(Inquiry No. 260 )
Conflict of interest; joint representation of a present client and a new client.
In civil litigation, even where there may be identity of interests, a single lawyer may not represent both parties if one has a claim against the adverse party and the other does not.
Disciplinary Rule 4-101
Inquiring counsel presently represents a client, in an unrelated matter, who has recommended his services to another. The potential new client has a claim against a third party, but counsel fully expects that the third party will have a claim against both the original client and his new client.
1. May the attorney represent the new client fully expecting that the present client will become a third party defendant?
2. May the attorney represent both the present and new clients if suit is first commenced by the third party?
Representation of the new client is not permitted by the Code of Professional Responsibility.
LimitatIons concerning representation of multiple clients do not automatically bar attorney from representing two clients in one litigation where there is an identity of interests, full disclosure, and informed consent. The better practice is a written acknowledgment that the lawyer has explained potential problems, signed by the client, but the Code of Professional Responsibility does not require that disclosure be made in writing. (Disciplihary: Rule 5-105 C; Opinion #88-21)
The fact that one party is a present client does disqualify the lawyer from representing both parties if a lawyer is not in a position to reveal confidential information of either client which would affect that client’s positions. In this case, it appears that there will be a claim by the new client either as a plaintiff or a third party plaintiff against the third party. That same claim does not appear to exist on the part of the present client. Therefore, whether or not litigation is commenced by the third party or by the new client, the practical positions will be the same.
Both the third party and the new client will both be defendants and plaintiffs, while the present client will only be a defendant.
If the lawyer accepts employment on behalf of the new client as plaintiff and the expected counterclaims and cross-claim are asserted, the lawyer cannot represent both clients because of their differing interests. The lawyer would have to withdraw from employment on behalf of the new client because of the conflict, and this would result in a hardship to the new client. It may even be necessary to withdraw from the existing dispute on behalf of the present client because confidences of the new client might be helpful to the present client in the new litigation. The lawyer should therefor refuse the proffered representation of the new client in the first place. (Disciplinary Rules 4-101 and (105 A)
In summary, a lawyer may not undertake to represent a new client when it appears that a present client will become a third party defendant in the action nor can he represent both the new client and the present client in that litigation if the adverse party commences the action.
(Approved by Executive Subcommittee 1-3-90; approved by full Committee 1-17-90)