(b) Except as permitted by paragraph (c) below, a lawyer shall not represent a client with respect to a matter if:
(1) That matter involves a specific party or parties and a position to be taken by that client in that matter is adverse to a position taken or to be taken by another client in the same matter even though that client is unrepresented or represented by a different lawyer;
(2) Such representation will be or is likely to be adversely affected by representation of another client;
(3) Representation of another client will be or is likely to be adversely affected by such representation;
(4) The lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interests in a third party or the lawyer’s own financial, business, property, or personal interests.
(c) A lawyer may represent a client with respect to a matter in the circumstances described in paragraph (b) above if
(1) Each potentially affected client provides informed consent to such representation after full disclosure of the existence and nature of the possible conflict and the possible adverse consequences of such representation; and
(2) The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client.
(d) If a conflict not reasonably foreseeable at the outset of representation arises under paragraph (b)(1) after the representation commences, and is not waived under paragraph (c), a lawyer need not withdraw from any representation unless the conflict also arises under paragraphs (b)(2), (b)(3), or (b)(4).
Comment
[1] Rule 1.7 is intended to provide clear notice of circumstances that may constitute a conflict of interest. Rule 1.7(a) sets out the limited circumstances in which representation of conflicting interests is absolutely prohibited even with the informed consent of all involved clients. Rule 1.7(b) sets out those circumstances in which representation is barred in the absence of informed client consent. For the definition of “informed consent,” see Rule 1.0(e). The difference between Rule 1.7(a) and Rule 1.7(b) is that in the former, the lawyer is representing multiple interests in the same matter, while in the latter, the lawyer is representing a single interest, but a client of the lawyer who is represented by different counsel has an interest adverse to that advanced by the lawyer. The application of Rules 1.7(a) and 1.7(b) to specific facts must also take into consideration the principles of imputed disqualification described in Rule 1.10. Rule 1.7(c) states the procedure that must be used to obtain the client’s informed consent if representation is to commence or continue in the circumstances described in Rule 1.7(b). Rule 1.7(d) governs withdrawal in cases arising under Rule 1.7(b)(1).
Representation Absolutely Prohibited – Rule 1.7(a)
[2] Institutional interests in preserving confidence
in the adversary process and in the administration of justice preclude
permitting a lawyer to represent adverse positions in the same matter.
For that reason, paragraph (a) prohibits such conflicting representations,
with or without client consent.
[3] The same lawyer (or law firm, see Rule
1.10) should not espouse adverse positions in the same matter during
the course of any type of representation, whether such adverse positions
are taken on behalf of clients or on behalf of the lawyer or an association
of which the lawyer is a member. On the other hand, for purposes of
Rule 1.7(a), an “adverse” position does not include inconsistent
or alternative positions advanced by counsel on behalf of a single client.
Rule 1.7(a) is intended to codify the result reached in D.C. Bar Legal
Ethics Committee Opinion 204, including the conclusion that a rulemaking
whose result will be applied retroactively in pending adjudications
is the same matter as the adjudications, even though treated as separate
proceedings by an agency. However, if the adverse positions to be taken
relate to different matters, the absolute prohibition of paragraph (a)
is inapplicable, even though paragraphs (b) and (c) may apply.
[4] The absolute prohibition of paragraph (a) applies
only to situations in which a lawyer would be called upon to espouse
adverse positions for different clients in the same matter. It is for
this reason that paragraph (a) refers to adversity with respect to a
“position taken or to be taken” in a matter rather than
adversity with respect to the matter or the entire representation. This
approach is intended to reduce the costs of litigation in other representations
where parties have common, non-adverse interests on certain issues,
but have adverse (or contingently or possibly adverse) positions with
respect to other issues. If, for example, a lawyer would not be required
to take adverse positions in providing joint representation of two clients
in the liability phase of a case, it would be permissible to undertake
such a limited representation. Then, after completion of the liability
phase, and upon satisfying the requirements of paragraph (c) of this
rule, and of any other applicable Rules, the lawyer could represent
either one of those parties as to the damages phase of the case, even
though the other, represented by separate counsel as to damages, might
have an adverse position as to that phase of the case. Insofar as the
absolute prohibition of paragraph (a) is concerned, a lawyer may represent
two parties that may be adverse to each other as to some aspects of
the case so long as the same lawyer does not represent both parties
with respect to those positions. Such a representation comes within
paragraph (b), rather than paragraph (a), and is therefore subject to
the consent provisions of paragraph (c).
