Print Version
Previous PageFile uploaded: 11/2/2017

Rule 1.7. Conflict of Interest: Current Clients.

(a) Except as provided inparagraph (b), a lawyer shall not represent a client if the representationinvolves a concurrent conflict of interest. A concurrent conflict of interestexists 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 existenceof a concurrent conflict of interest under paragraph (a), a lawyer mayrepresent 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 independentjudgment are essential elements in the lawyer?s relationship to a client.Concurrent conflicts of interest can arise from the lawyer?s responsibilitiesto another client, a former client or a third person or from the lawyer?s owninterests. For specific rules regarding certain concurrent conflicts ofinterest, see Rule 1.8. For former client conflicts of interest, see Rule 1.9.For conflicts of interest involving prospective clients, see Rule 1.18. Fordefinitions of "informed consent" and "confirmed inwriting," see Rules 1.0(f) and (b).

[2] Resolution of a conflict of interestproblem under this Rule requires the lawyer to:1)clearly identify the client or clients; 2) determine whether a conflict ofinterest exists; 3) decide whether the representation may be undertaken despitethe existence of a conflict, 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 mayexist before representation is undertaken, in which event the representationmust be declined, unless the lawyer obtains the informed consent of each clientunder the conditions of paragraph (b). To determine whether a conflict ofinterest exists, a lawyer should adopt reasonable procedures, appropriate forthe size and type of firm and practice, to determine in both litigation and nonlitigation matters the persons and issues involved. Seealso Comment to Rule 5.1. Ignorance caused by a failure to institute suchprocedures will not excuse a lawyer?s violation of this Rule. As to whether aclient-lawyer relationship exists or, having once been established, iscontinuing, see Comment to Rule 1.3 and Scope.

[4] If a conflict arises afterrepresentation has been undertaken, the lawyer ordinarily must withdraw fromthe representation, unless the lawyer has obtained the informed consent of theclient under the conditions of paragraph (b). See Rule 1.16. Where more thanone client is involved, whether the lawyer may continue to represent any of theclients is determined both by the lawyer?s ability to comply with duties owedto the former client and by the lawyer?s ability to represent adequately theremaining client or clients, given the lawyer?s duties to the former client.See Rule 1.9. See also Comments [5] and [29].

[4a] Toeliminate confusion, former Rule 2.2 "Intermediary" has been deletedentirely. The term "intermediation" is changed in Rule 1.7 to"common representation". Comment [4] sets out the analysis that alawyer should make in order to determine when common representation isimproper. The comments to Rule 1.7 specifically instruct lawyers on whatinformed consent means in the situations.

[5] Unforeseeable developments,such as changes in corporate and other organizational affiliations or theaddition or realignment of parties in litigation, might create conflicts in themidst of a representation, as when a company sued by the lawyer on behalf ofone client is bought by another client represented by the lawyer in anunrelated matter. Depending on the circumstances, the lawyer may have theoption to withdraw from one of the representations in order to avoid theconflict. The lawyer must seek court approval where necessary and take steps tominimize harm to the clients. See Rule 1.16. The lawyer must continue toprotect the confidences of the client from whose representation the lawyer haswithdrawn. See Rule 1.9(c).

Identifying Conflicts ofInterest: Directly Adverse

[6] Loyalty to a current clientprohibits undertaking representation directly adverse to that client withoutthat client?s informed consent. Thus, absent consent, a lawyer may not act asan advocate in one matter against a person the lawyer represents in some othermatter, even when the matters are wholly unrelated. The client as to whom therepresentation is directly adverse is likely to feel betrayed, and theresulting damage to the client-lawyer relationship is likely to impair thelawyer?s ability to represent the client effectively. In addition, the clienton whose behalf the adverse representation is undertaken reasonably may fearthat the lawyer will pursue that client?s case less effectively out ofdeference to the other client, i.e., that the representation may be materiallylimited by the lawyer?s interest in retaining the current client. Similarly, adirectly adverse conflict may arise when a lawyer is required to cross-examinea client who appears as a witness in a lawsuit involving another client, aswhen the testimony will be damaging to the client who is represented in thelawsuit. On the other hand, simultaneous representation in unrelated matters ofclients whose interests are only economically adverse, such as representationof competing economic enterprises in unrelated litigation, does not ordinarilyconstitute a conflict of interest and thus may not require consent of therespective clients.

