Print Version
Previous PageFile uploaded: 5/1/2019

Rule 1.7. Conflict of Interest:Current Clients.

(a) Except as provided in paragraph (b), a lawyer shall notrepresent a client if the representation involves a concurrent conflict ofinterest. A concurrent conflict of interest exists if:

(a)(1) The representation of one client will be directly adverseto another client; or

(a)(2) There is a significant risk that the representation of oneor more clients will be materially limited by the lawyer?s responsibilities toanother client, a former client or a third person or by a personal interest ofthe lawyer.

(b) Notwithstanding the existence of a concurrent conflict ofinterest under paragraph (a), a lawyer may represent a client if:

(b)(1) the lawyer reasonably believesthat the lawyer will be able to provide competent and diligent representationto each affected client;

(b)(2) the representation is notprohibited by law;

(b)(3) the representation does notinvolve the assertion of a claim by one client against another clientrepresented by the lawyer in the same litigation or other proceeding before atribunal; and

(b)(4) each affected client givesinformed consent, confirmed in writing.

Comment

General Principles

[1] Loyalty and independent judgment are essential elements in thelawyer?s relationship to a client. Concurrent conflicts of interest can arisefrom the lawyer?s responsibilities to another client, a former client or athird person or from the lawyer?s own interests. For specific rules regardingcertain concurrent conflicts of interest, see Rule 1.8. For former clientconflicts of interest, see Rule 1.9. For conflicts of interestinvolving prospective clients, see Rule 1.18. For definitions of "informedconsent" and "confirmed in writing," see Rules 1.0(f) and (b).

[2] Resolution of a conflict of interest problem under this Rulerequires the lawyer to:1) clearly identify the clientor clients; 2) determine whether a conflict of interest exists; 3) decidewhether the representation may be undertaken despite the existence of aconflict, i.e., whether the conflict is consentable;and, 4) if so, consult with the clients affected under paragraph (a)(1) andobtain their informed consent, confirmed in writing. The clients affected underparagraph (a)(1) include both of the clients referredto in paragraph (a)(1) and the one or more clients whose representation mightbe materially limited under paragraph (a)(2).

[3] A conflict of interest may exist before representation isundertaken, in which event the representation must be declined, unless thelawyer obtains the informed consent of each client under the conditions ofparagraph (b). To determine whether a conflict of interest exists, a lawyershould adopt reasonable procedures, appropriate for the size and type of firmand practice, to determine in both litigation and nonlitigationmatters the persons and issues involved. See also Comment to Rule 5.1.Ignorance caused by a failure to institute such procedures will not excuse alawyer?s violation of this Rule. As to whether a client-lawyer relationshipexists or, having once been established, is continuing, see Comment to Rule 1.3and Scope.

[4] If a conflict arises after representation has been undertaken,the lawyer ordinarily must withdraw from the representation, unless the lawyerhas obtained the informed consent of the client under the conditions ofparagraph (b). See Rule 1.16. Where more than one client is involved, whetherthe lawyer may continue to represent any of the clients is determined both bythe lawyer?s ability to comply with duties owed to the former client and by thelawyer?s ability to represent adequately the remaining client or clients, giventhe lawyer?s duties to the former client. See Rule 1.9. See also Comments [5]and [29].

[4a] To eliminate confusion, former Rule2.2 "Intermediary" has been deleted entirely. The term"intermediation" is changed in Rule 1.7 to "commonrepresentation". Comment [4] sets out the analysis that a lawyer shouldmake in order to determine when common representation is improper. The commentsto Rule 1.7 specifically instruct lawyers on what informed consent means in thesituations.

