Conflicts of Interest

Imputed Conflicts of Interest

Generally, lawyers who practice together in a "firm" are treated as a single unit for conflict of interest purposes. That is, when one of the lawyers cannot take on a matter because of a conflict of interest, the other lawyers in the "firm" are also barred from taking on that matter. The conflict is said to be "imputed" from the first lawyer to the other lawyers.

Financial Assistance to Client in Litigation

The ABA Model Rule for "Conflicts of Interests with Current Clients" prohibits a lawyer from financially assisting a client in connection with pending or contemplated litigation. The prohibition harkens back to ancient English common law, which forbade lawyers from stirring up litigation or supporting it out of their own purse. More to the point, a lawyer who has too great a financial stake in a case MAY be unable to give the client objective legal advice.

Serving as Both Director and Lawyer

The ABA Model Rules do not forbid a lawyer from serving both as a director of an organization and as a lawyer for the organization, but the Model Rules point out the dual role can create conflicts of interest. For instance when the lawyer participates in a meeting as a director (rather than as the organization's lawyer), the attorney-client privilege will not apply to communications at the meeting, but some of the other directors MAY not realize. If there is a substantial risk that the dual role will compromise the lawyer's professional judgment the lawyer should either resign as director or not act as the organization's lawyer when a conflict arises.

Investigation by CLO

The CLO MUST investigate the situation to determine whether a violation occurred. Alternatively, the CLO can turn the matter over to a legal compliance committee.

CONFLICTS INVOLVING FORMER JUDGES, ARBITRATORS, AND THE LIKE

The conflict of interest problems posed when a lawyer switches between government and private practice are also present when a judge leaves the bench and enters private practice.Thus the rules for conflicts involving former judges, arbitrators, and the like are similiar.

Possible Civil Liability Even When Client Is Not Disadvantaged

Note that the rule against "Misuse of Client's Information" applies only when the lawyer's misuse of confidential information disadvantages the client, former client, or prospective client. However a lawyer who uses the confidential information for his own pecuniary gain (other than in the practice of law) MAY be subject to CIVIL LIABILITY- i.e., he MAY have to account to the client, former client, or prospective client for his profits. EXAMPLE:Attorney A's client C told A in confidence that she was about to build a large new medical complex on the corner of 5th and Main Streets. Without telling C, A quietly bought land at 4th and Main and built a four-story parking garage to serve the new medical complex. The garage did not harm C; in fact it was a benefit to her. Nevertheless, A MUST disgorge the garage profits to C because A used C's confidential information to enrich himself other than in the practice of law.

Duty of Loyalty to Organization

A corporation, governmental agency, unincorporated association, or similar organization is a legal entity, but it MUST act through the people who make up the organization- the directors, officers, agency employees, shareholders, owners, and the like. A lawyer who represents an organization obviously MUST work through those people. However, when the organization is the lawyer's client, the lawyer owes a duty of loyalty to the ORGANIZATION- not to the people who are the constituents.

Whistleblower Protection

A lawyer who reasonably believes that she "learned a (i) person associated with the organization has acted or is about to act in a way that (ii) violates a duty to the organization or a law in a way that might be imputed to the organization, and the violation is likely to cause (iii)substantial injury to the organization" and reported it to a higher authority (e.g. to a corporation's president) or if necessary to the highest authority (e.g., the corporation's outside directors), or "(i) reported the violation to the organization's highest authority, but the highest authority (ii) failed to take timely, appropriate action, and the lawyer reported the relevant information to persons outside the organization even if the (iii) information was protected by the duty of confidentiality because she(iv) reasonably believed the reporting was necessary to (v) prevent substantial injury to the organization, and was (vi)not hired by the organization to investigate an alleged violation of the law or to defend the organization or its constituents against a claim violation of the law," or who withdraws under circumstances that require or permit her to act pursuant to either of those rules, MUST proceed as she reasonably believes necessary to assure that the organization's highest authority is informed of the firing or withdrawal.

Compliance with Rules

A securities lawyer who violates the Sarbanes-Oxley rules can be disciplined by the SEC, but a securities lawyer who complies with the Sarbanes-Oxley rules cannot be held civilly liable for doing so and cannot be disciplined under any inconsistent state rule.

Duty to Report to Higher Authority in Organization

If "a lawyer for an organization learns that a person (i) associated with an organization has acted, or is about to act in a way that (ii) violates a duty to the organization or law in a way that might be imputed to the organization, and the the violation is likely to cause (iii) substantial injury to the organization," the lawyer MUST ordinarily report the violation to the higher authority of the organization (e.g., the corporation's president). If necessary, the lawyer MUST report it to the organization's highest authority (e.g., a corporation's outside directors). However she need not report the violation if she reasonably believes that the organization's best interests do not require the violation to be reported.

Duty to Report Outside the Organization

If a lawyer (i) reports the violation to the organization's highest authority, but the (ii) highest authority fails to take timely, appropriate action, the lawyer (iii) MAY report the information to appropriate person outside the organization. This is true (iv) even if the information would otherwise be protected by the duty of confidentiality. However, the lawyer's authority to report to outsiders applies only if, and to the extent that, the lawyer (v) REASONABLY BELIEVES that reporting is necessary to (vi) PREVENT SUBSTANTIAL INJURY to the organization. The authority to report to outsiders does (v)not apply to a lawyer who is hired by the organization to investigate an alleged violation of law or to defend the organization or its constituents against a claimed violation of law. EXAMPLE: Attorney A's corporate client produces frozen chicken pies. C's production process creates large quantities of liquid waste, which C is supposed to pump into recycling tanks. C's manufacturing vice president sometimes orders his workers to dump the waste into a ditch that drains into some neighboring wetlands; the dumping is cheaper and quicker, but it gradually destroys the wetlands in violation of state and federal environmental laws. When A learns about the dumping, she reports it to C's president and warns him that C will be fined millions of dollars if it gets caught. C's president ignored A's warning, so A reported the matter to the highest authority in the company—the audit committee of the board of directors. The audit committee did nothing. If A reasonably believes that the company will be seriously injured if the dumping continues, A MAY report the relevant information to the appropriate environmental enforcement authority, even if some of that information would otherwise be protected by the duty of confidentiality.

Actions When Securities Lawyer is Fired

If a securities lawyer is fired for complying with the Sarbanes-Oxley rules, she MAY report the firing to the client's board of directors (thus setting up the client for an extensive wrongful termination suit).

Reporting Requirement

If securities lawyers becomes aware of credible evidence that her client is materially violating a federal or state securities law, she MUST report the evidence to her client's chief legal officer ("CLO") or chief executive officer. The same reporting duty applies to credible evidence that one of her client's personnel has breached a fiduciary duty under federal or state law or has committed a "similar material violation" of federal or state law.

If Violation Found "Appropriate Response" Required

If the CLO concludes that no violation occurred, he MUST report that conclusion back to the securities lawyer. If the CLO concludes that a violation did occur, is occurring, or is about to occur, the CLO MUST take all reasonable steps to get the client to make an "appropriate response." That means that the client MUST stop or remedy the violation and make sure that it does not happen again. The CLO MUST report those results to the securities lawyer.

Protecting the Organization's Interests

If the lawyer of an organization learns that (i) a person associated with the organization has acted, or is about to act, in a way that (ii) violates a duty to the organization or a law that might be imputed to the organization, and if the violation is likely to cause (iii) substantial injury to the organization, the lawyer MUST proceed as is reasonably necessary to protect the interests of the organization.

When Appropriate Response Not Taken

If the securities lawyer believes that the CLO did not achieve an appropriate response from the client, the securities lawyer MUST report the evidence to one of the following: (i) the client's whole board of directors; (ii) the audit committee of the board; or (iii) a committee made up of outside directors (directors who are not beholden to the client). Notice, the Sarbanes-Oxley reporting rule is MANDATORY, unlike the "Organization's Duty to Report to Higher Authority in Organization", which gives the lawyer some discretion about how to proceed.

Securities Lawyer's Duties Under Sarbanes-Oxley Act

In response to the collapse of several high-flying corporations in 2002, Congress passed the Sarbanes-Oxley Act. Among other things, the Act instructs the Securities and Exchange Commission ("SEC") to make rules for securities lawyers who discover their clients violating the federal or state securities laws or similar laws. The SEC did make rules, which are now part of the "law of lawyering" that is covered on the MPRE.

Conflicts Between Organization and Its Constituents

Ordinarily there is no conflict between the interests of the organization and the interests of the people who make up the organization. Sometime, however, their interests do come into conflict. When they do, the lawyer for the organization should (i) caution the person in question that the attorney represents the organization, not the person. For instance, the lawyer should (ii)warn the person that communications between them MAY not be protected by the attorney-client privilege. Furthermore, when appropriate, the lawyer should (iii) advise the person to obtain independent counsel. EXAMPLE: The board of directors of Growers' Export Corp. instructed the corporation's general counsel to give classes for all management personnel concerning the laws and corporate rules against using bribery and kick-backs when negotiating business contracts in foreign nations. After such a class, one of the foreign office managers told the general counsel that he had frequently used bribes to secure business for the corporation. The general counsel should remind the manager that (i) she represents the corporation, not the manager, that (ii) bribery is both illegal and against the rules of the corporation, and, if appropriate, that the manager should (iii) seek independent legal counsel.