[5] The ability to represent two parties who have
adverse interests as to portions of a case may be limited because the
lawyer obtains confidences or secrets relating to a party while jointly
representing both parties in one phase of the case. In some circumstances,
such confidences or secrets might be useful, against the interests of
the party to whom they relate, in a subsequent part of the case. Absent
the informed consent of the party whose confidences or secrets are implicated,
the subsequent adverse representation is governed by the “substantial
relationship” test, which is set forth in Rule 1.9.
[6] The prohibition of paragraph (a) relates only
to actual conflicts of positions, not to mere formalities. For example,
a lawyer is not absolutely forbidden to provide joint or simultaneous
representation if the clients’ positions are only nominally but
not actually adverse. Joint representation is commonly provided to incorporators
of a business, to parties to a contract, in formulating estate plans
for family members, and in other circumstances where the clients might
be nominally adverse in some respect but have retained a lawyer to accomplish
a common purpose. If no actual conflict of positions exists with respect
to a matter, the absolute prohibition of paragraph (a) does not come
into play. Thus, in the limited circumstances set forth in Opinion 143
of the D.C. Bar Legal Ethics Committee, this prohibition would not preclude
the representation of both parties in an uncontested divorce proceeding,
there being no actual conflict of positions based on the facts presented
in Opinion 143. For further discussion of common representation issues,
including intermediation, see Comments [14]-[18].
Representation Conditionally Prohibited – Rule 1.7(b)
[7] Paragraphs (b) and (c) are based upon two principles:
(1) that a client is entitled to wholehearted and zealous representation
of its interests, and (2) that the client as well as the lawyer must
have the opportunity to judge and be satisfied that such representation
can be provided. Consistent with these principles, paragraph (b) provides
a general description of the types of circumstances in which representation
is improper in the absence of informed consent. The underlying premise
is that disclosure and informed consent are required before assuming
a representation if there is any reason to doubt the lawyer’s
ability to provide wholehearted and zealous representation of a client
or if a client might reasonably consider the representation of its interests
to be adversely affected by the lawyer’s assumption of the other
representation in question. Although the lawyer must be satisfied that
the representation can be wholeheartedly and zealously undertaken, if
an objective observer would have any reasonable doubt on that issue,
the client has a right to disclosure of all relevant considerations
and the opportunity to be the judge of its own interests.
[8] A client may, on occasion, adopt unreasonable
positions with respect to having the lawyer who is representing that
client also represent other parties. Such an unreasonable position may
be based on an aversion to the other parties being represented by a
lawyer, or on some philosophical or ideological ground having no foundation
in the Rules regarding representation of conflicting interests. Whatever
difficulties may be presented for the lawyer in such circumstances as
a matter of client relations, the unreasonable positions taken by a
client do not fall within the circumstances requiring notification and
informed consent. Clients have broad discretion to terminate their representation
by a lawyer and that discretion may generally be exercised on unreasonable
as well as reasonable grounds.
[9] If the lawyer determines or can foresee that an
issue with respect to the application of paragraph (b) exists, the only
prudent course is for the lawyer to make disclosure, pursuant to paragraph
(c), to each affected client and enable each to determine whether in
its judgment the representation at issue is likely to affect its interests
adversely.
[10] Paragraph (b) does not purport to state a uniform
rule applicable to cases in which two clients may be adverse to each
other in a matter in which neither is represented by the lawyer or in
a situation in which two or more clients may be direct business competitors.