[5] Unforeseeable developments, such as changes in corporate andother organizational affiliations or the addition or realignment of parties inlitigation, might create conflicts in the midst of a representation, as when acompany sued by the lawyer on behalf of one client is bought by another clientrepresented by the lawyer in an unrelated matter. Depending on thecircumstances, the lawyer may have the option to withdraw from one of therepresentations in order to avoid the conflict. The lawyer must seek courtapproval where necessary and take steps to minimize harm to the clients. SeeRule 1.16. The lawyer must continue to protect the confidences of the clientfrom whose representation the lawyer has withdrawn. See Rule 1.9(c).

Identifying Conflicts ofInterest: Directly Adverse

[6] Loyalty to a current client prohibits undertakingrepresentation directly adverse to that client without that client?s informedconsent. Thus, absent consent, a lawyer may not act as an advocate in onematter against a person the lawyer represents in some other matter, even whenthe matters are wholly unrelated. The client as to whom the representation isdirectly adverse is likely to feel betrayed, and the resulting damage to theclient-lawyer relationship is likely to impair the lawyer?s ability torepresent the client effectively. In addition, the client on whose behalf theadverse representation is undertaken reasonably may fear that the lawyer will pursuethat client?s case less effectively out of deference to the other client, i.e.,that the representation may be materially limited by the lawyer?s interest inretaining the current client. Similarly, a directly adverse conflict may arisewhen a lawyer is required to cross-examine a client who appears as a witness ina lawsuit involving another client, as when the testimony will be damaging tothe client who is represented in the lawsuit. On the other hand, simultaneousrepresentation in unrelated matters of clients whose interests are onlyeconomically adverse, such as representation of competing economic enterprisesin unrelated litigation, does not ordinarily constitute a conflict of interestand thus may not require consent of the respective clients.

[7] Directly adverse conflicts can also arise in transactionalmatters. For example, if a lawyer is asked to represent the seller of abusiness in negotiations with a buyer represented by the lawyer, not in thesame transaction but in another, unrelated matter, the lawyer could notundertake the representation without the informed consent of each client.

Identifying Conflicts ofInterest: Material Limitation

[8] Even where there is no direct adverseness, a conflict ofinterest exists if there is a significant risk that a lawyer?s ability toconsider, recommend or carry out an appropriate course of action for the clientwill be materially limited as a result of the lawyer's other responsibilitiesor interests. For example, a lawyer asked to represent several individualsseeking to form a joint venture is likely to be materially limited in thelawyer?s ability to recommend or advocate all possible positions that eachmight take because of the lawyer?s duty of loyalty to the others. The conflictin effect forecloses alternatives that would otherwise be available to theclient. The mere possibility of subsequent harm does not itself requiredisclosure and consent. The critical questions are the likelihood that adifference in interests will eventuate and, if it does, whether it willmaterially interfere with the lawyer's independent professional judgment inconsidering alternatives or foreclose courses of action that reasonably shouldbe pursued on behalf of the client.

Lawyer?s Responsibilities toFormer Clients and Other Third Persons

[9] In addition to conflicts with other current clients, alawyer?s duties of loyalty and independence may be materially limited byresponsibilities to former clients under Rule 1.9 or by the lawyer?sresponsibilities to other persons, such as fiduciary duties arising from alawyer?s service as a trustee, executor or corporate director.

Personal Interest Conflicts

[10] The lawyer?s own interests should not be permitted to have anadverse effect on representation of a client. For example, if the probity of alawyer?s own conduct in a transaction is in serious question, it may bedifficult or impossible for the lawyer to give a client detached advice.Similarly, when a lawyer has discussions concerning possible employment with anopponent of the lawyer?s client, or with a law firmrepresenting the opponent, such discussions could materially limit the lawyer?srepresentation of the client. In addition, a lawyer may not allow relatedbusiness interests to affect representation, for example, by referring clientsto an enterprise in which the lawyer has an undisclosed financial interest. SeeRule 1.8 for specific rules pertaining to a number of personal interestconflicts, including business transactions with clients. See also Rule 1.10(personal interest conflicts under Rule 1.7 ordinarily are not imputed to otherlawyers in a law firm).