Representing Both the Organization and an Associated Person

The lawyer for an organization MAY represent both the organization and one or more of the directors, officers, employees, or other persons associated with the organization, provided that the ordinary conflict of interest rules are satisfied. When dual representation requires the consent of the organization, the consent MUST be given by an appropriate person other than the person to be represented. EXAMPLE: The Anti-Nuclear Coalition sued Consolidated Light and Power Co. and the president of Consolidated under federal, state, and common law to prevent Consolidated from starting up a nuclear generating plant that it had constructed. The firm of W, X & Y was retained to represent both Consolidated and its president. After careful examination, the firm concluded that it could represent both clients effectively, even though their interests potentially conflict on one or two points. After the firm (i) explained the potential conflicts, the (ii) president gave informed consent on his own behalf, confirmed in writing, and the (iii) chairman of the board of directors gave informed consent on behalf of the company, confirmed in writing. The dual representation is proper.

Application to "Securities Lawyers"

The rules apply to lawyers who represent an issuer of securities and who practice before the SEC ("securities lawyers"). This includes not only lawyers who transact business with the SEC, communicate with it, or represent a securities issuer before it, but also lawyers who give advice about a document that will be filed with the SEC or advice about whether information MUST be filed with the SEC.

Revealing Confidential Information

The securities lawyer MAY reveal to the SEC, without the client's consent, any confidential information that is reasonably necessary to: (i) stop the client from committing a violation that will cause substantial financial injury to the client or its investors; (ii) rectify such a financial injury if the lawyer's services were used to further the violation; or (iii) prevent the client from committing or suborning perjury in an SEC matter or lying in any matter within the jurisdiction of any branch of the federal government.

Exceptions to Imputed Disqualification

1) Personal Interest of Lawyer 2) Screening of Disqualified Lawyer

Lawyer's Financial Interest

A conflict of interest MAY be created by a lawyer's own financial interest. Suppose that attorney A is representing client C in a gender discrimination action against Magnum Corp. After one of the pretrial hearings, the general counsel of Magnum spoke quietly to A in the courthouse hallway, saying: "Your courtroom skills are first-rate. When you want to start playing in the big leagues, please come to see me- our law department could really use a person like you, and we pay top money." If the employment overture creates a substantial risk that A will curry favor with Magnum at C's expense, A MUST fully disclose the situation to C and obtain C's informed consent, confirmed in writing, before continuing as C's counsel.

Lawyers Who Are Close Relatives

A conflict of interest also MAY be created by a lawyer's relationship to another lawyer. Suppose that lawyer L is a partner in the J, K, & L firm. L lives with her parents, and her mother M is the senior litigation partner of the M,N, & O firm. M regularly serves as trial counsel for the Kansas Central Railway Co. in railway accident case. L's regular client C was badly injured when his car was struck at a crossing by one of Kansas Central's trains, and C asked L to represent him in a suit against Kansas Central. If L serves as C's lawyer, and M serves as Kansas Central's lawyer, there is a risk that client confidences MAY be compromised (e.g., if M makes a telephone message at home for L, M MAY inadvertently learn something confidential about C). Moreover, the family relationship MAY interfere with the loyalty or independent judgment of the two lawyers. Thus, L and M MUST each disclose the situation to their respective clients and MUST not proceed without their respective client's informed consent, confirmed in writing. The same is true of other lawyers who are closely related by blood or marriage (e.g., parent, child, spouse, or sibling). This kind of conflict is personal in nature and is ordinarily NOT imputed to other lawyers in the firm.

Consent MUST Be Confirmed in Writing

A consent that is merely oral will not solve a conflict. The consent MUST be "confirmed in writing." Usually that means either of two things: (i) there is a TANGIBLE OR ELECTRONIC RECORD that is physically or electronically SIGNED by the client; or (ii) there is an ORAL consent that is PROMPTLY MEMORIALIZED in a tangible or electronic record that is promptly sent to the client. But note: The client's consent to an aggregate settlement or a business transaction with the lawyer MUST be SIGNED BY THE CLIENT.

Law Clerks Negotiating for Private Employment

A law clerk to a judge or other adjudicative officer (i) MUST NOTIFY that judge/officer before negotiating for private employment with a party (or the attorney for the party) in a matter in which the law clerk is (ii) participating personally and substantially. Law clerks are specially treated because they are usually newly admitted lawyer for whom clerkship is only a temporary first step in a legal career. EXAMPLE: After graduating from law school, S became a law clerk for Judge J. In that capacity, S wrote the bench brief and drafted an opinion in the case of Arner v. Bosch. While that case was still pending before the court, the attorney for Bosch invited S to visit her law firm and interview for a job. S MUST notify Judge J before discussing future employment with the attorney.

Advancing Litigation Expenses

A lawyer MAY advance court costs and other litigation expenses on the client's behalf, and repayment MAY be contingent on the outcome of the case. EXAMPLE: Lawyer L's fee agreement with personal injury victim V provides that L will advance the court costs and litigation expenses in V's suit against the person who injured him. The agreement also states that if V wins the case, L will be repaid out of the judgment or settlement proceeds, but that if V loses, L will not be repaid. The fee agreement is proper.

Arbitrate Legal Malpractice Claims

A lawyer MAY agree prospectively with a client to arbitrate all legal malpractice claims, provided that such an agreement is proper under local law and the client understands the scope and effect of the agreement.

Contingent Fee Exception

A lawyer MAY enter into a contingent fee arrangement with a client in a civil case. A contingent fee arrangement gives the lawyer a personal stake in the outcome of the case and MAY thus affect the lawyer's objectivity. This arrangement is thus clearly at odds with the spirit of the rule. Nevertheless, because contingent fees have long been tolerated in the United States, they are excepted from the proprietary interest in the outcome of litigation rule. EXAMPLE: In both the American Consumer Finance example and the patent case example, the lawyers can escape the general rule by using a contingent fee arrangement rather than an assignment of the cause of action or assignment of one-half ownership of the patent. In both examples, a contingent fee arrangement would be proper.

Reasonably Limit Scope of Representation

A lawyer MAY enter into an agreement with his client that reasonably limits the scope of the lawyer's representation. EXAMPLE: Client C is thinking of purchasing the worldwide distribution rights to a strain of pest-resistant rice. C asks lawyer L to find out whether any nation imposes trade restrictions on that kind of rice. L tells C that to research the laws of every nation could take as much as 300 hours and cost $60,000, but C said he could not afford that much enlightenment. C and L agreed that L would research as many nations as he could in 100 hours, starting with C's most likely markets. The agreement is proper.

Practice in a Limited Liability Entity

A lawyer MAY practice in a limited liability entity, provided that the lawyer remains personally liable to the client for her own malpractice, and the entity complies with legal requirements for notice, insurance coverage, and the like.

Consent to Future Conflicts

A lawyer MAY properly ask a client to consent to conflicts that MAY arise in the future, but only if it is REASONABLE to do so, and only if the client truly understands the particular kinds of conflicts that MAY arise and the consequences of consenting. EXAMPLE: The standard contract that a firm of class action lawyers uses when signing up class representatives provides that: "Client hereby consents to and waives any and all conflicts of interest, both present and future." The contract does not explain the possible present or future conflicts, nor do the lawyers offer any explanation when they sign up the class representatives. The consent provision is invalid.

Paying Costs and Expenses for Indigent Client

A lawyer MAY simply pay the court costs and litigation expenses for an indigent client, without any provision for repayment.

Soliciting Substantial Gift

A lawyer MUST not SOLICIT a SUBSTANTIAL gift from a client who is not the lawyer's relative. However, a lawyer MAY accept a small gift from a client, such as a token of appreciation or on an appropriate holiday gift. Indeed, this rule does not prohibit a lawyer from accepting even a substantial gift, although the gift MAY be voidable for undue influence. EXAMPLE: Lawyer L is a loyal alumnus of the Port Arthur School of Law. The school asked L to serve as a pro bono legal advisor to a committee that was drafting a new affirmative action policy for the school. L gladly agreed and worked many hours on the project for no fee. When the work was done, L told the school's dean that his daughter would love to attend the school, but that she could not afford the high tuition. The dean then arranged for L's daughter to be admitted on a full scholarship. L is subject to discipline for soliciting a substantial gift from the school to his daughter.

Misuse of Client's Confidential Information

A lawyer has a duty not to disclose information relating to the representation of a client, except when an exception to the duty of confidentiality applies (i.e., client's informed consent, implied authority, dispute concerning attorney's conduct, disclosure: to obtain legal ethics advice; required by law or court order; to prevent death or substantial bodily harm; prevent or mitigate substantial financial harm; or to detect and resolve conflicts of interest.) In addition, a lawyer MUST not use such information to the CLIENT'S DISADVANTAGE, unless the client gives informed consent or some other exception to the duty of confidentiality applies.(i.e., client's informed consent, implied authority, dispute concerning attorney's conduct, disclosure: to obtain legal ethics advice; required by law or court order; to prevent death or substantial bodily harm; prevent or mitigate substantial financial harm; or to detect and resolve conflicts of interest.) The same rule applies to misuse of a FORMER OR PROSPECTIVE client's confidential information. EXAMPLE: Prospective client P came to patent attorney A's office, seeking to hire A to file a patent application on P's behalf. In the course of their preliminary discussions, P told A what chemical compound he uses to make his invention work. P ultimately decided not to hire A. A then told one of his other inventor clients about the chemical compound, and that client used the information in a way that prevented P from obtaining a patent. A is subject to discipline.