The matter in which two clients are adverse may be so unrelated or insignificant
as to have no possible effect upon a lawyer’s ability to represent
both in other matters. The fact that two clients are business competitors,
standing alone, is usually not a bar to simultaneous representation.
Thus, in a matter involving a specific party or parties, paragraphs
(b)(1) and (c) require notice and informed consent if the lawyer will
take a position on behalf of one client adverse to another client even
though the lawyer represents the latter client only on an unrelated
position or in an unrelated matter. Paragraphs (b)(2), (3), (4) and
(c) require disclosure and informed consent in any situation in which
the lawyer’s representation of a client may be adversely affected
by representation of another client or by any of the factors specified
in paragraph (b)(4).
Individual Interest Conflicts
[11] The lawyer’s own interests should not be
permitted to have an adverse effect on representation of a client. For
example, if the probity of a lawyer’s own conduct in a transaction
is in serious question, it may be difficult or impossible for the lawyer
to give a client detached advice. Similarly, when a lawyer has discussions
concerning possible employment with an opponent of the lawyer’s
client, or with a law firm representing the opponent, such discussions
could adversely affect the lawyer’s representation of the client.
See D.C. Bar Legal Ethics Committee Opinion No. 210 (defense
attorney negotiating position with United States Attorney’s Office).
In addition, a lawyer may not allow related business interests to affect
representation, for example, by referring clients to an enterprise in
which the lawyer has an undisclosed financial interest. See Comment
[34] for specific commentary concerning affiliated business interests;
Rule 1.8 for specific Rules pertaining to a number of individual attorney’s
interest conflicts, including business transactions with clients; Rule
1.8(j) for the effect of firm-wide imputation upon individual attorney
interests.
[12] For the effect of a blood or marital relationship
between lawyers representing different clients, see Rule 1.8(h).
Disqualification arising from a close family relationship is not imputed.
See Rule 1.8(j).
Positional Conflicts
[13] Ordinarily a lawyer may take inconsistent legal
positions in different forums at different times on behalf of different
clients. The mere fact that advocating a legal position on behalf of
one client might create precedent adverse to the interests of a client
represented by the lawyer in an unrelated matter does not, without more,
create a conflict of interest. A conflict of interest exists, however,
if there is a significant risk that a lawyer’s action on behalf
of one client in a given matter, as referred to in Rule 1.7(b), will
adversely affect the lawyer’s effectiveness in representing another
client in the same or different matter; for example, when a decision
favoring one client will create a precedent likely to seriously weaken
the position being taken on behalf of the other client. Factors relevant
in determining whether the clients need to be advised of the risk include:
where the matters are pending, the temporal relationship between the
matters, the significance of the issue to the immediate and long-term
interests of the clients involved, and the clients’ reasonable
expectations in retaining the lawyer. If there is significant risk of
material limitation, then, absent informed consent of the affected clients,
the lawyer must refuse one of the representations or withdraw from one
or both matters, subject to the exception provided in Rule 1.7(d). See
D.C. Legal Ethics Committee Opinion No. 265.
Special Considerations in Common Representation
[14] In considering whether to represent multiple
clients in the same matter, a lawyer should be mindful that if the common
representation fails because the potentially adverse interests cannot
be reconciled, the result can be additional cost, embarrassment and
recrimination. In some situations, the risk of failure is so great that
multiple representation is plainly impossible. For example, a lawyer
cannot undertake common representation of clients where contentious
litigation or negotiations between them are imminent or contemplated.
Moreover, because the lawyer is required to be impartial between commonly
represented clients, representation of multiple clients is improper
when it is unlikely that impartiality can be maintained. Generally,
if the relationship between the parties has already assumed antagonism,
the possibility that the clients’ interests can be adequately
served by common representation is not very good. Other relevant factors
are whether the lawyer subsequently will represent both parties on a
continuing basis and whether the situation involves creating or terminating
a relationship between the parties.
