Module 4: conflicts of interest

Duty of loyalty — core conflicts principle

A lawyer must not let their own interests, another client's interests, or a third person's interests interfere with loyalty to the client.

Conflict apparent BEFORE taking the matter

The lawyer must not take it unless the conflict can be resolved (e.g., with informed consent for waivable conflicts).

Conflict arises AFTER taking the matter

The lawyer must withdraw unless the conflict can be resolved.

3 consequences of mishandling a conflict

(1) Disqualification; (2) professional discipline; (3) civil liability for malpractice.

Imputed conflicts — general rule

Lawyers in a firm are treated as one unit: if one lawyer is conflicted out, all lawyers in the firm are too.

What counts as a "firm" for imputation?

Any group of lawyers who practice closely together, including a legal aid group, government agency, or corporate law department.

6 factors for whether lawyers are a "firm"

(1) Formal agreement; (2) hold themselves out as a firm; (3) share revenues and responsibilities; (4) access to each other's client files; (5) routinely discuss their matters; (6) whether imputing the conflict serves the rule's purpose.

Office-sharing lawyers and conflicts

They MAY be able to represent adverse clients, even in the same case, depending on their arrangement. Occasional informal consultations may not make them a firm but can still create conflicts.

2 exceptions to imputed disqualification

(1) Conflict is PERSONAL to the lawyer (e.g., family relationship with opposing counsel) and won't materially limit other firm lawyers; (2) certain prior-employment situations where proper screening/procedural steps are taken.

⚠ MISSED Q: Partners in different offices of the same firm. Taylor represents Books-R-Us; Scott represents its direct competitor in an unrelated copyright matter. No consent. Discipline?

NO, because the clients are NOT LEGALLY adverse. Mere economic competition is not direct adversity. (Different offices would NOT matter if there were a conflict, since conflicts are imputed firm-wide.)

2 types of current-client conflicts

(1) Direct adversity; (2) material limitation.

2 conditions to resolve a waivable current-client conflict

(1) The lawyer reasonably believes they can competently and diligently represent each affected client; AND (2) each affected client gives informed consent, CONFIRMED IN WRITING.

What makes consent "informed"?

The client knows all relevant circumstances, reasonable alternatives, and foreseeable ways the conflict could harm them.

When can a conflict NOT be waived because of confidentiality?

When the lawyer's duty of confidentiality to one client prevents disclosing information the other client needs to truly understand the conflict.

Can a client revoke consent to a conflict?

Almost always, yes.

2 NON-WAIVABLE current-client conflicts

(1) Lawyer asserts a claim by one client against another client in the SAME LITIGATION/proceeding before a tribunal (both sides of the "v."); (2) the representation is prohibited by law.

⚠ MISSED Q: Even with consent, a lawyer must not assert a claim against another current client…

Only IN THE SAME LITIGATION (or proceeding before a tribunal). Suing a current client in an UNRELATED matter is direct adversity, but it may be WAIVABLE.

Opposite sides of a TRANSACTION — waivable?

Possibly, depending on the circumstances. The absolute bar applies only to the same LITIGATION.

"Confirmed in writing" vs. "signed writing"

Confirmed in writing: the client's consent is memorialized in a writing (e.g., the lawyer promptly emails a confirmation after oral consent); NO client signature needed. Signed writing: the CLIENT must sign.

⚠ MISSED Q: Lender and borrower hire Ashley for a loan deal on agreed terms. She reasonably believes she can represent both, gets oral consent by phone, then promptly emails a confirmation. Discipline?

NO, she handled the conflict properly. It's a TRANSACTION, not litigation, so it's waivable, and general conflicts only need consent "confirmed in writing." No client signature is required.

Hypo 4A: Which satisfy "informed consent, confirmed in writing"? (A) client signs a writing (B) oral consent + lawyer's note in client file (C) oral consent + prompt confirming email to client (D) written explanation sent, then oral consent

(A) and (C). A signed writing more than satisfies the rule, and a prompt email confirmation works. A note in the lawyer's own file is never transmitted to the client, and in (D) the consent itself is never confirmed in writing.