Compensation from Third Person

A lawyer MUST not accept compensation from a third person for representing a client, UNLESS three conditions are met: (i) The client GIVES INFORMED CONSENT; (ii) The third person DOES NOT INTERFERE WITH THE LAWYER'S INDEPENDENCE or the representation of the client; and (iii) The arrangement DOES NOT COMPROMISE THE CLIENT'S CONFIDENTIAL INFORMATION. EXAMPLE: 1) T, a pimp, seeks to employ attorney A to defend C, who is charged with prostitution. T demands to be present whenever A talks with C, and T directs C to plead not guilty, promising to pay the fine if C is found guilty after trial. If A agrees to represent C under these conditions, A is subject to discipline. 2) Midwest Highway Construction Corp. and its executive vice president C are both indicted for conspiring with other highway contractors to rig the bids on government highway contracts. Midwest seeks to employ lawyer L to serve as C's separate defense counsel. Midwest will pay L's fee, but will not interfere with L's handling of the case or with the confidentiality of the relationship between L and C. Under these conditions, L MAY agree to represent C. 3) Trimmers and Fitters Union Local #876 established a group legal service program for the benefit of its members. Using money from union dues, the Local hired the law firm of R, S, and T to provide the necessary legal services to members. Union member C asked the firm to represent her in a sexual harassment case against her fellow worker D, a loyal member of the union. When the president of the Local heard about C's case, he called the law firm, demanding to know what C said about D and demanding that the firm dismiss the case. The law firm MUST not allow the union or its officials to interfere with the handling of C's case.

Proprietary Interest in Subject of Litigation

A lawyer MUST not acquire a proprietary interest in the cause of action or the subject matter of litigation that the lawyer is conducting for the client UNLESS it is a contingent fee or attorney's lien. EXAMPLE: 1) Lawyer L regularly does consumer loan collection work for American Consumer Finance Company. When one of American's debtors defaults, American assigns the debt and cause of action to L; in return, L immediately pays American 50% of the face value of the debt. If L ultimately collects more than the 50%, she pays half of the excess to American and keeps the other half. L is subject to discipline. 2) F owns a United States patent on a process for manufacturing fertilizer. R brings a declaratory judgment action against F, alleging that F's patent is invalid. Attorney A agrees to represent F in the declaratory judgment action in exchange for an assignment of a one-half ownership interest in F's patent. A is subject to discipline.

Acquiring Literary or Media Rights Concerning Client's Case

A lawyer MUST not acquire literary or media rights to a story based in substantial part on information relating to the lawyer's representation of a client. However, a lawyer MAY acquire such rights AFTER the client's legal matter is entirely completed, appeals and all. The reason behind the rule is that the client's interest in effective representation MAY conflict with the lawyer's interest in maximizing the value of the literary or media rights. For instance, the lawyer might conduct the client's criminal trial in a sensational manner, simply to pump up public interest in the client's story. The rule does not apply to literary or media rights that are not substantially based on information relating to the representation. EXAMPLE: Legendary rock star Deep River wrote an autobiography that tells the story of his rise from a poverty-stricken childhood to life as a beloved musical icon. Attorney A agreed to represent River in negotiating a book contract and a motion picture contract. In lieu of money, A agreed to do the legal work in return for 5% of the book and movie royalties. The literary rights rule does not apply to this arrangement because River's manuscript is about his life and not about negotiation of the book and movie contracts. However, the arrangement MUST comply with ABA Model Rule that prohibits unreasonably high fees and the ABA Model Rule governing business transactions with a client. (e.g., (i) the terms of the business transaction or the terms on which the interest is acquired are fair to the client; (ii) the terms are fully disclosed in writing expressed in a manner that the client can reasonably understand, and the disclosure to the client covers the essential terms of the transaction and lawyer's role in the transaction (including whether the lawyer is acting as the client's lawyer in the transaction), (iii) The client is advised in writing that he should get the advice of an independent lawyer about the arrangement before entering into it (and the client must be given reasonable chance to obtain the advice); and (iv) the client gives informed consent, in a writing the client signs.

Prospective Waiver or Limit of Malpractice Liability

A lawyer MUST not make an agreement with a client that prospectively waives or limits the lawyer's liability for legal malpractice (except if that the client is independently represented in making the agreement.) a lawyer MAY however: 1) Practice in a Limited Liability Entity 2) Reasonably Limit Scope of Representation 3) Arbitrate Legal Malpractice Claims

Switching from Judicial Service to Private Law Practice

A lawyer MUST not represent a private client in a matter in which the lawyer has earlier participated (i) personally and substantially (ii) while serving as a judge, or other adjudicative officer (e.g., a referee or special master), or as a law clerk to such person, or as an arbitrator, mediator, or other third-party neutral, unless (iii)all parties to the proceedings (iv)give informed consent confirmed in writing. However, an arbitrator who is selected as a partisan of a party in a multi-member arbitration panel MAY subsequently represent that party EXAMPLE: 1) Lawyer L was selected as the partisan of union U on a three-member arbitration panel. L MAY serve as U's lawyer in later proceedings relating to the dispute that was arbitrated. 2) Law clerk C worked on the case of P v. D and made recommendations to Judge J about some discovery motions and a motion for default judgment. When C completes her clerkship and enters private practice, she cannot work on the case of P v. D. 3) J was one of 15 judges on the County Superior Court (a trial court) while the case of State v. Able was pending in that court. However, the Able case was assigned to a different judge, and Judge J never had anything to do with it. Later, Judge J resigned from the bench and entered private practice. Able asked J to represent her on the appeal of her case. J MAY represent Able because J did not personally work on the Able case. 4) S was the Senior Presiding Judge of the Circuit Court of Appeal (an intermediate appellate court). In that capacity, Judge S was responsible for all court administration and for assigning judges to hear various cases. During that period, the case of Commonwealth v. Beale was heard and decided by the court, but Judge S had nothing to do with that case except to assign it to three other judges. Later, Judge S left the bench and entered private practice. S MAY represent Beale in a subsequent stage of Beale's case.

Opposing Former Client in Substantially Related Matter

A lawyer MUST not represent one client whose interests are materially adverse to those of a former client in a matter that is "substantially related" to a matter in which the lawyer represented the former client (unless the former client gives informed consent, confirmed in writing). One purpose of this rule is to protect confidential information that the lawyer MAY have received from the former client, but the rule applies even when the former client cannot demonstrate that the lawyer received any confidential information.

Settling Malpractice Claims

A lawyer always favors the amicable settlement of claims. Thus, a lawyer MAY settle a malpractice claim or potential claim made by client, but ONLY IF the lawyer first advises the client IN WRITING to seek the advice of an independent lawyer about the settlement, and the lawyer gives the client a reasonable chance to obtain such advice.

Special Problems of Representing More than One Client

A lawyer is often able to create or adjust a relationship between two or more clients by identifying and building on the interests that the clients have in common. When doing this the lawyer MUST be impartial in dealing with the several clients. If the relationships among the clients are already antagonistic, or if contentious negotiations or litigation is on the horizon, a single lawyer ordinarily should not try to represent all the clients.

Special Conflict Situations Concerning "Direct Adversity" Between Clients' Interest

A lawyer is prohibited from representing one client whose interests are DIRECTLY ADVERSE to those of another client, unless both of the affected clients give their informed consent, confirmed in writing. EXAMPLE: 1) Lawyer L represents patent owner O in connection with the licensing of O's patent. Manufacturer M is one of O's licensees, but M does not realize that L represents O. M asks L's law partner P to sue O for a declaratory judgment that O's patent is invalid and that O's license agreements are void. Obviously, L herself could not represent M because M's interests are directly adverse to O's interests. L's conflict is imputed to her law partner P. A reasonable lawyer would advise O and M not to consent to this conflict. Moreover, consent will not solve the conflict when one client sues another client represented by the lawyer in the same litigation. Therefore, P MUST not represent M. 2) Attorney A represents GenCorp, a genetic engineering company that is working on a cure for melanoma. A's law partner P represents BioTek, another genetic engineering company that is working on an entirely different way to cure melanoma. BioTek and GenCorp are head-to-head adversaries in an economic sense, but their interests are not adverse in any legal sense. If A and her partner P can disclose the situation to their respective clients without revealing confidential information, they MAY do so for the sake of client goodwill, but they would not be subject to discipline for failing to do so. 3) Lawyer L is defending D, who is accused of the armed robbery of a liquor store. L is stunned when he sees the prosecutor's witness list because it includes Z, a purported eyewitness to the armed robbery. L knows Z very well because he is defending Z in a drunk driving case. From confidential information L gathered in the drunk driving case, L knows that Z is an alcoholic who sometimes sees things that are not there and sometimes remembers things that did not happen. In defending D, L will have to cross-examine Z about his capacity to perceive, remember, and relate events accurately. If L cross-examines Z vigorously, he might seem to be using information about Z that he learned in confidence, or at least Z might think so. On the other hand, if L soft-pedals the cross-examination of Z, D might think he is not getting the effective assistance of counsel. A reasonable lawyer would have to advise D and Z not to consent to this conflict of interest. L MUST seek the court's permission to withdraw from one case or the other, preferably the case in which his withdrawal will be least harmful to the client. 4) Attorney A represents client C as plaintiff in an employment discrimination case against Mack's Grill. While that matter is pending, one of A's regular clients, Grinch Rentals, Inc., asks A to represent it in unlawful detainer proceedings to have C thrown out of her apartment for failure to pay rent. Even if the two cases are completely unrelated, A faces a conflict of interest. If A agrees to represent Grinch, C could feel betrayed by her own lawyer, and that could destroy A's ability to represent C effectively in the employment discrimination case. The conflict could be solved by getting informed consent, confirmed in writing, from both C and Grinch. 5) Lawyer L represents buyer B in negotiations for the purchase of a run-down shopping center from seller S. While those negotiations are in progress, S seeks to hire L to represent it in negotiations with the Planning Commission of a different city concerning an urban renewal project S wants to pursue. The shopping center sale is totally unrelated to the urban renewal project. Nevertheless, L MUST not represent S without first getting informed consent, confirmed in writing, from both B and S.

