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    Ethics: Determining Adverse Representation

    The term "directly adverse" is not well defined, nor is there a clear test for lawyers to apply when determining if the representation of one client will be directly adverse to another client. The State Bar's Ethics Hotline can help you determine if a conflict of interest exists.

    Dean R. Dietrich

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 78, No. 12 December 2005

    Determining Adverse Representation

    The term "directly adverse" is not well defined, nor is there a clear test for lawyers to apply when determining if the representation of one client will be directly adverse to another client. The State Bar's Ethics Hotline can help you determine if a conflict of interest exists.

    by Dean R. Dietrich

    Question

    When determining whether I have a conflict of interest, I have to consider whether my representation of one client will be "directly adverse" to another client. What does this mean?

    Dean DietrichDean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is chair of the State Bar Professional Ethics Committee.

    Answer

    The term "directly adverse" has not been succinctly defined in Wisconsin case law. Nor is there a clearly enunciated test for what type of representation is directly adverse to another representation. Thus, a determination of "adversity" is highly dependent on the nature and circumstances of the different representations.

    The concept of "directly adverse" began with the 1983 version of the conflict of interest rule, Model Rule 1.7. This Model Rule (which is also the current Wisconsin Rule SCR 20:1.7) addresses the concept of directly adverse in a general sense. SCR 20:1.7 provides in relevant part:

    "(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

    "(1) The lawyer reasonably believes that representation will not adversely affect the relationship with the other client; and

    "(2) Each client consents in writing after consultation."

    The comment to this rule provides some guidance to lawyers in determining what is meant by "directly adverse." The comment provides:

    "As a general proposition, loyalty to a client prohibits undertaking representation directly adverse to that client without that client's consent. Paragraph (a) expresses that general rule. Thus, a lawyer ordinarily may not act as advocate against a person the lawyer represents in some other matter, even if it is wholly unrelated. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only generally adverse, such as competing economic enterprises, does not require consent of the respective clients..."

    Changes to the Model Rules of Professional Conduct, based on the ABA Ethics 2000 Commission recommendations, provide another level of guidance to lawyers in determining whether the representation of one client is "directly adverse" to the representation of another client. Under the new Model Rule 1.7 (and the proposed SCR 20:1.7 currently pending before the Wisconsin Supreme Court), the concept of "concurrent conflict of interest" is used to describe the potential conflict between two clients. The new Model Rule 1.7 provides:

    "(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

    "(1) the representation of one client will be directly adverse to another client; or

    "(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer."

    Again, the concept of "directly adverse" is addressed in the comment to the new Model Rule. The comment provides:

    "Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent. Thus, absent consent, a lawyer may not act as an advocate in one matter against a person the lawyer represents in some other matter, even when the matters are wholly unrelated. The client to whom the representation is directly adverse is likely to feel betrayed, and the resulting damage to the clientnlawyer relationship is likely to impair the lawyer's ability to represent the client effectively.... Similarly, a directly adverse conflict may arise when a lawyer is required to cross examine a client who appears as a witness in a lawsuit involving another client, as when the testimony would be damaging to the client who is represented in the lawsuit. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only economically adverse, such as representation of competing economic enterprises in unrelated litigation, does not ordinarily constitute a conflict of interest."

    The comment goes on to address directly adverse conflicts in nonlitigation matters by stating:

    "Directly adverse conflicts can also arise in transactional matters. For example, if a lawyer is asked to represent the seller of a business in negotiations with a buyer represented by the lawyer, not in the same transaction but in another, unrelated matter, the lawyer could not undertake the representation without the informed consent of each client."

    While the comment to the New Model Rule (which likely will be incorporated in the proposed new SCR 20:1.7) addresses additional examples of what is meant by direct adverse representation, lawyers still do not have a bright line test of what is meant by directly adverse representation. A determination of a conflict of interest in the representation of two clients will still be a matter of review and analysis under the specific facts and circumstances surrounding the representation.

    For example, Black's Law Dictionary defines "directly adverse" as:

    "Opposed: contrary; in resistance or opposition to a claim, application, or proceeding. Having opposing interests; having interests for the preservation of which opposition is essential. In re National Lock Co., D.C.Ill., 9 F. Supp. 432, 433."

    This definition, of course, does not carry the weight of a court pronouncement but again offers some guidance to lawyers seeking to determine whether the representation of one client is directly adverse to the representation of another client. The Wisconsin Supreme Court has said that representing a client wife and then the husband in a divorce proceeding without obtaining written consent from either party regarding the joint representation constituted representation directly adverse to another client in violation of SCR 20:17(a).1 In another case, the supreme court held that the representation of a wife in a contemplated divorce proceeding and subsequent representation of the wife and husband in a joint bankruptcy proceeding without obtaining written consent from each client constituted representation that was directly adverse to a client.2

    A recent ethics opinion from the American Bar Association Committee on Professional Ethics (ABA Formal Opinion 05-434 "Lawyer Retained by Estate to Disinherit Beneficiary that Lawyer Represents on Unrelated Matters") also tried to address the notion of direct adversity. In that opinion, the ABA Committee stated:

    "There may be direct adversity even though there is no overt confrontation between the clients, as, for example, where one client seeks the lawyer's advice as to his legal rights against another client whom the lawyer represents on a wholly unrelated matter. Thus, for example, a lawyer would be precluded by Rule 1.7(a) from advising a client as to his rights under a contract with another client of the lawyer...."

    There are a myriad of cases on conflicts of interest and motions to disqualify a lawyer from representation, but all of those decisions turn on the specific facts that form the basis for a challenge to representation. Lawyers must do their best to analyze each situation to determine whether there is direct adversity in the representation of two clients and then make decisions accordingly. Lawyers must be careful to consider all aspects of each representation to make sure that all potential areas of adverse interest or consequences are considered. One valuable tool for assistance is to contact the State Bar of Wisconsin Ethics Hotline at (608) 250-6168 or (800) 444n9404, ext. 6168. Ethics Counsel Tim Pierce can help Wisconsin lawyers discern whether a conflict of interest exists that prohibits representation of a client.

    Endnotes

    1In the Matter of Disciplinary Proceedings Against William Whitnall, 2000 WI 131, 239 Wis. 2d 721, 619 N.W.2d 926.

    2In the Matter of Disciplinary Proceedings Against Thomas E. Zablocky, 2001 WI 115, 247 Wis. 2d 994, 635 N.W.2d 288.




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