Direct adversity — general rule

Absent proper waiver, a lawyer can't represent a client directly adverse to another CURRENT client, even in totally UNRELATED matters.

4 examples of direct adversity

(1) Multiple clients in the same matter with actually conflicting interests (opposite sides, or a co-party wants to sue a co-party); (2) taking on a client who is the adverse party in another matter the firm handles; (3) taking a matter adverse to an existing client; (4) having to cross-examine an existing client in a harmful or embarrassing way.

Is economic adversity a conflict?

NO. A firm may represent business competitors at the same time as long as they aren't adverse in any matter.

Are unnamed class members clients for the direct-adversity rule?

NO. Unnamed members of a class ordinarily aren't treated as clients for conflicts purposes.

⚠ MISSED Q: Maria is class counsel against a pharma company. Which class members could she sue for another client in an unrelated matter without ANY consent?

UNNAMED class members only. Named class members ARE her clients, so suing them is direct adversity requiring consent.

Material limitation conflict

Even without direct adversity: a significant risk that the representation will be materially limited by the lawyer's own interest or duties to another client, a former client, or a third person.

Representing criminal co-defendants

Ordinarily should NOT. Their interests are likely to diverge.

Representing co-parties in civil matters

ALLOWED (co-plaintiffs, co-defendants, or multiple parties in a non-litigation matter like spouses' trust), but the lawyer must address the potential conflict.

Privilege warning for joint clients

If former joint clients later litigate against each other, neither can claim privilege. The lawyer should explain that what one client discloses will be shared with the other.

4 steps for representing multiple co-parties

(1) Analyze whether the lawyer can effectively represent each; (2) disclose the potential conflict and the downsides of sharing a lawyer (incl. privilege); (3) get informed consent, confirmed in writing; (4) repeat if the potential conflict becomes actual.

Hypo 4B: Can a lawyer represent multiple bus passengers suing the bus company in the same lawsuit?

(C) It depends on the circumstances. Co-party representation is allowed if the lawyer addresses the potential conflict (e.g., competing claims to a limited fund) and gets informed consent, confirmed in writing.

Inconsistent legal positions in unrelated cases

Generally NOT a conflict, UNLESS one client's case is likely to become controlling precedent for the other's. Then the lawyer must address it; if consent is refused, ask the court to withdraw from one or both cases.

Conflicts from the lawyer's own interests

Financial interests (e.g., owns stock in the defendant) or personal relationships (e.g., opposing counsel is a close relative). If likely to materially limit representation, need informed consent, confirmed in writing.

Is a family-relationship conflict imputed?

NO, unless it would affect other lawyers at the firm.

Third-person or former-client interest conflicts (e.g., lawyer sits on the board of the company the client wants to sue)

May proceed if (1) the lawyer reasonably believes the other person's interest won't adversely affect the representation; AND (2) the client gives informed consent, confirmed in writing.

Insurance defense — whose rules govern?

Which party the lawyer represents (insurer, insured, or both) varies by state. Either way, the lawyer's ethical duties are governed by the Rules of Professional Conduct, NOT the insurance contract.

Misuse of client confidential information

Must not use a client's (or former/prospective client's) confidential information to their DISADVANTAGE without informed consent (no writing needed) or an exception.

Using client information for personal profit without harming the client

Not an ethics violation (the rule requires disadvantage to the client), but the lawyer may face CIVIL liability and have to account for the profits.

4 requirements for a business transaction with a client

(1) Terms fair and reasonable to the client; (2) terms fully disclosed in a writing the client can reasonably understand; (3) client advised IN WRITING to seek independent counsel and given a reasonable chance to do so; (4) client gives informed consent in a WRITING SIGNED BY THE CLIENT.