[11] When lawyers representing different clients in the samematter or in substantially related matters are closely related by blood ormarriage, there may be a significant risk that client confidences will berevealed and that the lawyer?s family relationship will interfere with bothloyalty and independent professional judgment. As a result, each client isentitled to know of the existence and implications of therelationship between the lawyers before the lawyer agrees to undertakethe representation. Thus, a lawyer related to another lawyer, e.g., as parent,child, sibling or spouse, ordinarily may not represent a client in a matterwhere that lawyer is representing another party, unless each client givesinformed consent. The disqualification arising from a close family relationshipis personal and ordinarily is not imputed to members of firms with whom thelawyers are associated. See Rule 1.10.

[12] A lawyer is prohibited from engaging in sexual relationshipswith a client unless the sexual relationship predates the formation of theclient-lawyer relationship. See Rule 1.8(j).

Interest of Person Paying for a Lawyer?s Service

[13] A lawyer may be paid from a source other than the client,including a co-client, if the client is informed of that fact and consents andthe arrangement does not compromise the lawyer?s duty of loyalty or independentjudgment to the client. See Rule 1.8(f). If acceptance of the payment from anyother source presents a significant risk that the lawyer?s representation ofthe client will be materially limited by the lawyer?s own interest inaccommodating the person paying the lawyer?s fee or by the lawyer?sresponsibilities to a payer who is also a co-client,then the lawyer must comply with the requirements of paragraph (b) beforeaccepting the representation, including determining whether the conflict is consentable and, if so, that the client has adequateinformation about the material risks of the representation.

Prohibited Representations

[14] Ordinarily, clients may consent to representationnotwithstanding a conflict. However, as indicated in paragraph (b), someconflicts are nonconsentable, meaning that the lawyerinvolved cannot properly ask for such agreement or provide representation onthe basis of the client?s consent. When the lawyer is representing more thanone client, the question of consentability must beresolved as to each client.

[15] Consentability is typically determinedby considering whether the interests of the clients will be adequatelyprotected if the clients are permitted to give their informed consent torepresentation burdened by a conflict of interest. Thus, under paragraph (b)(1), representation is prohibited if in the circumstancesthe lawyer cannot reasonably conclude that the lawyer will be able to providecompetent and diligent representation. See Rule 1.1 (competence) and Rule 1.3(diligence).

[16] Paragraph (b)(2) describes conflictsthat are nonconsentable because the representation isprohibited by applicable law. For example, in some states substantive lawprovides that the same lawyer may not represent more than one defendant in acapital case, even with the consent of the clients, and under federal criminalstatutes certain representations by a former government lawyer are prohibited,despite the informed consent of the former client. In addition, decisional lawin some states limits the ability of a governmental client, such as amunicipality, to consent to a conflict of interest.

[17] Paragraph (b)(3) describes conflictsthat are nonconsentable because of the institutionalinterest in vigorous development of each client?s position when the clients arealigned directly against each other in the same litigation or other proceedingbefore a tribunal. Whether clients are aligned directly against each otherwithin the meaning of this paragraph requires examination of the context of theproceeding. Although this paragraph does not preclude a lawyer?s multiplerepresentation of adverse parties to a mediation (because mediation is not aproceeding before a "tribunal" under Rule 1.0(q)), suchrepresentation may be precluded by paragraph (b)(1).

Informed Consent

[18] Informed consent requires that each affected client be awareof the relevant circumstances and of the material and reasonably foreseeableways that the conflict could have adverse effects on the interests of thatclient. See Rule 1.0(f) (informed consent). The information required depends onthe nature of the conflict and the nature of the risks involved. Whenrepresentation of multiple clients in a single matter is undertaken, theinformation must include the implications of the common representation,including possible effects on loyalty, confidentiality and the attorney-clientprivilege and the advantages and risks involved. See Comments [30] and [31](effect of common representation on confidentiality).

