RI-331
June 19, 2003
SYLLABUS
A lawyer who serves as a member of a legislative body while continuing to represent clients (individually or by association in a law firm) must decline representation of clients in matters that require the exercise of the lawyer's duty to the public that are contrary to the client's interests in the matter of the representation. When the conflict is between a client's general interests and the lawyer's duty to the public, there is no ethical duty to decline or terminate the representation.
When a lawyer/legislator has a conflict of interest that prohibits representation of a client, other lawyers within the lawyer's firm are also disqualified.
References: MRPC 1.7(b), 1.10(a), 6.4, 1.11, 8.4(d); CI-677, RI-22, RI-194, RI-306, RI-307; ABA Formal Opinion 93-377.
TEXT
This opinion responds to a series of questions concerning ethical issues raised when a lawyer serves as a state legislator while maintaining a relationship with the lawyer's firm, which represents predominately municipal clients. The questions raised all pertain to application of MRPC 1.7 and MRPC 1.10; and can be summarized as follows: First, is it a conflict of interest for a lawyer/legislator to represent a client when the client's interests may be affected, favorably or unfavorably, by the lawyer's actions as a legislator? More specifically, is it a conflict for the legislator to provide representation of municipal clients while the lawyer/legislator is involved in considering legislation that may impact the revenue sharing of a client, increase or decrease taxes a portion of which supports municipal clients, or increase the administrative burden on municipalities. Second, if there is a conflict of interest, is that conflict attributed to the lawyer's firm?
MRPC 1.7(b) states:
(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 . . . .
This Rule focuses on the possible material limitation on the lawyer's ability to represent a client resulting from the lawyer's responsibilities to another client or to third persons, or from the lawyer's own interests. In RI-306, we stated that, as a state legislator, a lawyer has a duty to constituents who may be considered "third persons" for the purpose of this Rule. The legislator does not owe any specific duties to specific constituents. The term "constituents" in Opinion RI-306 should be understood to refer to the public at large in characterizing the legislator's duty. That duty, however, is not a duty to a "client"; and is beyond the purview of this opinion, which pertains to duties to clients.
With regard to a lawyer/legislator's law clients, Rule 1.7(b) guarantees that a client should have the choice of accommodating other duties or interests of the lawyer that might provide a material limitation on the representation of a client. The question is when this choice should be afforded. If, in properly carrying out duties as a legislator, the lawyer/legislator favors legislation benefiting municipal clients, no conflict of interest with the client arises under the MRPC. The lawyer's conduct concerning legislative duties is to be considered under other applicable law governing the conduct of members of the legislature. However, if, in carrying out the lawyer's duties as a legislator, the lawyer supports action contrary to the lawyer's client's interests, a conflict between the lawyer's duty to the public and to the client's interests may be presented.
The resulting conflict is known as a "positional conflict" or issue conflict, usually meaning that involved clients, or a client and the lawyer, do not have interests that clash in a particular matter, but have positions that differ on some subject of mutual interest. While positional conflicts have often been disregarded as subjects of requirements of rules of professional conduct on ideological grounds such as independence of the bar, Hazard and Hodes advance the view that this is incorrect:
"The law is in fact neither neutral nor atomistic, and if a lawyer succeeds in establishing a legal precedent in the service of one client, another client may be seriously harmed; certainly the legal environment in which the second client operates will have been altered. Thus, because modern conflicts of interest analysis requires that lawyers weigh all risks of substantive harm in the balance, positional conflicts can no longer be ignored. Instead, they must be subjected to the same careful balancing of interests that attends other conflict situations." (Geoffrey C. Hazard and W. William Hodes, The Law of Lawyering, 3rd Edition (2003 Supplement), at § 10.10.
In Formal Opinion 93-377, the ABA Standing Committee on Ethics and Professional Responsibility stated that positional conflicts between client interests must be analyzed under Rule 1.7(b).
MRPC 6.4 speaks to a lawyer's involvement in law reform activities, which is somewhat analogous to the situation of a lawyer/legislator. That Rule directly authorizes a lawyer to serve as a member of an organization involved in reform of the law notwithstanding that the reform may affect the interests of a client. The Comment, however, cautions:
"In determining the nature and scope of participation in such activities, a lawyer should be mindful of obligations to clients under other rules, particularly Rule 1.7."
