Legal Malpractice Avoidance Tip: Conflicts with Current Clients
Conflicts of interest may create a breach of an attorney’s fiduciary duty of loyalty to his or her client. If, despite the presence of a conflict, the attorney reasonably believes that he or she will be able to provide competent and diligent representation to the affected client, then he or she may proceed after acquiring informed and written consent of both parties. The best place to do this is in a written fee agreement.
A lawyer cannot represent a client if the representation involves a concurrent conflict of interest under Rule 1.7 of the Rules of Professional Conduct. A concurrent conflict of interest is defined in one of two ways. First, it may be defined as representation of one client which is directly adverse to another client. Second, it may be defined as representing one or more clients where there is a significant risk that the lawyer will be materially limited by his or her responsibilities to another client, a former client, or a third person or by a personal interest. However, a lawyer can still choose to represent a client if he or she will be able to provide competent and diligent representation to each affected client; the representation is not prohibited by law; the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or proceeding before a tribunal; and each affected client gives consent.
There are other Rules of Professional Conduct which guard against other, more specific conflicts which may arise. Under Rule 1.8, a lawyer is prohibited from entering into a business transaction or knowingly acquiring an ownership, possessory, security, or other pecuniary interest adverse to a client unless a few precautionary steps are taken to make sure the client is fully informed of the terms of the transaction. Under Rule 1.9, a lawyer’s duty of confidentiality to a former client is extended and bars a lawyer from representing another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client, unless the former client gives informed consent. Under Rule 1.10, lawyers in the same firm may not knowingly represent a client when any one of them practicing alone would be prohibited from doing so under the Rules of Professional Conduct, unless the prohibition is based on a person interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.
Regardless of the type of potential conflict, ethical obligations and best practices dictate that you disclose the pertinent information to all affected or potentially affected clients in writing and secure written waiver of any potential problems. However, even if the Rules allow you to undertake a potentially conflicted representation, you should be very cautious in moving forward with the matter. If a mistake is later made, the client will most certainly raise the conflict – properly waived, or not – as an issue. It might be better to send the client to another practitioner and collect a referral fee.