CI-644

June 1, 1981

SYLLABUS

A lawyer may properly represent clients in actions against clients of the lawyer's former employer where the actions do not arise out of matters the lawyer was involved with during his or former employment, and where there is no appearance of impropriety.

References: DR 4-101, 5-101, 5-105; CI-250, CI-426, CI-524.

TEXT

The facts upon which this inquiry is based are as follows:

From October to January you were an associate in a 16-attorney firm, during which time you represented a number of insurance carries in cases involving automobile liability.

Since leaving the firm in January, you have been "of counsel" to a small firm in a city some 90 miles from the city in which you had previously practiced. Recently, you have been asked to represent a client against an insured of one of the companies your former firm represents, in an action arising out of a lawn mower accident on the insider's property.

While working for your former firm, you never represented this particular insurance company in this type of an action, the majority of the cases you handled involving automobile liability. Thus, you have not been privy to any information as to the company's defense of premises liability or homeowners' claims, nor have you been informed of high level decisions and policies of the company. You ask:

1. May you ethically pursue this suit described above, against the insured of your former firm's client?
2. May the firm to which you are "of counsel" ethically pursue the above-described suit against the insured of your former firm's client?
3. In the future, may you ethically bring suit against the insurers of your former firm's clients even in the automobile liability area?
4. In the future, may you ethically bring suit against your former firm's clients for failure to pay a first party claim under the "no-fault" Act, failure to defend, or take other like action?

The issue of representing a new client against a former client is one that has been presented to this Committee frequently. The general rule is well stated in CI-426 that states:

"[A}n attorney should not accept litigation against a former client under any circumstances if such would result in a conflict of interest or disclosure of any confidences of a former client. In addition, many opinions have held that attorneys should avoid representation of a party in a suit or any type of an action involving a former client where there may be the appearance of conflict of interest or possible violation of confidence even though, in fact, such may not exist." Emphasis added.

This rule is based on Disciplinary Rules 4-101, 5-101 and 5-105:

"(B) Except when permitted under DR 4-101(C), a lawyer shall not knowingly: (2) use a confidence or secret of his or her client to the disadvantage of the client." DR 4-101.

"(A) Except with the consent of his or her client after full disclosure, a lawyer shall not accept employment if the exercise of his or her professional judgment on behalf of his or her client will be or reasonably my be affected by his or her own financial, business, property, or personal interests." DR 5-101.

"(A) A lawyer shall decline proffered employment if the exercise of his or her independent professional judgment on behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C)." DR 5-105.

You have referred to CI-250 that does provide an affirmative answer to your questions 1 and 2 based on the facts as presented. It is stated:

"There is no ethical prohibition against representing a client against a former client or employer of the lawyer provided the business relations between the lawyer and the former client or employer have ceased.

"As stated in C-7, such representation would be improper if the lawyer had represented the former employer involving the same subject matter or if the lawyer had been in a situation or position with the former employer to have actually gained or been in a position to gain information on which to proceed in the present case."

Because no information has been received from the insurance company whom you helped to defend, and because you have ceased to represent that company, there is no problem in your bringing suit against it or for other members of your law firm to bring suit against that company in the lawn mower case described.

The same general rule quoted from CI-426 will also apply to your third and fourth questions. These questions do not permit, however, as ready an answer to the first two. It cannot be said that you may always bring suit against insurance companies that you once represented in the automobile liability area, even where the action does not arise out of matters what you were concerned with during your former employment, because there is a far greater likelihood of your having obtained privileged information from the insurance client, or at least the appearance of impropriety being raised. In CI-524, this Committee was asked whether information received from a former client that was a matter of public record (a real estate interest record in the Register of Deeds office) could be used in a suit to collect from a former client on behalf of a new client. The Committee opined:

"The lawyer's ethical duty to preserve the secrets of a client shields all information given by the client to his or her attorney whether or not strictly confidential in nature. This duty exists without regard to the nature or source of information or the fact that others share the knowledge, by virtue of it being a matter of public record, under circumstances where the particular facts were disclosed to the lawyer within the professional relationship . . . . This Committee is opposed to permitting lawyers to sue former clients where there is any kind of relationship between the prior and contemplated representation."

There is a far higher likelihood of an appearance of conflict of interest or the appearance of disclosure of confidential information obtained from the former client in the situation where you would be representing an automobile liability plaintiff against this particular former client. In CI-364 this Committee quoted the ABA Committee on Professional Ethics, In Informal Opinion 885:

"Moreover, the lawyer should avoid representation of a party in a suit against a former client where there may be the appearance of a conflict of interest or a possible violation of confidence, even though this may not be true in fact."

In light of Canon 9 that provides that "a lawyer should avoid even the appearance of professional impropriety," this Committee has consistently taken the position that an attorney should refuse a case where it could lead to the appearance of misuse or disclosure of a prior client's confidences. See C-7; CI-235, CI-304, and CI-426.

Thus, in general, there may be no appearance of impropriety arising out of your representation of clients against insurance companies for whom you have formerly provided services. We would caution you to evaluate each new case in light of the above-cited authorities. In making this determination, the geographical distance between your former firm and your current firm, which we understand to be 90 miles, and the time elapsed between your representation of the particular insurance company involved will be relevant factors. Also relevant will be your prior contacts with the particular branch office involved.

DR 5-105(D) provides:

"If a lawyer is required to decline employment or to withdraw from employment under DR 5-105, no partner or associate of his or her firm may accept or continue such employment."

If you determine that you yourself will not be able to ethically represent a new client because of information received in your former employment, this rule will preclude any other member of your firm from accepting that proffered employment. CI-459 contains a discussion of principles relevant to this issue.