[7] Directly adverse conflictscan also arise in transactional matters. For example, if a lawyer is asked torepresent the seller of a business in negotiations with a buyer represented bythe lawyer, not in the same transaction but in another, unrelated matter, thelawyer could not undertake the representation without the informed consent ofeach client.

Identifying Conflicts ofInterest: Material Limitation

[8] Even where there is no directadverseness, a conflict of interest exists if there is a significant risk thata lawyer?s ability to consider, recommend or carry out an appropriate course ofaction for the client will be materially limited as a result of the lawyer'sother responsibilities or interests. For example, a lawyer asked to representseveral individuals seeking to form a joint venture is likely to be materiallylimited in the lawyer?s ability to recommend or advocate all possible positionsthat each might take because of the lawyer?s duty of loyalty to the others. Theconflict in effect forecloses alternatives that would otherwise be available tothe client. 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 withother current clients, a lawyer?s duties of loyalty and independence may bematerially limited by responsibilities to former clients under Rule 1.9 or bythe lawyer?s responsibilities to other persons, such as fiduciary dutiesarising from a lawyer?s service as a trustee, executor or corporate director.

Personal Interest Conflicts

[10] The lawyer?s own interestsshould not be permitted to have an adverse effect on representation of aclient. For example, if the probity of a lawyer?s own conduct in a transactionis in serious question, it may be difficult or impossible for the lawyer togive a client detached advice. Similarly, when a lawyer has discussionsconcerning possible employment with an opponent of the lawyer?s client, or with a law firm representing the opponent, suchdiscussions could materially limit the lawyer?s representation of the client.In addition, a lawyer may not allow related business interests to affectrepresentation, for example, by referring clients to an enterprise in which thelawyer has an undisclosed financial interest. See Rule 1.8 for specific rulespertaining to a number of personal interest conflicts, including businesstransactions with clients. See also Rule 1.10 (personal interest conflictsunder Rule 1.7 ordinarily are not imputed to other lawyers in a law firm).

[11] When lawyers representingdifferent clients in the same matter or in substantially related matters areclosely related by blood or marriage, there may be a significant risk thatclient confidences will be revealed and that the lawyer?s family relationshipwill interfere with both loyalty and independent professional judgment. As aresult, each client is entitled to know of the existence and implicationsof the relationship between the lawyers before the lawyer agrees toundertake the representation. Thus, a lawyer related to another lawyer, e.g.,as parent, child, sibling or spouse, ordinarily may not represent a client in amatter where that lawyer is representing another party, unless each clientgives informed consent. The disqualification arising from a close familyrelationship is personal and ordinarily is not imputed to members of firms withwhom the lawyers are associated. See Rule 1.10.

[12] A lawyer is prohibited fromengaging in sexual relationships with a client unless the sexual relationshippredates the formation of the client-lawyer relationship. See Rule 1.8(j).

Interest of Person Paying for aLawyer?s Service

[13] A lawyer may be paid from asource other than the client, including a co-client, if the client is informedof that fact and consents and the arrangement does not compromise the lawyer?sduty of loyalty or independent judgment to the client. See Rule 1.8(f). Ifacceptance of the payment from any other source presents a significant riskthat the lawyer?s representation of the client will be materially limited by thelawyer?s own interest in accommodating the person paying the lawyer?s fee or bythe lawyer?s responsibilities to a payer who is also a co-client, then thelawyer must comply with the requirements of paragraph (b) before accepting therepresentation, 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 mayconsent to representation notwithstanding a conflict. However, as indicated inparagraph (b), some conflicts are nonconsentable,meaning that the lawyer involved cannot properly ask for such agreement orprovide representation on the basis of the client?s consent. When the lawyer isrepresenting more than one client, the question of consentabilitymust be resolved as to each client.

[15] Consentabilityis typically determined by considering whether the interests of the clientswill be adequately protected if the clients are permitted to give their informedconsent to representation burdened by a conflict of interest. Thus, underparagraph (b)(1), representation is prohibited if inthe circumstances the lawyer cannot reasonably conclude that the lawyer will beable to provide competent and diligent representation. See Rule 1.1(competence) and Rule 1.3 (diligence).

