joint clients should understand that if a conflict arises you might be required to withdraw from representing both.  As Comment 29 to Vermont Rule 1.7 states: “[o]rdinarily, the lawyer will be forced to withdraw from representing all of the clients if the common representation fails.”  Key point here: if one client quits or fires you, that client is now a former client whose interests might be materially adverse to the client who kept you.  If so, Rule 1.9(a) might knock you out.

Again, depending on the circumstances, there might be other disclosures that a lawyer should make to ensure that clients have enough information to make an informed decision as to whether to agree to a joint representation.  At the very least, the disclosures should include:

  1. An explanation from the lawyer as to how the lawyer will treat information communicated by any single one of the multiple clients.
  2. A reminder that information related to a joint representation might not be protected by the attorney-client privilege if the joint clients end up adverse to each other.
  3. A reminder that information from one will be shared with the other.
  4. A reminder that the lawyer may have to withdraw if one asks the lawyer to keep information from the other.

Finally, when should the disclosures be made? In my view, prior to the formation of the joint client relationship.  How can a client make an informed decision to agree to a joint representation without the information?  Thus, when giving advice on the pros & cons of joint representation, it’s probably best not to imitate Athos.

Why?  Because:

“He never gave his advice before it was demanded and even then it must be demanded twice.”

~ Alexandre Dumas, The Three Musketeers

The information necessary to make informed decisions about the representation is not info that a client need demand even once.  It’s info that Rule 1.4 requires a lawyer to provide.

Image result for athos 3 musketeers

Monday Morning Answers – #129

Happy Labor Day!

Is it hot & humid?  Yes!  But, you have a choice how you respond to the weather.  One choice is to bemoan it & sit on the couch all day.  Another is to smile at the thought of one more day to wear shorts, flip-flops, and to be outdoors!  Maybe even by the grill with a cold beverage . . . on a Monday!

I choose the latter.

Friday’s questions are here.  The answers follow the honor roll.  Also, you’ll recall that I asked readers to share the events seared into their memories.  I did so in the context of Friday being the anniversary of Princess Diana’s passing.  As always with my readers, the response was fantastic and significantly outnumbered entries into the quiz.

The most-cited events were to be expected:

  • 9/11
  • the space shuttle Challenger tragedy

A few others mentioned by at least 3 people:

  • JFK assassination
  • Sandy Hook
  • MLK assassination
  • the moon landing
  • Princess Diana
  • Boston Marathon bombings
  • Barack Obama elected

Interestingly, but perhaps not surprisingly given the frequent musical references on this blog, many of you will never forget where you were & what you were doing when you learned that a musician died.  Among the musicians whose deaths were mentioned more than once:

  • Kurt Cobain
  • Jerry Garcia
  • John Lennon
  • Jim Morrison
  • Elvis Presley
  • Prince
  • Tupac Shakur

Anyhow, thank you again for sharing. I love your stories.  Alas, to make the honor roll, you’ve got to answer the questions!

Honor Roll

(responses had to include quiz answers to make the honor roll)

Answers

Question 1

Lawyer called me with an inquiry.  My response included the following words and phrases:  “knowledge,” “violation,”  “substantial question,”  and “honesty, trustworthiness, fitness.”

What did Lawyer call to discuss?

  • A.  Informing a court that a client had testified falsely in a civil matter.
  • B.  Informing a court that a criminal defense client had testified falsely.
  • C.  Reporting another lawyer’s misconduct.  See, Rule 8.3(a).
  • D.  Whether reciprocal discipline would be imposed in Vermont as a result of Lawyer being sanctioned in another state.

Question 2

The conflicts rules are NOT relaxed for:

  • A.  Lawyers who transfer from one private firm to another.
  • B.  Lawyers who move from government practice to private practice.
  • C.  Lawyers who provide short-term pro bono services under the auspices of a program sponsored by a nonprofit or court.
  • D.  All of the above.

Vermont’s rules do not allow for the automatic screening of lateral transfers.  I’ve blogged on that issue here & here.  Later this month, the PRB will consider a rule change that I’ve recommended that would allow a new firm to screen a lateral transfer from another firm.

Our rules allow for screening when a lawyer moves from government practice to private practice.  In addition, Rule 6.5 relaxes the conflicts rules for lawyers who provide short-term pro bono services under the auspices of a program sponsored by a nonprofit or court.

Question 3

You’re at a CLE.   You hear me say:  “yes, it’s okay as long as  (1) your client gives informed consent; (2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and (3) information relating to the representation of your client is protected as required by Rule 1.6.”

What did someone ask if it was okay to do?

  • A.  Accept compensation for representing a client from someone other than the client.  See, Rule 1.8(f).
  • B.  Request that guardian be appointed for the client.
  • C.  Represent co-defendants in a criminal matter.
  • D.  Talk to the media in a client’s case.

Question 4

Client provides Lawyer with an advance payment of $2,000.  Lawyer has yet to do any work for Client.

Which is most accurate?

  • A.  The fee agreement must be confirmed in writing.
  • B.  The fee agreement must be confirmed in a writing that is signed by Client.
  • C.  The $2,000 must go into Lawyer’s pooled interest-bearing trust account (“IOLTA”).
  • D.  Lawyer may treat the money as Lawyer’s own if Lawyer confirms in writing (i) that the fee is not refundable; and (ii) the scope of availability or services that Client will receive.    See, Rule 1.5(f) & (g).

Here, A & B are not correct.  The rules do not require standard fee agreements to be reduced to writing.  That being said, I think it’s a bad idea not to.

C is not correct. There’s not enough information in the question to know.  For instance, if the lawyer has complied with Rule 1.5(f) and (g), then the money cannot go into trust.

Many lawyers charge “flat fees” that are “earned upon receipt” and treat the funds as their own upon receipt.  This is ok ONLY IF THE LAWYER COMPLIES WITH RULE 1.5(f) and RULE 1.5(g).  Otherwise, the money must go in trust until earned.

Question 5

Speaking of the JFK assassination . .  .

. . . Jules Mayer was a lawyer in Dallas.  In 1950, Mayer drew up a will for a client.  The will named Mayer as the executor the client’s estate.

The client died in 1967.  A dispute quickly arose, as the client’s family contended that the client had changed his will on his deathbed to remove Mayer as executor.  Mayer refused to make the change and kept the original will.

In 1991, after a lengthy legal battle, a probate court granted the family’s petition to remove Mayer as executor after concluding that he had mismanaged the estate.

Central to the dispute was gun associated with the JFK assassination.  Mayer’s client bought the gun for $62.50.   After winning their legal battle with Mayer, the client’s family sold the gun for $220,000.  Fortunately for the family, Mayer had safeguarded the gun, holding it in trust for 24 years.

Two-part question:

  1. Who was Mayer’s famous client?
  2. Who was the famous victim of the client’s gun?

Mayer’s client was Jack Ruby.  The gun was used on Lee Harvey Oswald.  A story of the gun is in this article in the Las Vegas Sun.

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