Aug. 19, 2015 – What are the ethical duties of a lawyer or firm represented by opposing counsel in an unrelated matter?
Law Firm A represents Law Firm B in connection with Legal Matter X. Law Firm A also represents clients in other matters, wholly unrelated to Legal Matter X, in which Law Firm B represents the opposing parties. What are the ethical duties of a lawyer whose firm is represented by an opposing firm in an unrelated matter?
This situation is not directly addressed by the Rules of Professional Conduct (the “Rules”). Various ethics opinions, however, have analyzed this situation under ABA Model Rule 1.7(a)(2) [SCR 20:1.7(a)(2) in Wisconsin], which states that a lawyer may have a conflict if there is a significant risk that the representation will be materially limited by the lawyer’s own interests.1 While there is some difference in the analysis in these opinions, there is a general consensus. For purposes of this opinion, I will discuss the analysis from the perspective of the represented firm (Firm B).
Each Situation Must Be Analyzed
First, the mere fact that a lawyer or firm is represented by opposing counsel in an unrelated matter does not in and of itself create a conflict. Rather, each situation must be analyzed by the lawyers involved to determine whether there is a significant risk of a material limitation on the lawyer’s ability to represent their respective clients.
org tpierce wisbar Tim Pierce is ethics counsel with the State Bar of Wisconsin. Reach him by org tpierce wisbar email. Ethics question? Call the Ethics Hotline at (608) 229-2017 or (800) 254-9154.
ABA Formal Ethics Opinion 97-406 lists the following factors to consider in determining whether such a conflict exists:
(1) the relative importance of the matter to the represented lawyer; (2) the relative size of the fee expected by the representing lawyer; (3) the relative importance to each lawyer and to his client, of the matter involving the "third-party" clients; (4) the sensitivity of each matter; (5) the substantial similarity between the subject matter or issues of the two representations; and (6) the nature of the relationship of one lawyer to the other and of each lawyer to his third-party client.
These factors are similar to those articulated in other opinions,2 and none should be regarded as determinative. As noted in Comment  to SCR 20:1.7, in determining whether there is a significant risk of a material limitation, “(t)he critical questions are the likelihood that a difference in interests will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client.”
Have an Ethical Dilemma?
Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel org tpierce wisbar Timothy Pierce and assistant ethics counsel org akaiser wisbar Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.
As a State Bar member, you have access to informal guidance in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys. To informally discuss an ethics issue, contact Pierce or Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m. to 4 p.m.
Risks of Material Limitation
Secondly, if the lawyer determines that there is a significant risk of a material limitation, the lawyer must determine whether he or she is able to provide competent representation notwithstanding the conflict. If the lawyer reasonably so believes, the lawyer may seek the affected client's consent to the conflict pursuant to SCR 20:1.7(b).
Third, even if the lawyer reasonably believes that there is no significant risk of a material limitation, the lawyer must consider whether the lawyer’s duty to explain matters to clients to the extent necessary to permit clients to make informed decisions regarding the representation pursuant to SCR 20:1.4(b) requires the lawyer to inform the client of the fact that the lawyer is represented by opposing counsel in an unrelated matter.
Disclosure May be Prudent – or Required
It is important here to note that this disclosure is not the equivalent of seeking a conflict waiver from the client. Rather, this is simply disclosure of a fact relevant to the client’s choice of counsel. Several ethics opinions have suggested that this disclosure is at least prudent, if not required, in many cases and, in one of the few disciplinary case involving this situation, the respondent lawyer was disciplined, in part, not for a conflict but for failing to disclose to a client that the lawyer was represented by opposing counsel in another matter.3
Client identity is confidential and a lawyer considering undertaking the representation of another lawyer or law firm should therefore secure the prospective client’s permission to disclose the existence of the relationship if necessary.
1 Most ethics opinions reference previous versions of the ABA Rule, 1.7(b).
2 See e.g. New York City Bar Association Formal Ethics Opinion 1996-3(1996); Alabama Ethics Opinion 1996-06 (1996); New Jersey Ethics Opinion 679 (1995).
3 See In re Allsep, 343 S.C. 503, 541 S.E.2d 245 (S.C. 2001).