[16] Paragraph (b)(2) describes conflicts that are nonconsentablebecause the representation is prohibited by applicable law. For example, insome states substantive law provides that the same lawyer may not representmore than one defendant in a capital case, even with the consent of theclients, and under federal criminal statutes certain representations by aformer government lawyer are prohibited, despite the informed consent of theformer client. In addition, decisional law in some states limits the ability ofa governmental client, such as a municipality, to consent to a conflict ofinterest.

[17] Paragraph (b)(3) describes conflicts that are nonconsentablebecause of the institutional interest in vigorous development of each client?sposition when the clients are aligned directly against each other in the samelitigation or other proceeding before a tribunal. Whether clients are aligneddirectly against each other within the meaning of this paragraph requiresexamination of the context of the proceeding. Although this paragraph does notpreclude a lawyer?s multiple representation of adverse parties to a mediation(because mediation is not a proceeding before a "tribunal" under Rule1.0(m)), such representation may be precluded by paragraph (b)(1).

Informed Consent

[18] Informed consent requiresthat each affected client be aware of the relevant circumstances and of thematerial and reasonably foreseeable ways that the conflict could have adverseeffects on the interests of that client. See Rule 1.0(f) (informed consent).The information required depends on the nature of the conflict and the natureof the risks involved. When representation of multiple clients in a singlematter is undertaken, the information must include the implications of thecommon representation, including possible effects on loyalty, confidentialityand the attorney-client privilege and the advantages and risks involved. SeeComments [30] and [31] (effect of common representation on confidentiality).

[19] Under some circumstances itmay be impossible to make the disclosure necessary to obtain consent. Forexample, when the lawyer represents different clients in related matters andone of the clients refuses to consent to the disclosure necessary to permit theother client to make an informed decision, the lawyer cannot properly ask thelatter to consent. In some cases the alternative to common representation canbe that each party may have to obtain separate representation with thepossibility of incurring additional costs. These costs, along with the benefitsof securing separate representation, are factors that may be considered by theaffected client in determining whether common representation is in the client?sinterests.

Consent Confirmed in Writing

[20] Paragraph (b) requires thelawyer to obtain the informed consent of the client, confirmed in writing. Sucha writing may consist of a document executed by theclient or one that the lawyer promptly records and transmits to the clientfollowing an oral consent. See Rule 1.0(b). See also Rule 1.0(p) (writingincludes electronic transmission). If it is not feasible to obtain or transmitthe writing 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 toconsider the risks and alternatives and to raise questions and concerns.Rather, the writing is required in order to impress upon clients theseriousness of the decision the client is being asked to make and to avoiddisputes or ambiguities that might later occur in the absence of a writing.

Revoking Consent

[21] A client who has givenconsent to a conflict may revoke the consent and, like any other client, mayterminate the lawyer?s representation at any time. Whether revoking consent tothe client?s own representation precludes the lawyer from continuing torepresent other clients depends on the circumstances, including the nature ofthe conflict, whether the client revoked consent because of a material changein circumstances, the reasonable expectations of the other client and whethermaterial detriment to the other clients or the lawyer would result.

Consent to Future Conflict

[22] Whether a lawyer mayproperly request a client to waive conflicts that might arise in the future issubject to the test of paragraph (b). The effectiveness of such waivers isgenerally determined by the extent to which the client reasonably understandsthe material risks that the waiver entails. The morecomprehensive the explanation of the types of future representations that mightarise and the actual and reasonably foreseeable adverse consequences of thoserepresentations, the greater the likelihood that the client will have therequisite understanding. Thus, if the client agrees to consent to aparticular type of conflict with which the client is already familiar, then theconsent ordinarily will be effective with regard to that type of conflict. Ifthe consent is general and open-ended, then the consent ordinarily will beineffective, because it is not reasonably likely that the client will haveunderstood the material risks involved. On the other hand, if the client is anexperienced user of the legal services involved and is reasonably informedregarding the risk that a conflict may arise, such consent is more likely to beeffective, particularly if, e.g., the client is independently represented byother counsel in giving consent and the consent is limited to future conflictsunrelated to the subject of the representation. In any case, advance consentcannot be effective if the circumstances that materialize in the future aresuch as would make the conflict nonconsentable underparagraph (b).