2 exceptions to the business-transaction rule

(1) Ordinary fee agreements; (2) standard commercial transactions where the lawyer buys goods or services the client routinely markets to the public.

⚠ MISSED Q: Business-transaction rules apply EXCEPT when: (property as fee / lawyer's title insurance company sells to client / lawyer takes standard home loan from bank client / lawyer buys client's boat / lawyer leases second home to client)

The STANDARD HOME LOAN from a bank client. It's a product the client routinely sells to the public. Buying a client's boat IS covered: the client doesn't routinely sell boats.

Proprietary interest in the subject of litigation

A lawyer must not acquire a proprietary interest in the client's cause of action or the subject matter of LITIGATION. Applies to litigation matters only.

2 exceptions to the proprietary-interest rule

(1) Contingent fees; (2) attorney's liens authorized by law.

Patent example: proprietary interest

Patent APPLICATION: lawyer may take an ownership interest in the patent as a fee (following the business-transaction rules). Patent LAWSUIT: may NOT.

⚠ MISSED Q: A cash-poor start-up hires Larry to incorporate and offers stock as his fee. Proper?

YES, if Larry meets the business-transaction requirements. It's not litigation, so the proprietary-interest bar doesn't apply.

2 prohibited acts regarding gifts from a non-relative client

(1) SOLICITING a substantial gift for the lawyer or the lawyer's relative; (2) PREPARING an instrument (e.g., a will) giving a substantial gift to the lawyer or the lawyer's relative.

Gift rule — family exception

Doesn't apply if the client is related to the gift recipient (e.g., the lawyer can draft mom's will leaving a bequest to the lawyer or the lawyer's sibling).

Hypo 4C: Lawyer's best friend (not related) wants the lawyer to draft a will leaving the lawyer his yacht. Can the lawyer draft it?

(B) NO, and no one else at the firm can draft it either. The specific 1.8 conflicts (except sexual relationships) are imputed firm-wide. The friend would need a lawyer outside the firm.

Lucrative appointments (executor, counsel to executor)

NOT barred by the gift rule. A lawyer may seek to be named. But if self-interest would taint the advice, it's a material limitation conflict.

⚠ MISSED Q: Estate lawyer Michelle wants to ask her (unrelated) client to name her executor, a lucrative position. May she?

YES, if she addresses any material limitation conflict: informed consent, confirmed in writing, explaining her financial interest and alternative candidates. Being named executor is not a "gift."

Literary or media rights rule

May not acquire literary or media rights to a story based in substantial part on the representation, until the matter is ENTIRELY completed, including appeals.

⚠ MISSED Q: Jean hires Louis to negotiate the contract for her mystery novel and offers him 2% of royalties. Proper?

YES, if Louis follows the business-transaction rules. The media-rights ban only covers stories based substantially on the REPRESENTATION, and a fictional novel isn't.

Financial assistance to a client in litigation — general rule

PROHIBITED in connection with pending or contemplated litigation, including gifts, loans, and guaranteeing a third party's loan.

3 exceptions to the financial-assistance ban

(1) ADVANCE court costs and litigation expenses for any client; repayment may depend on outcome; (2) PAY court costs and expenses outright for an INDIGENT client; (3) PRO BONO lawyer for an indigent client may give modest gifts for basic living expenses (food, rent, transportation, medicine).

Limits on pro bono living-expense gifts

The lawyer can't promise or advertise them and can't seek or accept reimbursement from the client or anyone affiliated with the client.

⚠ MISSED Q: Which litigation financial arrangements are proper? (pay indigent client's expert fees outright / pay non-indigent client's court costs outright / advance non-indigent client's court reporter fees, no repayment if they lose / lend pro bono indigent client $10K for a car)

PROPER: paying the INDIGENT client's expert fees outright; ADVANCING the non-indigent client's court reporter fees with repayment contingent on outcome. IMPROPER: paying a NON-indigent client's costs outright; a $10K car loan (not a modest gift for basic living).