[15] A particularly important factor in determining
the appropriateness of common representation is the effect on client-lawyer
confidentiality and the attorney-client privilege. With regard to the
attorney-client privilege, the prevailing rule is that, as between commonly
represented clients, the privilege does not attach. Hence, it must be
assumed that if litigation eventuates between the clients, the privilege
will not protect any such communications, and the clients should be
so advised.
[16] As to the duty of confidentiality, continued
common representation will almost certainly be inadequate if one client
asks the lawyer not to disclose to the other client information relevant
to the common representation. This is so because the lawyer has an equal
duty of loyalty to each client, and each client has the right to be
informed of anything bearing on the representation that might affect
that client’s interests and the right to expect that the lawyer
will use that information to that client’s benefit. See
Rule 1.4. The lawyer should, at the outset of the common representation
and as part of the process of obtaining each client’s informed
consent, advise each client that information relevant to the common
representation will be shared, and explain the circumstances in which
the lawyer may have to withdraw from any or all representations if one
client later objects to continued common representation or sharing of
such information. In limited circumstances, it may be appropriate for
the lawyer to proceed with the representation when the clients have
agreed, after being properly informed, that the lawyer will keep certain
information confidential. For example, the lawyer may reasonably conclude
that failure to disclose one client’s trade secrets to another
client will not adversely affect representation involving a joint venture
between the clients and agree to keep that information confidential
with the informed consent of both clients.
[17] When seeking to establish or adjust a relationship
between clients, the lawyer should make clear that the lawyer’s
role is not that of partisanship normally expected in other circumstances
and, thus, that the clients may be required to assume greater responsibility
for decisions than when each client is separately represented. Any limitations
on the scope of the representation made necessary as a result of the
common representation should be fully explained to the clients at the
outset of the representation. See Rule 1.2(c).
[18] Subject to the above limitations, each client
in the common representation has the right to loyal and diligent representation
and the protection of Rule 1.9 concerning the obligations to a former
client. The client also has the right to discharge the lawyer as stated
in Rule 1.16.
Lawyer’s Duty to Make Inquiries to Determine Potential Conflicts
[19] The scope of and parties to a “matter”
are typically apparent in on-the-record adversary proceedings or other
proceedings in which a written record of the identity and the position
of the parties exists. In Rule 1.7(b)(1), the phrase “matter involving
a specific party or parties” refers to such situations. In other
situations, however, it may not be clear to a lawyer whether the representation
of one client is adverse to the interests of another client. For example,
a lawyer may represent a client only with respect to one or a few of
the client’s areas of interest. Other lawyers, or non-lawyers
(such as lobbyists), or employees of the client (such as government
relations personnel) may be representing that client on many issues
whose scope and content are unknown to the lawyer. Clients often have
many representatives acting for them, including multiple law firms,
nonlawyer lobbyists, and client employees. A lawyer retained for a limited
purpose may not be aware of the full range of a client’s other
interests or positions on issues. Except in matters involving a specific
party or parties, a lawyer is not required to inquire of a client concerning
the full range of that client’s interests in issues, unless it
is clear to the lawyer that there is a potential for adversity between
the interests of clients of the lawyer. Where lawyers are associated
in a firm within the meaning of Rule 1.10(a), the rule stated in the
preceding sentence must be applied to all lawyers and all clients in
the firm. Unless a lawyer is aware that representing one client involves
seeking a result to which another client is opposed, Rule 1.7 is not
violated by a representation that eventuates in the lawyer’s unwittingly
taking a position for one client adverse to the interests of another
client. The test to be applied here is one of reasonableness and may
turn on whether the lawyer has an effective conflict checking system
in place.
Situations That Frequently Arise
[20] A number of types of situations frequently arise
in which disclosure and informed consent are usually required. These
include joint representation of parties to criminal and civil litigation,
joint representation of incorporators of a business, joint representation
of a business or government agency and its employees, representation
of family members seeking estate planning or the drafting of wills,
joint representation of an insurer and an insured, representation in
circumstances in which the personal or financial interests of the lawyer,
or the lawyer’s family, might be affected by the representation,
and other similar situations in which experience indicates that conflicts
are likely to exist or arise. For example, a lawyer might not be able
to represent a client vigorously if the client’s adversary is
a person with whom the lawyer has longstanding personal or social ties.