Conflicts in Litigation

[23] Paragraph (b)(3) prohibits representation of opposing parties in thesame litigation, regardless of the clients? consent. On the other hand,simultaneous representation of parties whose interests in litigation mayconflict, such as coplaintiffs or codefendants, isgoverned by paragraph (a)(2). A conflict may exist byreason of substantial discrepancy in the parties' testimony, incompatibility inpositions in relation to an opposing party or the fact that there aresubstantially different possibilities of settlement of the claims orliabilities in question. Such conflicts can arise in criminal cases as well ascivil. The potential for conflict of interest in representing multipledefendants in a criminal case is so grave that ordinarily a lawyer shoulddecline to represent more than onecodefendant. On theother hand, common representation of persons having similar interests in civillitigation is proper if the requirements of paragraph (b) are met.

[24] Ordinarily a lawyer may takeinconsistent legal positions in different tribunals at different times onbehalf of different clients. The mere fact that advocating a legal position onbehalf of one client might create precedent adverse to the interests of aclient represented by the lawyer in an unrelated matter does not create aconflict of interest. A conflict of interest exists, however, if there is asignificant risk that a lawyer?s action on behalf of one client will materiallylimit the lawyer?s effectiveness in representing another client in a differentcase; for example, when a decision favoring one client will create a precedentlikely to seriously weaken the position taken on behalf of the other client.Factors relevant in determining whether the clients need to be advised of therisk include: where the cases are pending, whether the issue is substantive orprocedural, the temporal relationship between the matters, the significance ofthe issue to the immediate and long-term interests of the clients involved andthe clients? reasonable expectations in retaining the lawyer. If there issignificant risk of material limitation, then absent informed consent of theaffected clients, the lawyer must refuse one of the representations or withdrawfrom one or both matters.

[25] When a lawyer represents orseeks to represent a class of plaintiffs or defendants in a class-actionlawsuit, unnamed members of the class are ordinarily not considered to beclients of the lawyer for purposes of applying paragraph (a)(1) of this Rule.Thus, the lawyer does not typically need to get the consent of such a personbefore representing a client suing the person in an unrelated matter.Similarly, a lawyer seeking to represent an opponent in a class action does nottypically need the consent of an unnamed member of the class whom the lawyerrepresents in an unrelated matter.

Nonlitigation Conflicts

[26] Conflicts of interest underparagraphs (a)(1) and (a)(2) arise in contexts otherthan litigation. For a discussion of directly adverse conflicts intransactional matters, see Comment [7]. Relevant factors in determining whetherthere is significant potential for material limitation include the duration andintimacy of the lawyer's relationship with the client or clients involved, thefunctions being performed by the lawyer, the likelihood that disagreements willarise and the likely prejudice to the client from the conflict. The question isoften one of proximity and degree. See Comment [8].

[27] For example, conflictquestions may arise in estate planning and estate administration. A lawyer maybe called upon to prepare wills for several family members, such as husband andwife, and, depending upon the circumstances, a conflict of interest may bepresent. In estate administration the identity of the client may be unclear underthe law of a particular jurisdiction. Under one view,the client is the fiduciary; under another view, the client is the estate ortrust, including its beneficiaries. In order to comply with conflict ofinterest rules, the lawyer should make clear the lawyer?s relationship to theparties involved.

[28] Whether a conflict is consentable depends on the circumstances. For example, alawyer may not represent multiple parties to a negotiation whose interests arefundamentally antagonistic to each other, but common representation ispermissible where the clients are generally aligned in interest even thoughthere is some difference in interest among them. Thus, a lawyer may seek toestablish or adjust a relationship between clients on an amicable and mutuallyadvantageous basis; for example, in helping to organize a business in which twoor more clients are entrepreneurs, working out the financial reorganization ofan enterprise in which two or more clients have an interest or arranging aproperty distribution in settlement of an estate. The lawyer seeks to resolvepotentially adverse interests by developing the parties? mutual interests.Otherwise, each party might have to obtain separate representation, with thepossibility of incurring additional cost, complication or even litigation.Given these and other relevant factors, the clients may prefer that the lawyeract for all of them.