[19] Under some circumstances it may be impossible to make thedisclosure necessary to obtain consent. For example, when the lawyer representsdifferent clients in related matters and one of the clients refuses to consentto the disclosure necessary to permit the other client to make an informeddecision, the lawyer cannot properly ask the latter to consent. In some casesthe alternative to common representation can be that each party may have toobtain separate representation with the possibility of incurring additionalcosts. These costs, along with the benefits of securing separate representation,are factors that may be considered by the affected client in determiningwhether common representation is in the client?s interests.

Consent Confirmed in Writing

[20] Paragraph (b) requires the lawyer to obtain the informedconsent of the client, confirmed in writing. Such a writingmay consist of a document executed by the client or one that the lawyerpromptly records and transmits to the client following an oral consent. SeeRule 1.0(b). See also Rule 1.0(r) (writing includeselectronic transmission). If it is not feasible to obtain or transmit thewriting at the time the client gives informed consent, then the lawyer mustobtain or transmit it within a reasonable time thereafter. See Rule 1.0(b). Therequirement of a writing does not supplant the need in most cases for thelawyer to talk with the client, to explain the risks and advantages, if any, ofrepresentation burdened with a conflict of interest, as well as reasonablyavailable alternatives, and to afford the client a reasonable opportunity to considerthe risks and alternatives and to raise questions and concerns. Rather, thewriting is required in order to impress upon clients the seriousness of thedecision the client is being asked to make and to avoid disputes or ambiguitiesthat might later occur in the absence of a writing.

Revoking Consent

[21] A client who has given consent to a conflict may revoke theconsent and, like any other client, may terminate the lawyer?s representationat any time. Whether revoking consent to the client?s own representationprecludes the lawyer from continuing to represent other clients depends on thecircumstances, including the nature of the conflict, whether the client revokedconsent because of a material change in circumstances, the reasonableexpectations of the other client and whether material detriment to the otherclients or the lawyer would result.

Consent to Future Conflict

[22] Whether a lawyer may properly request a client to waiveconflicts that might arise in the future is subject to the test of paragraph(b). The effectiveness of such waivers is generally determined by the extent towhich the client reasonably understands the material risks that the waiverentails. The more comprehensive the explanation of the typesof future representations that might arise and the actual and reasonablyforeseeable adverse consequences of those representations, the greater thelikelihood that the client will have the requisite understanding. Thus,if the client agrees to consent to a particular type of conflict with which theclient is already familiar, then the consent ordinarily will be effective withregard to that type of conflict. If the consent is general and open-ended, thenthe consent ordinarily will be ineffective, because it is not reasonably likelythat the client will have understood the material risks involved. On the otherhand, if the client is an experienced user of the legal services involved andis reasonably informed regarding the risk that a conflict may arise, suchconsent is more likely to be effective, particularly if, e.g., the client isindependently represented by other counsel in giving consent and the consent islimited to future conflicts unrelated to the subject of the representation. Inany case, advance consent cannot be effective if the circumstances thatmaterialize in the future are such as would make the conflict nonconsentable under paragraph (b).

Conflicts in Litigation

[23] Paragraph (b)(3) prohibitsrepresentation of opposing parties in the same litigation, regardless of theclients? consent. On the other hand, simultaneous representation of partieswhose interests in litigation may conflict, such as coplaintiffsor codefendants, is governed by paragraph (a)(2). Aconflict may exist by reason of substantial discrepancy in the parties'testimony, incompatibility in positions in relation to an opposing party or thefact that there are substantially different possibilities of settlement of theclaims or liabilities in question. Such conflicts can arise in criminal casesas well as civil. The potential for conflict of interest in representingmultiple defendants in a criminal case is so grave that ordinarily a lawyershould decline to represent more than one codefendant. On the other hand,common representation of persons having similar interests in civil litigationis proper if the requirements of paragraph (b) are met.