Other Financial Help is Prohibited

A lawyer is subject to discipline for giving a client other financial help in the context of pending or contemplated litigation. EXAMPLE: Chem Corp.'s chemical plant blew up, spreading toxic fumes across pasture land belonging to dozens of dairy farmers. The grass shriveled, the cows died, and the farmers became destitute. The law offices of E.Z. Bucks took out newspaper ads offering to represent the farmers on contingency, to advance the costs and expenses of litigation, and to lend them money to restore their pastures and dairy herds. The last feature of that offer to "lend money to restore the farmer's dairy pastures and hers" makes the lawyers subject to discipline.

Screening of Disqualified Lawyer

A lawyer's conflict of interest will not be imputed to her firm if the lawyer's prohibition is based on ABA Model Rule 1.9(a) or (b) (relating to conflict of interest duties to former clients), and arises out of her association with a prior firm PROVIDED the disqualified lawyer is timely screened from participation in the matter and is apportioned no part of the fee from the matter.

Client's of Former Firm

A lawyer's duties MAY extend not only to the clients she represented personally, but also to clients of the lawyer's former firm. A lawyer whose firm formerly represented a client in a matter and who acquired protected confidential information or information pertaining to the representation MAY not thereafter represent another person in the SAME OR A SUBSTANTIALLY RELATED MATTER if that person's interest are MATERIALLY ADVERSE to those of the former client, unless the former client gives INFORMED CONSENT, CONFIRMED IN WRITING. EXAMPLE: Lawyer L is an associate at Firm One, which represents client A in the case of A v. B. L works on the A v. B case, and he receives reams of confidential information about the case from A. L then quits Firm One and becomes an associate at Firm Two. Absent informed consent from A, confirmed in writing, L MAY not now represent B in the A v. B case. Furthermore, L MAY not represent C in the case of C v. A if the C v. A case is substantially related to the A v. B case and if the confidential information L obtained from A is material to the C v. A case.

Disqualification of Lawyer's Former Firm

A lawyer's former firm is prohibited from representing a person with interests materially adverse to those of a client of the formerly associated lawyer if: (i) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and (ii) a lawyer remaining in the firm has information protected by confidentiality and a duty to a former client that is material to the matter. EXAMPLE: Lawyer L is a partner at Firm One. L and three associates of Firm One represent client A in the A v. B case. L and the three associates obtain reams of confidential information from A about the case. Then L leaves Firm One to form Firm Two. The three associates stay at Firm One. Now L and Firm Two represent client A in the A v. B case. No lawyer at Firm One MAY represent B in the A v. B case because the three associates who obtained confidential information from A are still at Firm One. No lawyer at Firm One MAY represent C in the case of C v. A if that case is substantially related to the A v. B case, and if the confidential information the three associates obtained from A is material to the C v. A case. If the three associates had also left Firm One, and if no other lawyer in Firm One had been privy to the confidential information received from A, then any lawyer at Firm One MAY represent B in the A v. B case or C in the C v. A case. The disqualification can be waived if A gives informed consent, confirmed in writing. Thus, if A consents, the results of the foregoing hypotheticals would be the opposite.

Business Transactions with Client and Money or Property Interests Adverse to Client

A lawyer's professional training, together with the bond of trust and confidence between a lawyer and client, create a risk that the lawyer can overreach the client in a business, property, or financial transaction. Therefore, a lawyer MUST NOT enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or money interest that is adverse to the client, UNLESS ALL of the following conditions are satisfied: (i) The terms of the business transaction (or the terms on which the interest is acquired) are FAIR TO THE CLIENT; (ii) The terms are FULLY DISCLOSED to the client IN WRITING, expressed in a manner that the client can reasonably understand (i.e., not in technical legal terminology). The lawyer's disclosure to the client MUST cover the ESSENTIAL TERMS of the transaction and the LAWYER'S ROLE in the transaction (including whether the lawyer is acting as the client's lawyer in the transaction); (iii) The client is advised IN WRITING that he should get the ADVICE OF AN INDEPENDENT LAWYER about the arrangement before entering into it (and the client MUST be given a reasonable chance to obtain the advice); and (iv) The client gives INFORMED CONSENT, IN A WRITING THAT THE CLIENT SIGNS.

Lawyer's Duty Concerning Confidential Information

A prospective client is someone who consults with a lawyer about the possibility of forming a lawyer-client relationship. The attorney-client privilege protects confidential communication between a lawyer and a prospective client. The ethical duty of confidentiality also applies to information learned during a consultation between a lawyer and prospective client. Thus the lawyer MUST not reveal or use information learned from a prospective client, unless an exception to the duty of confidentiality applies (i.e. client's informed consent, implied authority, dispute concerning the attorney's conduct, disclosure to: obtain legal ethics advice, required by law or court order, to prevent death or substantial bodily harm, to prevent or mitigate substantial financial harm, to detect and resolve conflicts of interest, or information becomes generally known). EXAMPLE: 1) Prospective client PC came to lawyer L's office seeking L's legal advice about a plan to murder PC's sister-in-law without getting caught. The attorney-client privilege would not protect PC's communication because he was seeking L's aid to commit a future crime. Furthermore, the ethical duty of confidentiality would not prohibit L from warning the sister-in-law and telling the police if L reasonably believes that PC really will carry out the plan. 2) Senator S telephoned attorney A, asking A to visit him in the county jail. When A arrived, S explained in confidence that he was picked up for felony drunk driving, that he was very drunk at the time, and that he wanted A to represent him. A was overburdened with other work and could not do so. Several weeks later, the entire story of Senator S's drunken escapade became common knowledge after S talked about it on a popular television show. Not long afterward, in an unrelated matter, A had occasion to cross-examine S, who had testified on behalf of A's adversary. A asked S: "Sir, shortly before witnessing the events about which you testified on direct, had you drunk any alcohol?" S was outraged and accused A of violating the duty of confidence owed to a potential client. A's conduct was proper. The question on cross-examination was designed to test S's ability to perceive correctly. Furthermore, the information about S's drinking, although originally confidential, lost its protection when S himself made it public on television.

Special Conflict Situations Concerning "Material Limitation"

A second kind of conflict occurs in situations in which there is SIGNIFICANT RISK that the lawyer's representation of a client will be MATERIALLY LIMITED by the lawyer's own personal interests or by the lawyer's responsibilities to: (i) a different client, (ii) a former client, (iii) a third person. When there is such a risk, the lawyer MUST not take on the matter (or MUST withdraw), unless each affected client gives informed consent, confirmed in writing.

Sexual Relationship Between Lawyer and Client

A sexual relationship between a lawyer and a client MAY create a conflict of interest. Suppose that Client C hired lawyer L to represent him in divorce proceedings commenced by his wife. Perhaps because he was at a vulnerable time in his life, C made sexual overtures to L, and she responded with enthusiasm. Because a sexual relationship between a lawyer and client is likely to distort the lawyer's professional judgment and endanger confidentiality and the attorney-client privilege, such a relationship makes the lawyer SUBJECT TO DISCIPLINE, whether or not the client consents and whether or not the client is harmed. The prohibition also applies to a lawyer who represents an organization and who has a sexual relationship with the organization's liaison person. Note that the prohibition does NOT apply when the sexual relationship predated the lawyer-client relationship, but even then the lawyer should stop to consider whether the sexual relationship will impair the lawyer-client relationship. The conflict created by a sexual relationship is personal and is NOT imputed to other lawyers in the lawyer's firm.

Settlement Controlled by Insurance Company

Although the policyholder is usually glad to have the insurance company settle a claim within the policy limits, that is not always true. For example, a physician might not want her malpractice insurance company to settle for fear that the settlement will tarnish her medical reputation. Some insurance policies authorize the insurance company to control the defense and to settle within the policy limits at the company's sole discretion. In that situation, a lawyer hired by the insurance company MUST inform the policyholder, as early in the case as possible, about the constraints on the representation. Having done that, the lawyer MAY then follow the insurance company's instructions about settlement. If the lawyer knows that the policyholder objects to a settlement, the lawyer MUST not proceed without first giving the policyholder a chance to reject the insurance company's defense and to assume responsibility for her own defense at her own defense.

Continuing Duty of Confidentiality

An attorney's duty to preserve a client's confidential information does not cease when the representation ends. The attorney has a continuing obligation to preserve information gained in confidence during the representation. EXAMPLE: 1) When A retired from his solo law practice, he sold his practice to another lawyer. The purchaser received not only books, furniture, and an office lease but also all of A's files relating to past and pending legal matters. Many of the files contained confidential information, and A made no effort to obtain the consent of his current clients and former clients before transferring the files. A is subject to discipline. 2) Lawyer L, a solo practitioner, left instructions for the winding up of his law practice in the event of his unexpected death. L directed his personal representative to contact each client to find out whether that client's files should be delivered directly to the client, to another lawyer of the client's choice, or to a young lawyer designated by L. L's instructions are proper.