The client is entitled to be informed of such circumstances so that
an informed decision can be made concerning the advisability of retaining
the lawyer who has such ties to the adversary. The principles of disclosure
and informed consent are equally applicable to all such circumstances,
except that if the positions to be taken by two clients in a matter
as to which the lawyer represents both are actually adverse, then, as
provided in paragraph (a), the lawyer may not undertake or continue
the representation with respect to those issues even if disclosure has
been made and informed consent obtained.
Organization Clients
[21] As is provided in Rule 1.13, the lawyer who represents
a corporation, partnership, trade association or other organization-type
client is deemed to represent that specific entity, and not its shareholders,
owners, partners, members or “other constituents.” Thus,
for purposes of interpreting this rule, the specific entity represented
by the lawyer is the “client.” Ordinarily that client’s
affiliates (parents and subsidiaries), other stockholders and owners,
partners, members, etc., are not considered to be clients of the lawyer.
Generally, the lawyer for a corporation is not prohibited by legal ethics
principles from representing the corporation in a matter in which the
corporation’s stockholders or other constituents are adverse to
the corporation. See D.C. Bar Legal Ethics Committee Opinion
No. 216. A fortiori, and consistent with the principle reflected in
Rule 1.13, the lawyer for an organization normally should not be precluded
from representing an unrelated client whose interests are adverse to
the interests of an affiliate (e.g., parent or subsidiary), stockholders
and owners, partners, members, etc., of that organization in a matter
that is separate from and not substantially related to the matter on
which the lawyer represents the organization.
[22] However, there may be cases in which a lawyer
is deemed to represent a constituent of an organization client. Such
de facto representation has been found where a lawyer has received confidences
from a constituent during the course of representing an organization
client in circumstances in which the constituent reasonably believed
that the lawyer was acting as the constituent’s lawyer as well
as the lawyer for the organization client. See generally ABA
Formal Opinion 92-365. In general, representation may be implied where
on the facts there is a reasonable belief by the constituent that there
is individual as well as collective representation. Id. The propriety
of representation adverse to an affiliate or constituent of the organization
client, therefore, must first be tested by determining whether a constituent
is in fact a client of the lawyer. If it is, representation adverse
to the constituent requires compliance with Rule 1.7. See ABA
Opinion 92-365. The propriety of representation must also be tested
by reference to the lawyer’s obligation under Rule 1.6 to preserve
confidences and secrets and to the obligations imposed by paragraphs
(b)(2) through (b)(4) of this rule. Thus, absent informed consent under
Rule 1.7(c), such adverse representation ordinarily would be improper
if:
(a) the adverse matter is the same as, or substantially
related to, the matter on which the lawyer represents the organization
client,
(b) during the course of representation of the organization
client the lawyer has in fact acquired confidences or secrets (as defined
in Rule 1.6(b)) of the organization client or an affiliate or constituent
that could be used to the disadvantage of any of the organization client
or its affiliate or constituents, or
(c) such representation seeks a result that is likely
to have a material adverse effect on the financial condition of the
organization client.
[23] In addition, the propriety of representation
adverse to an affiliate or constituent of the organization client must
be tested by attempting to determine whether the adverse party is in
substance the “alter ego” of the organization client. The
alter ego case is one in which there is likely to be a reasonable expectation
by the constituents or affiliates of an organization that each has an
individual as well as a collective client-lawyer relationship with the
lawyer, a likelihood that a result adverse to the constituent would
also be adverse to the existing organization client, and a risk that
both the new and the old representation would be so adversely affected
that the conflict would not be “consentable.” Although the
alter ego criterion necessarily involves some imprecision, it may be
usefully applied in a parent-subsidiary context, for example, by analyzing
the following relevant factors: whether (i) the parent directly or indirectly
owns all or substantially all of the voting stock of the subsidiary,
(ii) the two companies have common directors, officers, office premises,
or business activities, or (iii) a single legal department retains,
supervises and pays outside lawyers for both the parent and the subsidiary.