[24] Ordinarily a lawyer may take inconsistent legal positions indifferent tribunals at different times on behalf of different clients. The merefact that advocating a legal position on behalf of one client might createprecedent adverse to the interests of a client represented by the lawyer in anunrelated matter does not create a conflict of interest. A conflict of interestexists, however, if there is a significant risk that a lawyer?s action onbehalf of one client will materially limit the lawyer?s effectiveness inrepresenting another client in a different case; for example, when a decisionfavoring one client will create a precedent likely to seriously weaken the positiontaken on behalf of the other client. Factors relevant in determining whetherthe clients need to be advised of the risk include: where the cases arepending, whether the issue is substantive or procedural, the temporalrelationship between the matters, the significance of the issue to theimmediate and long-term interests of the clients involved and the clients?reasonable expectations in retaining the lawyer. If there is significant riskof material limitation, then absent informed consent of the affected clients,the lawyer must refuse one of the representations or withdraw from one or bothmatters.

[25] When a lawyer represents or seeks to represent a class ofplaintiffs or defendants in a class-action lawsuit, unnamed members of theclass are ordinarily not considered to be clients of the lawyer for purposes ofapplying paragraph (a)(1) of this Rule. Thus, the lawyer does not typicallyneed to get the consent of such a person before representing a client suing theperson in an unrelated matter. Similarly, a lawyer seeking to represent anopponent in a class action does not typically need the consent of an unnamedmember of the class whom the lawyer represents in an unrelated matter.

Nonlitigation Conflicts

[26] Conflicts of interest under paragraphs (a)(1)and (a)(2) arise in contexts other than litigation. For a discussion ofdirectly adverse conflicts in transactional matters, see Comment [7]. Relevantfactors in determining whether there is significant potential for materiallimitation include the duration and intimacy of the lawyer's relationship withthe client or clients involved, the functions being performed by the lawyer,the likelihood that disagreements will arise and the likely prejudice to theclient from the conflict. The question is often one of proximity and degree.See Comment [8].

[27] For example, conflict questions may arise in estate planningand estate administration. A lawyer may be called upon to prepare wills forseveral family members, such as husband and wife, and, depending upon thecircumstances, a conflict of interest may be present. In estate administrationthe identity of the client may be unclear under the law of a particularjurisdiction. Under one view, the client is thefiduciary; under another view, the client is the estate or trust, including itsbeneficiaries. In order to comply with conflict of interest rules, the lawyershould make clear the lawyer?s relationship to the parties involved.

[28] Whether a conflict is consentabledepends on the circumstances. For example, a lawyer may not represent multipleparties to a negotiation whose interests are fundamentally antagonistic to eachother, but common representation is permissible where the clients are generallyaligned in interest even though there is some difference in interest amongthem. Thus, a lawyer may seek to establish or adjust a relationship betweenclients on an amicable and mutually advantageous basis; for example, in helpingto organize a business in which two or more clients are entrepreneurs, working outthe financial reorganization of an enterprise in which two or more clients havean interest or arranging a property distribution in settlement of an estate.The lawyer seeks to resolve potentially adverse interests by developing theparties? mutual interests. Otherwise, each party might have to obtain separaterepresentation, with the possibility of incurring additional cost, complicationor even litigation. Given these and other relevant factors, the clients mayprefer that the lawyer act for all of them.

Special Considerations inCommon Representation

[29] In considering whether to represent multiple clients in thesame matter, a lawyer should be mindful that if the common representation failsbecause the potentially adverse interests cannot be reconciled, the result canbe additional cost, embarrassment and recrimination. Ordinarily, the lawyerwill be forced to withdraw from representing all of the clients if the commonrepresentation fails. In some situations, the risk of failure is so great thatmultiple representation is plainly impossible. Forexample, a lawyer cannot undertake common representation of clients wherecontentious litigation or negotiations between them are imminent orcontemplated. Moreover, because the lawyer is required to be impartial betweencommonly represented clients, representation of multiple clients is improperwhen it is unlikely that impartiality can be maintained. Generally, if therelationship between the parties has already assumed antagonism, thepossibility that the clients? interests can be adequately served by commonrepresentation is not very good. Other relevant factors are whether the lawyersubsequently will represent both parties on a continuing basis and whether thesituation involves creating or terminating a relationship between the parties.