Hypo 4D: Lawyer represents an indigent client on CONTINGENCY and gives him grocery money for the week. Discipline?

(A) YES. The living-expense gift exception is only for PRO BONO representation, not contingency-fee cases.

Aggregate settlement — definition

An agreement where multiple co-plaintiffs or co-defendants settle their claims at the same time.

2 requirements for an aggregate settlement

(1) Disclose to each client the existence and nature of all claims and each person's participation (how much each pays or receives); AND (2) each client gives informed consent in a WRITING SIGNED BY THE CLIENT.

Class action settlements

Class counsel doesn't have a full lawyer-client relationship with unnamed members but must follow the class action rules on notice and procedural protections.

Joint plea bargains

Same rules as aggregate civil settlements.

⚠ MISSED Q: Which TWO conflict situations require the client's informed consent in a SIGNED writing?

(1) BUSINESS TRANSACTIONS with a client; (2) AGGREGATE SETTLEMENTS. Co-party representation only needs consent confirmed in writing; third-party fee payment needs informed consent with NO writing.

Signed writing vs. confirmed in writing vs. no writing — quick sort

SIGNED by client: business transactions, aggregate settlements (and contingent fee agreements). CONFIRMED in writing: general current-client conflicts, former-client conflicts, govt/judge conflicts. NO writing: third-party payment of fees, consent to use confidential information.

3 requirements when a third person pays the client's fees

(1) Client gives informed consent (no writing needed); (2) no interference with the lawyer's independent judgment or the lawyer-client relationship; (3) client's confidential information is protected.

Sexual relationship with a client

Prohibited (even if consensual and harmless to the representation) UNLESS a consensual sexual relationship existed BEFORE the lawyer-client relationship began.

Sexual relationship rule — organizational clients

Applies to any person who supervises, directs, or regularly consults with the lawyer about the organization's legal matters.

Is the sexual-relationship conflict imputed?

NO. It's personal, unlike the other specific conflicts, which ARE imputed to the firm.

Pre-existing sexual relationship with a client

Not barred by the specific rule, but it may still create a material limitation conflict under the general rule.

Hypo 4E: Lawyer works only with a tech company's CEO and in-house counsel; dates a marketing executive there. No effect on the work. Discipline?

(B) NO. The marketing exec doesn't supervise, direct, or regularly consult with the lawyer on the company's legal matters.

Hypo 4F: Can you represent a client suing a former client?

(B) Yes, except in certain situations (e.g., the same or substantially related matter, or misuse of the former client's confidential information).

Using a former client's confidential information

Can't reveal it or use it to the former client's disadvantage without informed consent, confirmed in writing, unless it has become generally known or an exception applies.

Former-client conflict rule

Absent the FORMER client's informed consent, confirmed in writing, can't represent someone materially adverse to a former client in the SAME or a SUBSTANTIALLY RELATED matter.

Whose consent is needed for a former-client conflict?

Only the FORMER client's (confirmed in writing). But the current representation may separately raise a material limitation conflict.

"Substantially related" — 2 tests

(1) Same transaction or legal dispute; OR (2) a substantial risk that confidential factual information normally obtained in the prior representation would materially advance the new client's position.

Recurring work for a former client — substantially related?

Not automatically. A lawyer who routinely handled a TYPE of problem for a former client may later oppose them in a factually distinct problem of the same general type.

Hypo 4G: Lawyer defended a client on reckless driving. New client wants to sue that former client for breach of contract. Need consent?

(A) No consent needed. The matters aren't substantially related.

⚠ MISSED Q: Ayanna did tax work on Janet's business and personal finances years ago. Janet's husband wants Ayanna for their contentious divorce. Allowed without Janet's consent?

NO, the matters are SUBSTANTIALLY RELATED. Confidential financial information from the tax work would materially advance the husband's position (e.g., property division, support).