Whether a conflict governed by Rule 1.7(b) exists depends on whether the representation of the client is "materially limited" by other responsibilities of the lawyer. Does the lawyer's role as a legislator materially limit the lawyer's representation of the client? In the situation presented by the inquiry, the lawyer may be voting on legislation in a manner that adversely affects a client's interests. The lawyer/legislator may or may not take an active role in legislative action that may adversely affect the client's interests. Under Rule 1.7(b), even where a duty to third persons "materially limits" the representation of the client, the client may consent to the conflict as long as the lawyer reasonably believes the representation of the client will not be adversely affected. See, Restatement of the Law Third: The Law of Governing Lawyers (2000) (Restatement) at §135 where the concept is presented more clearly by using the phrase "materially and adversely affected."
The questions posed to us for this Opinion invite us either (i) to equate action taken independently of a client's matter that may have an adverse effect on a client with a material limitation on the representation of the client generally, or (ii) to determine that service on a public body in the public interest supporting action unfavorable to a client's interests does not pose a material limitation on representation of the client. Is the ability to represent a municipal client generally "materially limited" by the lawyer/legislator's need to vote in the overall public interest on a bill that may have adverse revenue or other impacts on the municipality?
The question of whether a given conflict situation is strong enough to "materially limit" the lawyer's representation of a client does not have a simple categorical answer. In our Opinion RI-307, we considered a lawyer's representation of two municipal clients whose interests would not always be aligned in a matter, in a manner similar to the questions prompting this Opinion. In analyzing Rule 1.7(b), we said that each fact scenario is to be considered in a case-by-case basis; and observed that in the situation of multiple potential conflicts originating from statutory duties of the parties and their relationship on a variety of intergovernmental issues, great caution was essential in considering dual representation under these or similar circumstances. However, in prior opinions addressing the inability of a lawyer to represent clients before public bodies of which the lawyer (or a member of the lawyer's firm) was a member, or before bodies subordinate to the body of which the lawyer was a member, we found an "inexorable conflict" between the roles of public servant and private counsel, which prevented a disinterested lawyer from a reasonable belief that representation of the private client would not be materially limited by the lawyer's responsibilities to "another client or to a third person, or by the lawyer's own interests," a litany that includes service on the public body. See RI-194, citing RI-22 and others.
We are not prepared to say that the positional conflict posed always results in a material limitation on the representation of a client; and we are not prepared to say that the positional conflict can never result in such a limitation. The interests of each person to whom the lawyer owes a duty must be balanced on a case-by-case basis. In the balancing process of determining whether a material limitation exists, loyalty to the client's interests must prevail over the lawyer's interests. The result of the process will require the lawyer to decline representation of the client rather than to proceed under a material and adverse limitation.
Once a material limitation is present, the lawyer must then determine whether carrying out the duty to others is adverse to the client in the representation, for if so, the representation must be declined or terminated. Nothing in MRPC 1.7(b) requires the lawyer/legislator to refrain from representing all clients whose interests could be affected by legislation considered by the legislative body. The prohibition relates to the representation affected. A lawyer/legislator who votes to cut back revenue sharing to all municipalities in an effort to balance the state budget may reasonably form a belief that representation of municipal clients will not be adversely affected, even though there is a material limitation. However, the lawyer/legislator may not represent a client in its attempts to defeat the legislation, because under Rule 1.7(b) there is a material limitation imposed by the lawyer/legislator's public duty (i.e., to third persons) that a lawyer could not reasonably believe would not adversely affect the representation if the lawyer were required to make a decision about the legislation based on the interests of others.
We have previously opined that a lawyer or the lawyer's law firm may not represent a client before a government body in which the lawyer is a member (RI-22). Thus it is not possible for a lawyer to represent a client in lobbying the government body of which the lawyer is a member, nor is it possible for the lawyer's firm to represent a client for such a purpose.
In the Comment to §135, Comment f(i), the Restatement offers the following illustration:
Lawyer is a member of a city council of a town. The council is considering the mayor's proposal to raise the property tax rate by five percent. Some of Lawyer's private clients favor the proposal and some oppose it. Whether Lawyer may vote on the proposal is determined by public law. However, Company, one of Lawyer's private clients, seeks to retain Lawyer to persuade the city council to exempt Company's large and valuable tract of land from the tax increase. Lawyer may not accept the representation. Lawyer's responsibility as public official to vote on the merits of Company's planned exemption creates a risk that Lawyer's representation of Company would be materially and adversely affected.