[30] A particularly important factor in determining theappropriateness of common representation is the effect on client-lawyerconfidentiality and the attorney-client privilege. With regard to theattorney-client privilege, the prevailing rule is that, as between commonlyrepresented clients, the privilege does not attach. Hence, it must be assumedthat if litigation eventuates between the clients, the privilege will notprotect any such communications, and the client should be so advised.

[31] As to the duty of confidentiality, continued commonrepresentation will almost certainly be inadequate if one client asks thelawyer not to disclose to the other client information relevant to the commonrepresentation. This is so because the lawyer has an equal duty of loyalty toeach client, and each client has the right to be informed of anything bearingon the representation that might affect that client?s interests and the rightto expect that the lawyer will use that information to that client?s benefit.See Rule 1.4. The lawyer should, at the outset of the common representation andas part of the process of obtaining each client?s informed consent, advise eachclient that information will be shared and that the lawyer will have towithdraw if one client decides that some matter material to the representationshould be kept from the other. In limited circumstances, it may be appropriatefor the lawyer to proceed with the representation when the clients have agreed,after being properly informed, that the lawyer will keep certain informationconfidential. For example, the lawyer may reasonably conclude that failure todisclose one client?s trade secrets to another client will not adversely affectrepresentation involving a joint venture between the clients and agree to keepthat information confidential with the informed consent of both clients.

[32] When seeking to establish or adjust a relationship betweenclients, the lawyer should make clear that the lawyer?s role is not that ofpartisanship normally expected in other circumstances and, thus, that theclients may be required to assume greater responsibility for decisions thanwhen each client is separately represented. Any limitations on the scope of therepresentation made necessary as a result of the common representation shouldbe fully explained to the clients at the outset of the representation. See Rule1.2(c).

[33] Subject to the above limitations, each client in the commonrepresentation has the right to loyal and diligent representation and theprotection of Rule 1.9 concerning the obligations to a former client. Theclient also has the right to discharge the lawyer as stated in Rule 1.16.

Organizational Clients

[34] A lawyer who represents a corporation or other organizationdoes not, by virtue of that representation, necessarily represent anyconstituent or affiliated organization, such as a parent or subsidiary. SeeRule 1.13(a). Thus, the lawyer for an organization is not barred from acceptingrepresentation adverse to an affiliate in an unrelated matter, unless thecircumstances are such that the affiliate should also be considered a client ofthe lawyer, there is an understanding between the lawyer and the organizationalclient that the lawyer will avoid representation adverse to the client?saffiliates, or the lawyer?s obligations to either the organizational client orthe new client are likely to limit materially the lawyer?s representation ofthe other client.

[35] A lawyer for a corporation or other organization who is alsoa member of its board of directors should determine whether theresponsibilities of the two roles may conflict. The lawyer may be called on to advise the corporation in matters involving actions of thedirectors. Consideration should be given to the frequency with which suchsituations may arise, the potential intensity of the conflict, the effect ofthe lawyer's resignation from the board and the possibility of thecorporation's obtaining legal advice from another lawyer in such situations. Ifthere is material risk that the dual role will compromise the lawyer'sindependence of professional judgment, the lawyer should not serve as adirector or should cease to act as the corporation?s lawyer when conflicts ofinterest arise. The lawyer should advise the other members of the board that insome circumstances matters discussed at board meetings while the lawyer ispresent in the capacity of director might not be protected by theattorney-client privilege and that conflict of interest considerations mightrequire the lawyer?s recusal as a director or might require the lawyer and thelawyer?s firm to decline representation of the corporation in a matter.

 

 

Effective May 1, 2019