If all or most of those factors are present, for conflict of interest
purposes those two entities normally would be considered alter egos
of one another and the lawyer for one of them should refrain from engaging
in representation adverse to the other, even on a matter where clauses
(a), (b) and (c) of the preceding paragraph [22] are not applicable.
Similarly, if the organization client is a corporation that is wholly
owned by a single individual, in most cases for purposes of applying
this rule, that client should be deemed to be the alter ego of its sole
stockholder. Therefore, the corporation’s lawyer should refrain
from engaging in representation adverse to the sole stockholder, even
on a matter where clauses (a), (b) and (c) of the preceding paragraph
[22] are not applicable.
[24] If representation otherwise appropriate under
the preceding paragraphs seeks a result that is likely ultimately to
have a material adverse effect on the financial condition of the organization
client, such representation is prohibited by Rule 1.7(b)(3). If the
likely adverse effect on the financial condition of the organization
client is not material, such representation is not prohibited by Rule
1.7(b)(3). Obviously, however, a lawyer should exercise restraint and
sensitivity in determining whether to undertake such representation
in a case of that type, particularly if the organization client does
not realistically have the option to discharge the lawyer as counsel
to the organization client.
[25] The provisions of paragraphs [20] through [23]
are subject to any contrary agreement or other understanding between
the client and the lawyer. In particular, the client has the right by
means of the original engagement letter or otherwise to restrict the
lawyer from engaging in representations otherwise permissible under
the foregoing guidelines. If the lawyer agrees to such restrictions
in order to obtain or keep the client’s business, any such agreement
between client and lawyer will take precedence over these guidelines.
Conversely, an organization client, in order to obtain the lawyer’s
services, may in the original engagement letter or otherwise give informed
consent to the lawyer in advance to engage in representations adverse
to an affiliate, owner or other constituent of the client not otherwise
permissible under the foregoing guidelines so long as the requirements
of Rule 1.7(c) can be met.
[26] In any event, in all cases referred to above,
the lawyer must carefully consider whether Rule 1.7(b)(2) or Rule 1.7(b)(4)
requires informed consent from the second client whom the lawyer proposes
to represent adverse to an affiliate, owner or other constituent of
the first client.
Disclosure and Consent
[27] Disclosure and informed consent are not mere
formalities. Adequate disclosure requires such disclosure of the parties
and their interests and positions as to enable each potential client
to make a fully informed decision as to whether to proceed with the
contemplated representation. If a lawyer’s obligation to one or
another client or to others or some other consideration precludes making
such full disclosure to all affected parties, that fact alone precludes
undertaking the representation at issue. Full disclosure also requires
that clients be made aware of the possible extra expense, inconvenience,
and other disadvantages that may arise if an actual conflict of position
should later arise and the lawyer be required to terminate the representation.
[28] It is ordinarily prudent for the lawyer to provide
at least a written summary of the considerations disclosed and to request
and receive a written informed consent, although the rule does not require
that disclosure be in writing or in any other particular form in all
cases. Lawyers should also recognize that the form of disclosure sufficient
for more sophisticated business clients may not be sufficient to permit
less sophisticated clients to provide informed consent. Moreover, under
the District of Columbia substantive law, the lawyer bears the burden
of proof that informed consent was secured.
[29] The term “informed consent” is defined
in Rule 1.0(e). As indicated in Comment [2] to that rule, a client’s
consent must not be coerced either by the lawyer or by any other person.
In particular, the lawyer should not use the client’s investment
in previous representation by the lawyer as leverage to obtain or maintain
representation that may be contrary to the client’s best interests.
If a lawyer has reason to believe that undue influence has been used
by anyone to obtain agreement to the representation, the lawyer should
not undertake the representation.
