RI-25

May 18, 1989

SYLLABUS

A lawyer may not represent a client in other matters while the client is in the process of suing the lawyer for malpractice if the lawyer has first made a determination that a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances.

When one member of a firm is being sued for malpractice, the firm may only continue to represent that client in other pending litigation if the client consents to the representation after consultation, and only if the firm lawyers have individually made determinations that the representation of the client will not be adversely affected, utilizing the standard of a disinterested lawyer examining the circumstances.

References: MRPC 1.0, 1.7(b), 1.10.

TEXT

A client is represented on unrelated matters by lawyers at two different firms. The client becomes dissatisfied with the representation from one firm and files a malpractice lawsuit against the firm and the individual lawyer. Subsequently, the two law firms merge.

1. May the successor firm continue to represent the client using any member, including the sued lawyer, for new projects?
2. May the successor firm continue to represent the client in the pending matter through the efforts of the other members of the predecessor professional corporation, excluding the individual lawyer being sued for the alleged malpractice?
3. May the successor firm represent the client with respect to one or more of the matters pending at the time of the filing of the malpractice lawsuit against the individual lawyer and the predecessor firm using lawyers who were not members of the predecessor firm?

MRPC 1.7(b) sets forth a two-pronged test which first requires the affected lawyer "reasonably believe that the representation will not be adversely affected." The preamble of the Michigan Rules of Professional Conduct states that the words "belief" or "believes" are to be defined as denoting that "the person invoked actually supposes the fact in question to be true. A person's beliefs may be inferred from circumstances." MRPC 1.1, Comment.

The lawyer must, therefore, first examine the facts in the situation in an impartial and carefully thought out manner, and arrive at a conclusion that the interests of the client in the ongoing matters, as well as future representation of the client by the lawyer, will not be adversely affected by the malpractice litigation before the lawyer can proceed with the second portion of the test. This examination should be broad-based and should at minimum consider how the confidentiality of the information protected by the lawyer-client privilege, as well as other secrets of the client, might be handled in such a situation. In addition, the lawyer must believe that the client's interests would not be adversely affected by the lawyer's feelings of anger, revenge, or betrayal arising out of the filing of the client's malpractice lawsuit, which might spill over into areas of the lawyer's ongoing representation of the client. Where the lawyer disputes the malpractice claim, it is unlikely that representation of the client will not be adversely affected.

In light of these considerations, the Committee believes that only in very limited circumstances could the lawyer conclude that the client's interests were being served in such a situation. For example, if the lawyer admits fault in the malpractice litigation and intends to make the client whole, representation in the other matters might be permitted to continue. Also, if the additional matters being handled by the firm are transactions of some importance to the client, i.e., complex litigation or matters which require special legal expertise held by the firm, the firm's continued representation of the client may be in the client's interests.

The Comment of Rule 1.7 indicates that the lawyer, in order to undertake the examination, should peruse the situation as if the lawyer were disinterested and must make a determination as to whether or not a disinterested lawyer would conclude that the client should or should not agree to the representation. If a disinterested lawyer would conclude that the client should not agree to the representation, the lawyer may not seek client consent to the continuing representation. Only when it is determined that this is not the case may the client be approached for consent so as to meet the second prong of the test, as set out in MRPC 1.7(b)(2). If the client does actually consent, then the proposed course of action would not violate the general prohibition against representing a client in this type of a conflict-of-interest situation. In general, where the lawyer disputes the malpractice claim, it is unlikely that a client would agree to continued representation.

With respect to the question as to whether or not a malpractice suit brought against a member of a firm would cause an imputed disqualification of the other members of the firm, MRPC 1.10(a) indicates that when lawyers are associated in a firm, "none of them shall normally represent a client when any one of them practicing alone would be prohibited from doing so by Rule 1.7. MRPC 1.10(d) provides that "a disqualification described by this Rule may be waived by the affected client under the conditions stated in Rule 1.7."

It seems that this would require a new analysis made by each affected member of the firm using the same procedure and utilizing the same standards set out above to determine whether or not a disinterested lawyer examining the situation would conclude that the client should or should not agree to the representation under the circumstances. It is pointed out that all affected members of the firm must be sure that all relevant factors are considered, including in this case whether or not the potential financial loss to the firm pursuant to the malpractice litigation, which would engender higher malpractice insurance premiums so as to impact negatively upon all firm members' salaries and financial compensation, would have a personal affect. It is possible, though unlikely, that the respective analyses will determine that even if one firm member is precluded from representing the client concurrent with being sued for malpractice, that other firm members may, pursuant to the outcome of their own individual analysis, be permitted such representation.

In summary, under the circumstances as presented in this inquiry, if a disinterested lawyer would conclude that the client should not agree to the representation under those circumstances, then the representation may not be undertaken. Client consent would not vitiate the conflict.