As this illustrates, the fact that some clients of a lawyer may be adversely affected by the lawyer's duty to the public in voting on the tax rate increase proposal does not cause the representation of those clients generally to be materially and adversely affected. Only representation of a client in a matter that places in potential conflict the lawyer/legislator's duties to the public is within the scope of Rule 1.7(b).
The Rule permits a conflict to be resolved by client consent to the representation about which there may be a material limitation as long as the lawyer reasonably believes that the representation will not be adversely affected. In the illustration provided above, the lawyer need not seek consent of the private clients in continuing to represent them on unrelated matters in preparing to vote against their preferences on the tax rate increase, because the duty to the public is not considered material and adverse to the representation. The lawyer cannot seek consent of Company in the illustration since that representation will be adversely affected by lawyer's duty to the public. Where the lawyer represents a private client that has consistently appealed its property tax assessment to the local Board of Review (not the City Council), it may be appropriate for the lawyer in the illustration to seek consent of the client to continue the representation while serving on the City Council that has authority to increase tax rates, even though there is no conflict in the matter of representation.
Unless consent is obtained prospectively, it is of little use to the lawyer/legislator concerned about the potential of a conflict with existing clients. In general, advance consents are of less certain value because all necessary information necessary for the consent to be sufficiently informed may not be available at the time of the consent. MRPC 1.7 requires a client to "consent after consultation." This requires communication reasonably sufficient to permit the client to appreciate the significance of the matter in question. See, MRPC Terminology. In the Model Rules of Professional Conduct (2002) adopted by the American Bar Association (Model Rules), the Rule requires "informed consent," denoting an agreement to a proposed course of conduct after the lawyer has communicated "adequate information and explanation about the materials risks of and reasonably available alternatives to the proposed course of conduct." The consent of the client must also be confirmed in writing. See also, Restatement §122. The actual conflict may not arise until after the lawyer begins serving the lawyer's term, and if the consent were not then granted, the representation would need to be terminated or declined. Such consents are valid to the extent they satisfy requirements for informed consent.
Our analysis has addressed the questions posed to us in terms of the lawyer/legislator's continued representation of a client. Under Rule 1.10(a) a conflict that is prohibited under Rule 1.7 is imputed to all lawyers associated in a firm:
"(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9(a) or (c), or 2.2."
The answer to the second question summarized at the beginning of this opinion is that the firm is disqualified if any lawyer associated with it is. There is no mechanism that permits the firm to wall off a conflicted lawyer who remains associated with the firm. In the Model Rules, Rule 1.10(a) would not impute the conflict of a lawyer to the lawyer's firm if the prohibition is based on a personal interest of the prohibited lawyer and does not present a "significant risk of materially limiting the representation of the client by the remaining members of the firm."
If the lawyer/legislator resigns from the firm and is fully disassociated from the firm, then Rule 1.10(a) does not apply. When the lawyer/legislator rejoins the firm following the lawyer's term in the legislature, Rule 1.11(a) would apply:
"(a) Except as law may otherwise expressly permit, a lawyer shall not represent a private client in connection with a matter in which the lawyer participated personally and substantially as a public officer or employee, unless the appropriate government agency consents after consultation. No lawyer in a firm with which that lawyer is associated may knowingly undertake r continue representation in such a matter, unless:
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(2) written notice is promptly given to the appropriate government agency to enable it to ascertain compliance with the provisions of this rule."
In Opinion RI-194, we noted the applicability of MRPC 8.4(d) to situations where a lawyer is a member of an official body and seeks to represent a client in matters before that body. That Opinion says that there would be an implication that the lawyer on the official body could influence it in the matter of the representation. In both RI-194 and RI-22, we have made it clear that a lawyer and the lawyer's firm may not represent a client before the body on which the lawyer serves or a body that is subordinate to it. Even where there is no such representation, the lawyer and the lawyer's firm should be diligent in observance of MRPC 8.4(d).
The principles enunciated in our prior opinions on the conflict potential arising from public service and client representation do not demand a categorical answer to the positional conflicts presented for consideration in this opinion. They, and careful consideration of MRPC 1.7(b), require not undertaking representation of clients in matters that are directly involved in the duty of the public servant. Our prior opinions and MRPC 1.7(b) do not preclude the representation of clients whose interests may be adverse to the duty of the public servant, in other matters.