Meaning of the Term "Matter"

As used in this rule, "matter" has a narrow, technical meaning. It means a SPECIFIC SET OF FACTS INVOLVING SPECIFIC PARTIES. "Matter" is defined as, "any judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, investigation, charge, accusation, arrest, or other particular matter involving a specific party or parties" (plus anything else that is covered under the conflict of interest rules of the government agency in question). EXAMPLE: 1) When lawyer L worked for the State Consumer Protection Agency, she was assigned to draft some regulations to govern the conduct of door-to-door salespeople. The regulations that she drafted were ultimately adopted, almost verbatim, by the agency. A year later, L left government service and entered private practice. She was asked to represent American Encyclopedia Company (a door-to-door sales company) in a dispute with the State Consumer Protection Agency. The essence of the dispute is the proper application of the regulations that L herself drafted. L MAY represent American because the drafting of regulations is not a "matter"; it does not involve specific facts and specific parties. 2) When serving as Oakville City Attorney, lawyer L drafted a city ordinance for the rezoning of a particular tract of land owned by developer R. The drafting of the ordinance is a "matter" because it involved one narrow, specific situation. Thus, when L later enters private law practice, she MAY not work on a case that involves that ordinance.

Informed Consent Can Solve Some Conflicts

Despite a concurrent conflict of interest, a lawyer MAY represent a client if all four of the following conditions are satisfied: (i) the lawyer reasonably believes that he can competently and diligently represent each affected client, despite the conflict of interest; (ii) the representation is not prohibited by law; (iii) the representation does not involve asserting a claim by one client against another client represented by the lawyer in the same litigation (or other proceeding before a tribunal); and (iv) each affected client gives informed consent, confirmed in writing.

Whom Does the Defense Lawyer Represent?

Does an insurance defense lawyer represent the policyholder (a person he is likely to encounter only once) or the insurance company (which pays his fees and can send him repeat business)? The law on this question varies from state to state. Some states say the client if the policyholder only, but others say that the policyholder and the insurance company are joint clients. Insurance law and contract law determine who is the client. No matter whether the defense lawyer represents the policyholder only or both the policyholder and the insurance company, the defense lawyer's ethical obligations are governed by the Rules of Professional Conduct and not by the insurance contract.

Private Work Following Government Work on Same Matter

Except when expressly permitted by law, a lawyer who leaves government service and enters private practice MUST not represent a private client in a MATTER in which the lawyer participated PERSONALLY AND SUBSTANTIALLY while in government service, unless the government agency gives informed consent confirmed in writing.

Concurrent Conflicts of Interest

Except under conditions for informed consent exception to concurrent conflicts of interest, a lawyer MUST not represent a client if the representation creates a concurrent conflict of interest. A concurrent conflict of interest exists in two situations: (i) The representation of one client will be directly adverse to another client; (ii) There is a SIGNIFICANT RISK that the representation of one client will be MATERIALLY LIMITED by the lawyer's own interest or by the lawyer's responsibilities to another client, a former client, or a third person. EXAMPLE: Client C asked attorney A to defend her in a vehicular manslaughter case in which C is charged with killing victim V while driving drunk. Unbeknownst to C, V was A's college roommate, and they remained best friends until V's death. There is a significant risk that A's efforts on C's behalf would be materially limited by A's personal grief at the loss of his best friend. Therefore, A MUST not take on C's case.

Subsequent Use of Information Gained During Government Service

Except when expressly permitted by law, a government lawyer who (i) receives confidential government information about a person, MUST not later represent a private client whose interests are (ii) ADVERSE to that person, when the (iii) information could be used to the MATERIAL DISADVANTAGE of that person. The rule covers only information ACTUALLY RECEIVED by the government lawyer, not information that could be fictionally imputed to the lawyer. "Confidential government information" means information that is gained under government authority and which the government is prohibited from revealing, or has a privilege not to reveal, and which is not otherwise available to the public. EXAMPLE: When attorney A worked on the legal staff of the State Parole Board, he received confidential information about the personal life, character, and criminal proclivities of X, a parolee. Later, A entered private practice as a criminal defense lawyer. He was assigned to defend D in a case in which it appeared quite likely that X, not D, was the perpetrator. The proper defense of D would require a thorough investigation of the very facts that A learned about X in confidence. A MUST request the court to relieve him of the assignment to defend D.

Consequences of a Conflict of Interest

If a conflict of interest is apparent BEFORE a lawyer takes on a client's matter, the the lawyer MUST not take it. If a conflict becomes apparent AFTER the lawyer has taken on a client's matter, and if informed consent of the affected client(s) will not solve the problem, then the lawyer MUST withdraw. A lawyer's failure to handle a conflict properly can have three unpleasant consequences: (i) disqualification as counsel in a litigated matter, (ii) professional discipline, and (iii) civil liability for legal malpractice.

Imputed Disqualification

If a former government lawyer is disqualified because "he (i) received confidential information about a person, and could not later represent a private client whose (ii) interests are adverse to that person, and the (iii) information could be used to the material disadvantage of that person" then everyone in that lawyer's firm is also disqualified unless: (i) The lawyer is timely screened from the matter; and (ii) The lawyer is not apportioned any part of the fee earned in the matter. EXAMPLE: In the previous State Parole Board example, attorney A's law partner P MAY defend D if A is screened from the case and is not apportioned any part of the fee earned in the case.

Revocation of Consent

Just as a client can almost always fire a lawyer, the client can almost always revoke a previously given consent to a conflict. The revocation MAY or MAY not mean that the lawyer can continue representing other clients in the matter, depending on the particular facts.

Imputed Disqualification

If a lawyer is disqualified due to their personal and substantial involvement, then everyone in that lawyer's firm is also disqualified UNLESS the lawyer is (i) TIMELY SCREENED FROM THE CASE, (ii) the lawyer DOES NOT SHARE FEES from the matter, and (iii) WRITTEN NOTICE IS PROMPTLY GIVEN TO THE GOVERNMENTAL AGENCY to enable it to make sure that the above conditions are being met. EXAMPLE: When lawyer L worked for the State Environmental Safety Bureau, he participated personally and substantially in an investigation of Noxatox Corp. concerning the dumping of radioactive industrial waste in Evergreen Slough. Later, L quit the Bureau and became a partner in the T, S & U firm. One of L's law partners is now asked to defend Noxatox in private litigation arising out of the Evergreen Slough matter. L will not work on the case, will have no access to the case files, and will not discuss the case with others in the office. L will receive his ordinary share of the proceeds of the partnership, set by prior independent agreement. Finally, the Bureau will be promptly informed of the foregoing facts in writing. Under these conditions, the partner MAY represent Noxatox.

Screening Can Avoid Imputed Disqualification

If a lawyer is disqualified to represent a private client because he earlier participated (i) personally and substantially while serving as a (ii) judge or other adjudicative officer (e.g., a referee or special master) or as a law clerk to such person, or as an arbitrator, mediator or other third-party neutral and (iii) all parties did not give (iv) informed consent confirmed in writing, everyone else in the lawyer's firm is also disqualified unless the following conditions are met: (i) The lawyer is timely screened from the matter; (ii) The lawyer is not apportioned any part of the fee earned in the matter; and (iii) Written notice is given to the parties and (iv) Written notice is given to the appropriate tribunal so they can ensure the foregoing conditions are met

Disqualification of Lawyer's New Firm

If a lawyer who is disqualified from representing a client, joins a new firm, the new firm MAY be disqualified as well UNLESS THE LAWYER IS PROPERLY SCREENED (i.e., the disqualified lawyer does not work on the case, discuss it with those who do, or have access to case files) and does not share fees from the matter, and the former client is given notice. EXAMPLE: Same facts as last example. A lawyer at Firm Two MAY not represent B in the A v. B case or C in the C v. A case, unless L is screened from the case and shares no fees, and A is given notice. Note: The prohibition against sharing fees does not prevent the lawyer from receiving a regular salary or partnership share set by prior independent agreement. It means only that the lawyer's compensation MUST not be "directly related to the matter in which the lawyer is disqualified."

"Personal and Substantial" Rule Also Applies

If a lawyer worked "personally and substantially" on a "matter" in private practice or other nongovernmental employment, the lawyer MUST not work on that same matter when she enters government service, whether or not the later work would be adverse to a former client. However informed consent, confirmed in writing, can solve the conflict. EXAMPLE: In private practice, attorney A represented Electro Corp. in trying to obtain a license from the State Energy Commission to build a geothermal electric generating plant. While Electro's application was still pending, A quit private practice to become a lawyer for the Commission. A MUST not work on the Electro application unless she obtains the informed consent, confirmed in writing, from both the Commission and Electro.

Conflicts Caused by Lawyer's Own Interests

If a lawyer's own interests are likely to materially limit her ability to represent a client effectively, then she MUST not take on the matter (or she MUST withdraw) unless she obtains the client's informed consent, confirmed in writing. Three situations where lawyer's interests MAY create a conflict include: 1) Lawyer's Financial Interest, 2) Lawyers Who Are Close Relatives 3) Sexual Relationship Between Lawyer and Client

Class Action Settlements

In a class action, the lawyer who represents the class ordinarily does not have a complete lawyer-client relationship with the unnamed members of the class. Even so, at settlement time, the class's lawyer MUST follow all the class action rules concerning notice and other procedural requirements that protect the unnamed class members.

Civil Litigation

In civil litigation one lawyer MAY represent two plaintiffs or two defendants whose interests are potentially in conflict, but ONLY IF the two clients give informed consent, confirmed in writing. There is a four step guide to handling this situation.