Special Considerations in CommonRepresentation

[29] In considering whether torepresent multiple clients in the same matter, a lawyer should be mindful thatif the common representation fails because the potentially adverse interestscannot be reconciled, the result can be additional cost, embarrassment andrecrimination. Ordinarily, the lawyer will be forced to withdraw fromrepresenting all of the clients if the common representation fails. In somesituations, the risk of failure is so great that multiple representationis plainly impossible. For example, a lawyer cannot undertake commonrepresentation of clients where contentious litigation or negotiations betweenthem are imminent or contemplated. Moreover, because the lawyer is required tobe impartial between commonly represented clients, representation of multipleclients is improper when it is unlikely that impartiality can be maintained.Generally, if the relationship between the parties has already assumed antagonism,the possibility that the clients? interests can be adequately served by 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 importantfactor in determining the appropriateness of common representation is theeffect on client-lawyer confidentiality and the attorney-client privilege. Withregard to the attorney-client privilege, the prevailing rule is that, asbetween commonly represented clients, the privilege does not attach. Hence, itmust be assumed that if litigation eventuates between the clients, theprivilege will not protect any such communications, and the client should be soadvised.

[31] As to the duty ofconfidentiality, continued common representation will almost certainly beinadequate if one client asks the lawyer not to disclose to the other clientinformation relevant to the common representation. This is so because thelawyer has an equal duty of loyalty to each client, and each client has theright to be informed of anything bearing on the representation that mightaffect that client?s interests and the right to expect that the lawyer will usethat information to that client?s benefit. See Rule 1.4. The lawyer should, atthe outset of the common representation and as part of the process of obtainingeach client?s informed consent, advise each client that information will beshared and that the lawyer will have to withdraw if one client decides thatsome matter material to the representation should be kept from the other. Inlimited circumstances, it may be appropriate for the lawyer to proceed with therepresentation when the clients have agreed, after being properly informed,that the lawyer will keep certain information confidential. For example, thelawyer may reasonably conclude that failure to disclose one client?s tradesecrets to another client will not adversely affect representation involving ajoint venture between the clients and agree to keep that informationconfidential with the informed consent of both clients.

[32] When seeking to establish oradjust a relationship between clients, the lawyer should make clear that thelawyer?s role is not that of partisanship normally expected in othercircumstances and, thus, that the clients may be required to assume greaterresponsibility for decisions than when each client is separately represented.Any limitations on the scope of the representation made necessary as a resultof the common representation should be fully explained to the clients at theoutset of the representation. See Rule 1.2(c).

[33] Subject to the abovelimitations, each client in the common representation has the right to loyaland diligent representation and the protection of Rule 1.9 concerning theobligations to a former client. The client also has the right to discharge thelawyer as stated in Rule 1.16.

Organizational Clients

[34] A lawyer who represents acorporation or other organization does not, by virtue of that representation,necessarily represent any constituent or affiliated organization, such as aparent or subsidiary. See Rule 1.13(a). Thus, the lawyer for an organization isnot barred from accepting representation adverse to an affiliate in anunrelated matter, unless the circumstances are such that the affiliate shouldalso be considered a client of the lawyer, there is an understanding betweenthe lawyer and the organizational client that the lawyer will avoidrepresentation adverse to the client?s affiliates, or the lawyer?s obligationsto either the organizational client or the new client are likely to limitmaterially the lawyer?s representation of the other client.

[35] A lawyer for a corporationor other organization who is also a member of its board of directors shoulddetermine whether the responsibilities of the two roles may conflict. Thelawyer may be called on to advise the corporation inmatters involving actions of the directors. Consideration should be given tothe frequency with which such situations may arise, the potential intensity ofthe conflict, the effect of the lawyer's resignation from the board and thepossibility of the corporation's obtaining legal advice from another lawyer insuch situations. If there is material risk that the dual role will compromisethe lawyer's independence of professional judgment, the lawyer should not serveas a director or should cease to act as the corporation?s lawyer when conflictsof interest arise. The lawyer should advise the other members of the board thatin some 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 November 1, 2017