[30] The lawyer’s authority to solicit and to
act upon the client’s consent to a conflict is limited further
by the requirement that the lawyer reasonably believe that he or she
will be able to provide competent and diligent representation to each
affected client. Generally, it is doubtful that a lawyer could hold
such a belief where the representation of one client is likely to have
a substantial and material adverse effect upon the interests of another
client, or where the lawyer’s individual interests make it likely
that the lawyer will be adversely situated to the client with respect
to the subject-matter of the legal representation.
[31] Rule 1.7 permits advance waivers within certain
limits and subject to certain client protections. Such waivers are permissible
only if the prerequisites of the rule – namely “full disclosure
of the existence and nature of the possible conflict and the possible
adverse consequences of such representation” – are satisfied.
Under the Rules’ definition of “informed consent,”
the client must have “adequate information and explanation about
the material risks of and reasonably available alternatives to the proposed
course of action.” See Rule 1.0(e). Ordinarily this will require
that either (1) the consent is specific as to types of potentially adverse
representations and types of adverse clients (e.g., a bank client for
whom the lawyer performs corporate work waives the lawyer’s representation
of borrowers in mortgage loan transactions with that bank) or (2) the
waiving client has available in-house or other current counsel independent
of the lawyer soliciting the waiver.
[32] Rule 1.7(a) provides that a conflict arising
from the lawyer’s advancing adverse positions in the same matter
cannot be waived in advance or otherwise. Although an advance waiver
may permit the lawyer to act adversely to the waiving client in matters
that are substantially related to the matter in which the lawyer represents
that client, lawyers should take particular care in obtaining and acting
pursuant to advance waivers where such a matter is involved.
Withdrawal
[33] It is much to be preferred that a representation
that is likely to lead to a conflict be avoided before the representation
begins, and a lawyer should bear this fact in mind in considering whether
disclosure should be made and informed consent obtained at the outset.
If, however, a conflict arises after a representation has been undertaken,
and the conflict falls within paragraph (a), or if a conflict arises
under paragraph (b) and informed and uncoerced consent is not or cannot
be obtained pursuant to paragraph (c), then the lawyer should withdraw
from the representation, complying with Rule 1.16. Where a conflict
is not foreseeable at the outset of representation and arises only under
Rule 1.7(b)(1), a lawyer should seek informed consent to the conflict
at the time that the conflict becomes evident, but if such consent is
not given by the opposing party in the matter, the lawyer need not withdraw.
In determining whether conflict is reasonably foreseeable, the test
is an objective one. In determining the reasonableness of a lawyer’s
conduct, such factors as whether the lawyer (or lawyer’s firm)
has an adequate conflict-checking system in place, must be considered.
Where more than one client is involved and the lawyer must withdraw
because a conflict arises after representation has been undertaken,
the question of whether the lawyer may continue to represent any of
the clients is determined by Rule 1.9.
Imputed Disqualification
[34] All of the references in Rule 1.7 and its accompanying
Comment to the limitation upon a “lawyer” must be read in
light of the imputed disqualification provisions of Rule 1.10, which
affect lawyers practicing in a firm.
[35] In the government lawyer context, Rule 1.7(b)
is not intended to apply to conflicts between agencies or components
of government (federal, state, or local) where the resolution of such
conflicts has been entrusted by law, order, or regulation to a specific
individual or entity.