Unnamed Members of a Class Do Not Count as Clients

In class action litigation, the unnamed members of a class ordinarily are NOT regarded as clients for conflict of interest purposes. EXAMPLE: Lawyer L is presently representing victim V in a medical malpractice case against Dr. D. Today, United Motors Corp. asked L to defend it in a class action case that is unrelated to the malpractice case. V is not a named plaintiff in the class action, but she will be a member of the class if the court eventually certifies the case as a class action. L does not need to obtain V's consent before agreeing to defend United Motors

Confidentiality and Privilege Problems

In litigation between two people who were formerly joint clients of a single lawyer, neither of them can claim the attorney-client privilege for their communications with that lawyer. That is one disadvantage of having one lawyer for multiple clients, and the lawyer should warn the clients about it before undertaking multiple representation. Moreover a multiple representation is unlikely to work if one client wants to disclose material to the lawyer in confidence and wants to keep it confidential from the other clients. Therefore, the lawyer should ordinarily make clear to all clients at the outset that whatever one client discloses will be shared with all of the other clients. In special situations, however, the clients MAY agree that one of them MAY disclose a given item of information to the lawyer but not to the other clients. EXAMPLE: Clients X, Y, and Z hire attorney A to represent all of them in forming a new business venture. Z's contribution to the business will be a valuable invention. Z has applied for a patent, but until a patent issues, the specifics of the invention are protected as Z's trade secret. X, Y, and Z MAY agree that Z MAY disclose the specifics of the invention to A in confidence and that A will not share that information with X or Y.

Attorney's Lien Exception

In some states, an attorney is allowed to secure payment of her fee and repayment of advanced litigation expenses by taking a lien on the proceeds of a client's case. Some states authorize attorney's liens by statute or case law. An attorney's lien gives the attorney a personal stake in the outcome of the client's case, but the situation is tolerated as an exception to the proprietary interest in the outcome of litigation rule. EXAMPLE: The law of East Carolina permits an attorney to contract with a client for a lien to secure the attorney's fee and advanced litigation expenses. Attorney A's fee agreement with client C provides that A shall have a lien on whatever C recovers in her case against X to secure payment of A's fee and to secure repayment of litigation expenses that A advances on C's behalf. This provision of A's fee agreement is proper.

Representing Multiple Clients in Nonlitigation Matters

Lawyers are often asked to represent more than one client in nonlitigation matters. Whether that creates a conflict of interest depends on many factors, including the length and intimacy of the lawyer's relationship with one or more of the clients, the kind of work the lawyer is asked to do, the chances of disagreement between the clients, and the consequences to the clients if the joint representation breaks down. EXAMPLE: 1) Clients X, Y, and Z ask lawyer L to represent the three of them in forming a new business venture. X will supply the capital, Y will supply a valuable trade secret, and Z will supply the managerial skill. Although their interests are mostly harmonious, there are potential conflicts. For instance, if the venture folds, who will own the trade secret? L MAY represent all three clients if she follows the four steps. 2) Estate planning attorney E is asked to prepare estate plans and wills for four members of a family—G (the wealthy grandmother), H and W (the irresponsible parents), and D (the talented daughter). All four have the same basic goals: to maximize the family's wealth and to allocate it rationally. However, their interests are potentially in conflict. For instance, H and W may want to get their hands on money that G wants to preserve for D. E MAY represent all of the family members if she follows the four steps.

Federal and State Conflict of Interest Laws

Lawyers who move between government and private jobs MUST comply not only with the ethics rules but also with various state and federal statutes and regulations. Those are not covered in these flashcards, but they MUST be considered in solving an actual problem of successive government and private employment.

Policyholder's Interests

Liability insurance policies commonly provide that the insurance company will select and pay for a lawyer to defend the policyholder in suits arising out of events covered by the policy. The policyholder, in turn, promises to cooperate with the defense. Generally, the policyholder wants a claim handled in a way that minimizes his risk of paying money out of his own pocket (e.g., if the policy limit is $50,000, but the claimant wins a judgment for $60,000, the policyholder would have to pay the $10,000 difference from his own pocket)

General Rules Concerning Conflicts of Interest

Loyalty is an essential element in the relationship between a lawyer and client. The lawyer's professional judgment must be exercised solely for the benefit of the client, free of compromising influences and loyalties. Thus, ABSENT THE NECESSARY INFORMED CONSENT, a lawyer MUST not represent a client if a conflict of interest exists. A conflict of interest arises when there is a substantial risk that the lawyer's representation of the client will be materially and adversely affected by the lawyer's own interest or the lawyer's duties to another current client, former client, or a third person.

Consent MUST Meet Reasonable Lawyer Standard

Notice the consent rule creates a REASONABLE LAWYER STANDARD. That is, if a reasonable layer looking at the facts would conclude that the client's interests would not be adequately protected in light of the conflict, then the conflict is UNCONSENTABLE, meaning that the client's consent will not solve the conflict. EXAMPLE: General practitioner G represents husband H in legal matters arising out of the investment of H's inherited fortune. G has represented H for many years, and he knows all of H's innermost secrets, both financial and personal. Now wife W has asked G to represent her in obtaining a divorce from H. In light of all of the confidential information G has learned about H over the years, a reasonable lawyer would have to advise H not to consent to the conflict of interest. Thus, even if H did consent, the consent would not solve the conflict.

How to Overcome a Prospective Client Conflict

One way to overcome the conflict when a lawyer obtains (i) confidential information during a consultation with a prospective client, and can't latter represent a different person in the (ii) same or substantially related matter if the confidential information could (iii)significantly harm the prospective client", is to (iii) obtain informed consent, confirmed in writing, from (iv) both the affected client and prospective client. A second way to overcome the conflict is to satisfy all of the following conditions: (i) Demonstrate that the lawyer who held discussions with the prospective client took care to AVOID EXPOSURE TO ANY MORE CONFIDENTIAL INFORMATION THAN WAS NECESSARY to determine whether to represent the prospective client; (ii) Demonstrate that the disqualified lawyer is TIMELY SCREENED FROM ANY PARTICIPATION IN THE MATTER and will not share the fee (but he MAY take his ordinary salary or partnership share); and (iii) Give WRITTEN NOTICE to the prospective client

Consent MUST be Informed

Only INFORMED consent will solve a conflict. That means that the affected client is aware of all of the relevant circumstances, reasonable alternatives, and foreseeable ways the conflict might harm her. Sometimes a lawyer cannot obtain informed consent from one client without revealing a fact that she learned in confidence from another client; if the second client will not permit the lawyer to reveal that confidence, then the lawyer cannot represent first client; consent will not solve conflict.

Notice and Certifications to Former Client

Prompt written notice MUST be given to any affected former client detailing: (i) a description of the screening procedures employed, (ii) a statement of the firm' and the lawyer's compliance with these requirements, (iii) a statement that review before a tribunal MAY be available, and (iv) an agreement by the firm to respond promptly to written inquiries or objections by the former client concerning the screening procedures. The disqualified lawyer and a partner of the firm MUST provide the former client with certifications of compliance with the ABA Model Rules and with the screening procedures at reasonable intervals upon written request, and upon termination of the screening procedures.

Unreasonable Limits on Defense Fees and Expenses

Seeking to control litigation costs, some insurance companies insist on detailed audits of a defense lawyer's time records and litigation files. Some companies also limit the amount a defense lawyer can spend in preparing the case for trial. Some companies use "litigation managers" who look over the lawyer's shoulder and sometimes tries to micromanage the defense. A defense lawyer MUST not disclose a policyholder's confidential information to an outsider auditor without the policyholder's informed consent, but he MAY disclose bills and time records containing confidential information to the insurance company itself if doing so will aid, not harm, the policyholder. Furthermore, a defense lawyer MUST refuse to follow insurance company litigation management guidelines that interfere with the lawyer's professional judgment or prevent the lawyer from representing the policyholder competently. If the insurance company will not relent, the lawyer MUST withdraw.

Personal Interest of Lawyer

Some kinds of conflicts are NOT imputed to other lawyers in the firm. Generally, these conflicts are uniquely personal to the lawyer in question, which makes it unlikely that other lawyers in the firm would have divided loyalties. EXAMPLE: Client C hires attorney A to defend her in a copyright infringement action. After A takes on C's case, C commences a sexual relationship with Lawyer L, who is one of A's law partners. A lawyer is prohibited from starting a sexual relationship with a client; therefore, L would be subject to discipline if he himself were defending C in the copyright case. However, L's conflict is uniquely personal to L and is not likely to affect the way L's partner A handles C's case. Thus, L's conflict is not imputed to partner A.

Conflict Between Client's Interest and Third Person's Interest

Sometimes the interest of a third person MAY create a substantial risk of materially limiting the lawyer's ability to represent the client effectively. When that is true, the lawyer MAY represent the client, provided that: (i) the lawyer reasonably believes that the third person's interest will not adversely affect the representation; and (ii) the client gives informed consent, confirmed in writing. EXAMPLE: 1) Carter Corp. and its executive vice president K were indicted for mail fraud in connection with the interstate sale of certain investment properties. The bylaws of Carter Corp. provide that the corporation will pay for separate legal representation of any officer accused of wrongdoing in the course of the corporation's business; however, there is no provision for indemnifying officers who are found guilty of wrongdoing. Carter Corp. asks lawyer L to provide the necessary separate representation for K. L's fee will be paid by Carter Corp. L MAY represent K if: (i) the arrangement between Carter Corp. and L assures L's independence, (ii) L reasonably believes that he can represent K effectively, and (iii) K gives informed consent, confirmed in writing. 2) The United Coastal Charities Fund offers to pay attorney A's fee for drafting the will of any person who leaves a bequest of $2,000 or more to the Fund. If A agrees to the arrangement, he will be subject to discipline. 3) Lawyer L is a staff attorney for the County Legal Aid Society. Her salary is set by the board of directors of the society, but her clients are those who come to the society for legal assistance and are assigned to L. The board of directors MAY set general operating policies, but L MUST not allow the board of directors to influence her independent legal judgment about how to handle a particular client's legal matter.

