December 21, 1990
Informed client consent notwithstanding, a lawyer may not undertake representation of a client, even in unrelated matters, where the prospective client is also a defendant in a pending lawsuit where the lawyer represents the plaintiff, and where there is the possibility that such representation may adversely affect the interest of the existing client.
References: MRPC 1.7(a) and (b), 8.4(c); RI-25, RI-37, RI-44, RI-47, RI-53; Unified Sewerage Agency v. Jelco Inc, 649 F2d 1339 (CA9 1981); Financial Bankshares v. Metzger, 523 F Supp 744 (DDC 1981).
A lawyer represents the plaintiff in a negligence action against both the driver of a motorboat and the motorboat's owner, who also happens to be the plaintiff's roommate. The case is currently in litigation. The lawyer has been asked by the motorboat owner to represent the owner as a plaintiff in an unrelated negligence claim of the owner's own, and in a business transaction involving the transfer of property. The current client and prospective client enjoy a friendly relationship despite the ongoing litigation and both agree to the lawyer's proposed representation of the motorboat owner. The lawyer requests guidance from the Committee as to whether lawyer can ethically represent both parties.
MRPC 1.7, the general rule regarding conflicts of interest, states in pertinent 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 the representation will not adversely affect the relationship with the other client; and
"(2) each client consents after consultation.
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation . . . ."
The comments following MRPC 1.7 define the scope as broad, indicating that a lawyer may not represent an individual whose interests are adverse to an existing client even when the matters are wholly separate and distinct. The rationale for the prohibition revolves around the concern that the vigor of the lawyer's representation of one client may be diminished by the lawyer's representation of the other in an effort to avoid antagonizing the other. Moreover, clients are likely to doubt the loyalty of the lawyer who represents both. Loyalty is characterized as an indispensable element of a lawyer's relationship with a client, ABA i1495.
In previous opinions we have stated that MRPC 1.7 requires a lawyer to first determine whether a disinterested lawyer would reasonably believe the representation of the prospective client will not adversely affect the relationship with the current client, RI-25, RI-37, RI-47. Until and unless this question is answered affirmatively, the lawyer should not seek consent from the clients to the representation. Several factors should be considered in determining whether two clients can be adequately represented, including the nature of the litigation; the type of information to which the lawyer has access; whether the client is in a position to protect the client's interests or to recognize the client's vulnerability; the questions in dispute; and whether a government body is involved. Unified Sewerage Agency v. Jelco Inc, 649 F2d 1339 (CA9 1981).
In this instance, while the interests of the current client may not be adversely affected at this time by the lawyer's representation of the motorboat owner, the potential for adverse effect clearly exists and that potential is sufficient to require the lawyer to decline representation of the motorboat owner.
Clearly, while the owner is not suggesting that the lawyer represent the owner in the ongoing litigation, in which the parties' interests are obviously adverse, even representing the owner in the unrelated matters described could compromise the representation of the plaintiff in the initial lawsuit. The most obvious adverse effect appears when one considers what happens when the lawyer zealously, as the lawyer is required to do, represents the plaintiff in the lawsuit against the owner and succeeds in securing a judgment against the owner. Even if there is insurance coverage, it is possible that the verdict will exceed the available coverage and the lawyer will be placed in the position of making recommendations to the plaintiff as to the advisability of proceeding against the owner individually, and possibly as to the owner's collectability. If the lawyer had undertaken representation of the owner, the lawyer would be in possession of vital and confidential information about the owner and the owner's financial circumstances, and would be in the position of making recommendations to the owner about how to proceed with the unrelated matters, taking into consideration the existence of the outstanding judgment. See RI-46, RI-53. Under those circumstances, the lawyer would be placed in the position of sacrificing the interests of one client in favor of those of the other. Such a conflict is not permitted under MRPC 1.7(a) and (b).
There is also the possibility of the appearance of collusion between the parties. The current client and prospective client are roommates, and although disputes between individuals who enjoy such close associations are not unusual, the need to avoid collusion and/or the appearance of collusion under such circumstances is absolutely critical to the administration of justice, MRPC 8.4(c). While parties to lawsuits cannot avoid their ongoing close associations (or at least cannot do so easily), they can exercise discretion in other actions which might lead to the conclusion that they are conspiring. One of those actions would be the retention of the same lawyer, albeit in unrelated matters. It is the lawyer's responsibility to advise the client which the lawyer presently represents of that necessity.
Having concluded that a disinterested lawyer cannot reasonably conclude that the representations would not be adversely affected, we need not consider whether the clients have knowingly consented. We note, however, that in obtaining the clients' consent under MRPC 1.7 a lawyer must affirmatively disclose all the facts, legal implications, possible effects, and other circumstances relating to the proposed representation, Financial Bankshares v. Metzger, 523 F Supp 744 (DDC 1981).
Therefore, the lawyer may not ethically represent the owner, even in unrelated matters, while the lawyer is representing the current client in a lawsuit against the owner.