Businesses Affiliated With a Lawyer or Firm
[36] Lawyers, either alone or through firms, may have
interests in enterprises that do not practice law but that, in some
or all of their work, become involved with lawyers or their clients
either by assisting the lawyer in providing legal services or by providing
related services to the client. Examples of such enterprises are accounting
firms, consultants, real estate brokerages, and the like. The existence
of such interests raises several questions under this rule. First, a
lawyer’s recommendation, as part of legal advice, that the client
obtain the services of an enterprise in which the lawyer has an interest
implicates paragraph 1.7(b)(4). The lawyer should not make such a recommendation
unless able to conclude that the lawyer’s professional judgment
on behalf of the client will not be adversely affected. Even then, the
lawyer should not make such a recommendation without full disclosure
to the client so that the client can make a fully informed choice. Such
disclosure should include the nature and substance of the lawyer’s
or the firm’s interest in the related enterprise, alternative
sources for the non-legal services in question, and sufficient information
so that the client understands that the related enterprise’s services
are not legal services and that the client’s relationship to the
related enterprise will not be that of a client to attorney. Second,
such a related enterprise may refer a potential client to the lawyer;
the lawyer should take steps to assure that the related enterprise will
inform the lawyer of all such referrals. The lawyer should not accept
such a referral without full disclosure of the nature and substance
of the lawyer’s interest in the related enterprise. See also
Rule 7.1(b). Third, the lawyer should be aware that the relationship
of a related enterprise to its own customer may create a significant
interest in the lawyer in the continuation of that relationship. The
substantiality of such an interest may be enough to require the lawyer
to decline a proffered client representation that would conflict with
that interest; at least Rule 1.7(b)(4) and (c) may require the prospective
client to be informed and to give informed consent before the representation
could be undertaken. Fourth, a lawyer’s interest in a related
enterprise that may also serve the lawyer’s clients creates a
situation in which the lawyer must take unusual care to fashion the
relationship among lawyer, client, and related enterprise to assure
that the confidences and secrets are properly preserved pursuant to
Rule 1.6 to the maximum extent possible. See Rule 5.3.
Sexual Relations Between Lawyer and Client
[37] The relationship between lawyer and client is
a fiduciary one in which the lawyer occupies the highest position of
trust and confidence. Because of this fiduciary duty to clients, combining
a professional relationship with any intimate personal relationship
may raise concerns about conflict of interest, impairment of the judgment
of both lawyer and client, and preservation of attorney-client privilege.
These concerns may be particularly acute when a lawyer has a sexual
relationship with a client. Such a relationship may create a conflict
of interest under Rule 1.7(b)(4) or violate other disciplinary rules,
and it generally is imprudent even in the absence of an actual violation
of these Rules.
[38] Especially when the client is an individual,
the client’s dependence on the lawyer’s knowledge of the
law is likely to make the relationship between lawyer and client unequal.
A sexual relationship between lawyer and client can involve unfair exploitation
of the lawyer’s fiduciary role and thereby violate the lawyer’s
basic obligation not to use the trust of the client to the client’s
disadvantage. In addition, such a relationship presents a significant
risk that the lawyer’s emotional involvement will impair the lawyer’s
independent professional judgment. Moreover, a blurred line between
the professional and personal relationships may make it difficult to
predict the extent to which client confidences will be protected by
the attorney-client privilege, because client confidences are protected
by privilege only when they are imparted in the context of the client-lawyer
relationship. The client’s own emotional involvement may make
it impossible for the client to give informed consent to these risks.
[39] Sexual relationships with the representative
of an organization client may not present the same questions of inherent
inequality as the relationship with an individual client. Nonetheless,
impairment of the lawyer’s independent professional judgment and
protection of the attorney-client privilege are still of concern, particularly
if outside counsel has a sexual relationship with a representative of
the organization who supervises, directs, or regularly consults with
an outside lawyer concerning the organization’s legal matters.
An in-house employee in an intimate personal relationship with outside
counsel may not be able to assess and waive any conflict of interest
for the organization because of the employee’s personal involvement,
and another representative of the organization may be required to determine
whether to give informed consent to a waiver. The lawyer should consider
not only the disciplinary rules but also the organization’s personnel
policies regarding sexual relationships (for example, prohibiting such
relationships between supervisors and subordinates).
Short-Term Limited Legal Services
[40] For the application of this rule and Rules 1.9
and 1.10 when the lawyer undertakes to provide short-term limited legal
services to a client under the auspices of a program sponsored by a
nonprofit organization or court, see Rule 6.5(a).