Lawyer's Duty Concerning Conflict of Interest with Prospective Clients

Subject to exceptions, a lawyer who obtains (i) confidential information during a consultation with a prospective client MUST not later represent a different person in the (ii) same or substantially related matter if the confidential information could (iii) significantly harm the prospective client. This conflict is imputed to other in the lawyer's firm, but the imputation can be overcome by screening.

Insurance Company's Interests

The insurance company generally wants a claim handled in a way that minimizes what it must pay, whether in litigation costs or payments to a claimant. To minimize litigation costs (and thus to keep insurance premiums affordable), some insurance companies adopt spending limits and audit procedures that limit the defense lawyer's fees and expenses for various steps in the litigation process. Insurance defense lawyers have complained that these limits sometimes undercut their ability to represent policyholders effectively.

Representing Two Clients with Inconsistent Legal Positions in Two Unrelated Cases

Suppose a lawyer represents two clients in different cases that are pending in different tribunals. On behalf of Client One, the lawyer needs to argue that a certain statute is unconstitutional. On behalf of Client Two, the lawyer needs to argue that the same statute is constitutional. Aside from the legal issue, the cases are unrelated. On those bare facts, there is no conflict of interest between Client One and Client Two. Suppose, however, that Client One's case will be heard next week in the intermediate appellate court that hears cases from Judicial District Six. Client Two's case will be tried seven months from now in a trial court in Judicial District Six. Thus, the appellate court's decision in Client One's case is likely to become the controlling precedent in Client Two's case. That presents a substantial risk that the lawyer's representation of one client will be materially limited by her responsibilities to the other client. Therefore, the lawyer MUST fully disclose the situation to both clients and seek their informed consent, confirmed in writing. If either or both clients will not consent, the lawyer MUST seek the court's permission to withdraw from one or both cases.

Is the Event Covered By the Policy?

Suppose that G drove her car over her boyfriend B in circumstances that make it unclear whether G acted intentionally or only negligently. B sued G, alternatively alleging negligence and intentional conduct. G's auto liability policy covers negligence, but not intentional conduct. G's insurance hired lawyer L to defend the case, but it sent G a "reservation of rights" letter, informing her that it might ultimately contend that G acted intentionally, thus freeing the company from liability. During the pretrial preparation, G told L in confidence that she ran over B intentionally. L MUST not disclose that confidential information to the insurance company. If G's confidential statement means that L cannot defend G effectively, L MUST withdraw.

Settlement Within the Policy Limits

Suppose that Insco Insurance Co. hires attorney A to defend policyholder D in a slip-and-fall case brought by P. The liability limit in D's policy is $100,000, and P offers to settle for $90,000. D wants to settle because that would free him from paying P anything from his own pocket. Insco, on the other hand, might rather go to trial because its exposure is only $10,000 more than the settlement offer. The settlement offer creates a conflict of interest that has the following consequences: (i) A and Insco MUST disclose the conflict to D and invite D to obtain independent counsel (at Insco's expense) to advise D on the settlement issue; (ii) if A fails to do that and negligently or in bad faith advises D to reject the settlement offer, A is subject to discipline and perhaps civil liability to D for malpractice; and (iii) if Insco negligently or in bad faith rejects the settlement offer, Insco will be liable for the entire judgment P obtains against D, even the amount over the policy limits.

Representing Co-Parties in Litigation

Suppose that two plaintiffs or two defendants ask a single lawyer to represent both of them in a litigated matter. The advantages of having a single lawyer are obvious: the cost will probably be lower than having two lawyers, and the single lawyer can present a united front of both clients. The disadvantages are also obvious: the interests of the two clients MAY be mostly harmonious but partly or potentially in conflict (e.g., one personal injury plaintiff MAY need money badly and MAY therefore be anxious to accept a joint settlement offer that the other plaintiff thinks is too low).

Aggregate Settlement Agreements: The Terms Lawyer Must Disclose

The lawyer MUST DISCLOSE TO EACH CLIENT ALL OF THE TERMS of the aggregate settlement including: (a) the total amount that will be paid or received; (b) the existence and nature of all the claims, defenses, and pleas involved in the settlement; (c) the details of every other client's participation in the settlement, including how much each will contribute or receive and how each criminal charge will be resolved; and (d) how the lawyer's fees and costs will be paid and by whom. Note: These extensive disclosures MAY require the lawyer to share one client's confidential information with the others, so at the outset of the matter, the lawyer should get each client's informed consent to do that

Criminal Litigation

The Sixth Amendment guarantees every criminal defendant the right to effective assistance of counsel. Because the interests of criminal co-defendants are very likely to diverge, ordinarily a lawyer should not try to defend two people in a criminal case. If a trial judge requires two criminal defendants with divergent interests to share a single lawyer, and if they are prejudiced as a result, their Sixth Amendment rights have been violated. Four examples of divergent interests include: a) One defendant seeks to put the blame on the other; b) The story told by one defendant is inconsistent with the story told by the other; c) One defendant has a strong defense that is compromised to protect the other; and d) The trial tactics that would help one would harm the other.

Gifts to Lawyer from Client Who Is Not a Relative

The following three rules limit a lawyer's freedom to solicit or accept a substantial gift from a client who is not the lawyer's relative. The same rules apply to a substantial gift from a client to the lawyer's relative. In this rule "relative" includes a spouse, child, parent, grandparent, grandchild, and other persons with whom the lawyer maintains a close, familial relationship. "Gift" includes a testamentary gift. a) Soliciting Substantial Gifts b) Preparing Legal Instrument that Creates Substantial Gift c) Lucrative Appointments

Outer Limits of the Rule

The lawyer need not advise the client to consult independent counsel if the client already has independent counsel in the matter. Moreover, if the client has independent counsel, the disclosure of the conflict can be made by the independent counsel. Finally, the rule about business transactions and adverse interests does not apply to an ordinary fee agreement between a lawyer and a client or to standard commercial transactions in which the lawyer buys goods or services that the client routinely markets to the public (e.g., the lawyer who buys a car from his car dealer or the lawyer who uses a client as her stockbroker

Other Adjudicative Officers Negotiating for Private Employment

The lenient rule that applies to law clerks does not apply to judges, arbitrators, mediators, third-party neutrals, and other adjudicative officers. They are forbidden to negotiate for private employment with a party (or the attorney for a party) in a matter in which they are participating PERSONALLY AND SUBSTANTIALLY.

Ordinary Conflict Rules Apply

The ordinary conflict rules for current clients and former clients apply to a lawyer who enters government service after private practice or other nongovernmental work. EXAMPLE: For the past five years, lawyer L worked for the M & N law firm. In that job, L worked on a few matters for Cosmoplex, a diversified communications company, and he gained considerable confidential information about the company's finances. Now, L has quit M & N and has gone to work for the United States Department of Labor, which is about to sue Cosmoplex for fraud in connection with the purchase of overvalued company stock for its employee pension plan. ABA Model Rule for former clients (i.e. a lawyer who's firm formerly represented a client in a matter and (i) who acquired protected confidential information or information pertaining to the representation may not represent in (ii) the same or substantially related matter (iii) if the person's interests are materially adverse to those of the former client) prohibits L from working on that suit (unless Cosmoplex gives informed consent, confirmed in writing). However, if L is timely screened from the suit, other labor department lawyers MAY work on it—L's conflict will not be imputed to them.

Use to Benefit Lawyer or Someone Else

The rule against the "Misuse of Client's Confidential Information" applies not only when the lawyer uses this information for the lawyer's own benefit, but also when the lawyer uses it to benefit someone else, such as another client or third party. EXAMPLE: While representing client Chez Nous Catering Co., lawyer L learned that Chez Nous was teetering on the edge of insolvency. L knew that his good friend F had contracted with Chez Nous to cater F's daughter's big wedding reception. L advised F to cancel the contract and hire a different caterer. L is subject to discipline for using the information to the disadvantage of Chez Nous.

Preparing Legal Instrument that Creates Substantial Gift

The rule prohibiting "Gifts to Lawyer from Client Who Is Not a Relative" also prohibits a lawyer from preparing a legal instrument (such as a will or a deed of property) that creates a substantial gift to the lawyer (or the lawyer's relative), except when the donor is one of the lawyer's relatives. EXAMPLE: Attorney A's aged father asks her to draft a new will for him. The father tells A that he wants to set up a testamentary trust that will provide college funds for A's children. A MAY draft the will and related documents, but only because the client is her father.

Lucrative Appointments

The rule prohibiting "Gifts to Lawyer from Client Who Is Not a Relative" does not prohibit a lawyer from seeking to have himself or his law partner or associate named as executor of an estate, or counsel to the executor, or to some other fee-paying position. However, the general conflict of interest principles expressed in "Conflicts of Interest with Current Clients" do prohibit such efforts if the lawyer's advice is tainted by the lawyer's self-interest. Moreover, lawyers with long experience in probate and estate planning law know that clients tend to rebel when they discover the lawyer trying to feather his own nest in this manner.

Handling Conflicts in Nonlitigation Matters

The same four-step process for representing two plaintiffs or defendants whose interests are potentially in conflict, is suitable for handling conflicts in nonlitigation matters: 1) The lawyer should ANALYZE THE FACTS and law to see if she can EFFECTIVELY REPRESENT the various clients, despite their potentially conflicting interests. 2) Next the lawyer should DISCLOSE THE POTENTIAL CONFLICTS to each client and explain how they can harm each client, the reasonable alternatives, and the disadvantages of having only one lawyer. 3) When the clients fully understand the situation, the lawyer MAY invite their INFORMED CONSENT to the joint representation and CONFIRM such consent IN WRITING. 4) If a POTENTIAL CONFLICT RIPENS INTO A PRESENT CONFLICT, the lawyer MUST repeat steps 1), 2), and 3), above. The lawyer MUST withdraw from the joint representation if a reasonable lawyer would have to advise any of the clients not to consent. The lawyer MAY continue to represent one or more consenting clients, but only if the clients who are dropped give their informed consent, confirmed in writing, to the continuation.

Aggregate Settlement of Criminal Case

The same rules apply to an aggregate settlement in a civil case also apply to a joint plea bargain in a criminal case, although ordinarily one lawyer will not be representing more than one defendant in a criminal case.

Meaning of "Firm"

The term "firm" includes not only an ordinary private law firm, but also other groups of lawyers who practice closely together, such as lawyers in a corporate law department, legal aid office, or prosecutors' or public defenders' office. Whether a group of lawyers should be regarded as a "firm" for conflict of interest purposes depends on many factors, including: (i) do the lawyers have a formal agreement among themselves, (ii) do they hold themselves out in a way that would make the public think they practice together as a firm, (iii) do they share their revenues and responsibilities, (iv) do they have physical access to each other's client files, (v) do they routinely talk among themselves about the matters they are handling, and (vi) would the purpose of the particular conflict rule be served by imputing one lawyer's conflict to the other lawyers in the group?

Meaning of "Personally and Substantially"

The term "personally and substantially" means just what it says- the disqualification rule applies only when the lawyer's work on the matter was both personal and substantial. The term does not include work that is trifling, and it does not include mere supervisory responsibility. EXAMPLE: Attorney A is the District Attorney of Colma County. She is in charge of 16 deputies working out of five different offices spread through the county. A's rubber-stamped signature appears on every paper that goes out of the five offices. In theory, she is personally responsible for every detail of every case; in fact, most of A's day is consumed in supervision and administration. The disqualification rule would cover only the few, exceptional cases in which A does become personally and substantially involved.

Consent MUST Be in Writing Rationale

The writing requirement has two purposes: (i) it helps impress on the client that consent to a conflict is a serious matter, and (ii) it helps avoid later disputes that might arise if there is no writing.

Opposing Former Client - Confidential Information

When a former client has imparted confidential information to a lawyer, the lawyer MUST not then oppose the former client in any matter in which the confidential information would be relevant, unless the former client gives informed consent, confirmed in writing. EXAMPLE: For many years, lawyer L represented client H in matters relating to H's business and personal finances. Then L and H had a sharp disagreement and came to a parting of the ways. Later, X asked L to represent her in a civil case against H. If any information that L obtained in confidence about H's business and personal finances would be relevant in X's suit against H, then L MUST not represent X unless H gives informed consent, confirmed in writing.

Using Confidential Information to Former Client's Disadvantage

When a lawyer has obtained confidential information form a former client, the lawyer MUST not thereafter use the confidential information to the former client's disadvantage, unless the former client gives informed consent, confirmed in writing. This rule does not apply to information that has become commonly known. Futhermore, it does not apply to any information that the lawyer would be allowed to reveal or use under an exception to the general ethical duty of confidentiality. (i.e., client's informed consent, implied authority, dispute concerning attorney's conduct, disclosure: to obtain legal ethics advice; required by law or court order; to prevent death or substantial bodily harm; prevent or mitigate substantial financial harm; or to detect and resolve conflicts of interest; or information becomes generally known). EXAMPLE: Three years ago, attorney A represented C, the son of a movie star, in a drug possession case. In that connection, C told A in confidence that he had abused drugs for several years and had become a hard drug addict. Based on information from other sources, several tabloid newspapers and gossip magazines published stories about C's drug problems; within a few weeks, the public knew all there was to know about C. Now A represents C's ex-wife in a dispute with C over the custody of their infant daughter. In the custody dispute, A MAY use publicly known information about C's history of drug abuse.

Aggregate Settlement Agreements

When a lawyer represents several co-parties in a matter (e.g., several plaintiffs or several defendants), the adversary sometimes makes an "aggregate settlement offer," for example, an offer to settle all claims for a lump sum of $1 million. That creates a potential conflict of interest among the lawyer's several clients. Some of them MAY want to settle for that amount, but others MAY want to hold out for a better offer. Moreover, the several clients MAY disagree about how the lump sum is to be allocated- who pays how much or who receives how much. Because of the potential conflict, the lawyer MUST not participate in the making of an aggregate settlement agreement UNLESS ALL of the following conditions are met: (i) The lawyer MUST assure that the CLIENTS HAVE COME TO AN AGREEMENT among themselves about how much the aggregate sum will be shared (who will pay how much or receive how much); (ii) The lawyer MUST DISCLOSE TO EACH CLIENT ALL OF THE TERMS of the aggregate settlement; and (iii) Each client MUST give informed consent to the aggregate settlement agreement in a WRITING SIGNED BY THE CLIENT.

CONFLICT RULES FOR CURRENT AND FORMER GOVERNMENT OFFICERS AND EMPLOYEES

When a lawyer serves as an officer or employee of the government for a period and then leaves to enter private law practice, the government has a right to expect that its confidential information will not be abused. Furthermore, private clients should not be allowed to gain an unfair advantage from information known to a lawyer only because of prior government service, and lawyers should not be in a position to benefit private clients because of prior government service. Finally possible future benefit to private clients should not distort a lawyer's professional judgment while working for the government. All the foregoing would suggest that there should be a broad, rigid rule of disqualification for lawyers who move from government to private practice. However, such a rule would have a serious drawback- the government would be hindered in recruiting good lawyers for short-term government service. Thus the ABA Model Rules establish disqualification rules that are relatively narrow and flexible.

Negotiating for Private Employment

When a person in government service is currently working PERSONALLY and SUBSTANTIALLY on a matter, she MUST not negotiate for private employment with any party or lawyer who is involved in that matter. There is special exception for judges' and adjudicative officers' law clerks who are seeking work after their clerkships end. EXAMPLE: Lawyer L currently serves on the State Agriculture and Fisheries Commission. L's work for the Commission is strictly nonlegal; he does not function as a lawyer for the Commission. Currently, L and the other Commissioners are working personally and substantially on a matter involving the Shady Bay Salmon Farm. Now, Shady Bay approaches L, asking if he would like to become Shady Bay's in-house general counsel. If L negotiates for employment with Shady Bay, he will be subject to discipline. Notice that the rule applies to L, even though his work for the Commission is nonlegal.

Meaning of Substantially Related Matter

Whether a matter is "substantially related" depends on the facts of the particular situation. When a lawyer has been directly involved in a specific transaction, the lawyer cannot later oppose the former client in a dispute concerning that same transaction absent informed consent, confirmed in writing. On the other hand if a lawyer ROUTINELY handled a type of problem for a client, the lawyer MAY later oppose that former client in a wholly different problem of the same general type. EXAMPLE: 1) Summitville Hospital employed lawyer L to draft a consent form to be signed by all patients scheduled for elective surgery at the hospital. L drafted the form and thereafter did no further legal work for the hospital. Three years later, client C asked L to represent her in a suit against the hospital; in that suit, C will contend that the consent form violates public policy and is therefore void. L MUST not represent C unless the hospital gives informed consent, confirmed in writing. 2) When attorney A was an associate in the M, N, O & P firm, she regularly represented the Magnum Oil Company in suits to eject service station dealers for failure to comply with the terms of their service station leases. Two years ago, A left the firm to enter solo practice. Now S, a Magnum service station dealer, has asked her to defend him in an ejectment suit brought by Magnum. A MAY represent S without getting Magnum's consent.

Four Step Guide to Representing Two Plaintiffs or Defendants Whose Interests Are Potentially in Conflict

a) First, the lawyer should ANALYZE THE FACTS of the case and the applicable law. If she concludes that she can EFFECTIVELY REPRESENT BOTH CLIENTS, despite their potentially conflicting interests, then she can move to the second step. b) Second, the lawyer should DISCLOSE THE POTENTIAL CONFLICT to each client and explain how it can harm each client, the reasonably available alternatives, and the disadvantages of having only one lawyer for the two of them. c) Third, when the clients fully understand the situation, the lawyer MAY invite their INFORMED CONSENT to the joint representation and CONFIRM such consent IN WRITING. d) Fourth, IF THE POTENTIAL CONFLICT EVENTUALLY RIPENS INTO PRESENT CONFLICT, the lawyer must repeat steps a), b), and c), above. The lawyer MUST withdraw from the joint representation if a reasonable lawyer would have to advice either of the two clients not to consent. The lawyer MAY continue to represent one consenting client, but only if the client who is dropped gives informed consent to the continuation, confirmed in writing. EXAMPLE: Attorney A agreed to defend Ace Corp. and Bay Corp. in a negligence case. At the outset, A believed that neither Ace nor Bay caused the harm to the plaintiff. A went through steps a), b), and c), above, and obtained Ace's and Bay's informed, written consent to the joint representation. Discovery revealed that Ace had a credible defense, but that Bay was very likely negligent, and that its negligence probably harmed the plaintiff. A repeated steps a), b), and c), at which point Ace insisted on obtaining a separate lawyer. A MAY continue representing Bay, but only if Ace gives informed consent, confirmed in writing, and Bay gives informed consent, confirmed in writing.