⚠ MISSED Q: Five years ago, Lynette regularly handled ApartmentCo's lease-breach suits against tenants. Now a tenant wants her defense against ApartmentCo over a lease signed 6 months ago. Conflict?

NO. It's a factually distinct problem of the same general type she routinely handled. It's not the same dispute, and her old confidential information wouldn't materially advance the tenant.

Client of a lawyer's FORMER FIRM — when is the lawyer conflicted?

Only if the lawyer ACTUALLY ACQUIRED material confidential information there AND the new matter is the same or substantially related and materially adverse. Waivable by that client's informed consent, confirmed in writing.

⚠ MISSED Q: Terrell's old firm represented Smith in Smith v. Jones; Terrell didn't work on it or learn anything confidential. His new firm represents Jones. May Terrell work on the case without Smith's consent?

YES. He acquired no confidential information at the old firm, so he has no conflict.

Lateral hire's conflict — how does the NEW firm avoid disqualification?

(1) Screen the disqualified lawyer (no work, discussion, or file access) and give them no part of the specific fee (salary or partnership share is fine); AND (2) give notice to the former client.

When is the FORMER firm disqualified after a lawyer leaves with a client?

Only if BOTH: (1) the new matter is the same or substantially related to the departed lawyer's matter; AND (2) at least one remaining lawyer has material confidential information.

⚠ MISSED Q: Thea's firm (via a now-departed partner and a still-present associate) defended Monty in a traffic case 5 years ago. Pedro wants Thea to defend him in Monty's breach-of-contract suit. Monty's consent needed?

NO. The matters aren't substantially related, so the associate's remaining information doesn't matter. BOTH conditions must be met.

Can former-client conflicts be waived?

YES, always, by the former client's informed consent, confirmed in writing (personal or imputed).

Who is a prospective client?

Someone who consults a lawyer in good faith about possibly forming a lawyer-client relationship. NOT someone who unilaterally sends information with no reasonable expectation the lawyer will discuss representation.

Prospective client conflict rule

A lawyer who got confidential information from a prospective client can't represent someone else against them in the same or a substantially related matter IF the information could be SIGNIFICANTLY HARMFUL to the prospective client.

Waiving a prospective-client conflict

BOTH the current client AND the prospective client must give informed consent, confirmed in writing.

3 steps for other firm lawyers to avoid an imputed prospective-client conflict

(1) Show the lawyer limited exposure to only the information needed to decide whether to take the case; (2) timely screen the lawyer and give them no part of the fee; (3) give WRITTEN NOTICE to the prospective client.

Hypo 4H: Which rule is unique to prospective-client conflicts?

(A) The information must be "SIGNIFICANTLY HARMFUL." The "substantially related" test also applies to former clients.

Lawyers moving between government and private practice must also comply with…

State and federal conflict-of-interest statutes and regulations, in addition to the ethics rules.

Government → private: same matter rule

A former government lawyer can't represent a private client in a matter they worked on PERSONALLY AND SUBSTANTIALLY in government, unless the AGENCY gives informed consent, confirmed in writing.

"Matter" in the government-lawyer rule

A specific dispute involving specific facts and parties. Drafting broadly applicable regulations is NOT a matter.

"Personally and substantially"

The lawyer actually worked on the matter, and the work was more than trifling.

Former government lawyer — curing imputation to the new firm

(1) Timely screen the lawyer; (2) no share of the fee; (3) WRITTEN NOTICE to the government agency.

Confidential government information about a person

A former government lawyer can't represent a private client adverse to that person when the information could be used to the person's material disadvantage. Cured for the firm by timely screening and no fee share.

Hypo 4I(1): Former assistant prosecutor helped charge a man with murder; now wants to defend him in the same case. Allowed?

(B) NO, unless the prosecutor's office gives informed consent, confirmed in writing. They worked on it personally and substantially.

Hypo 4I(2): Former chief agency attorney's rubber-stamp signature was on a contract another attorney drafted. A farmer wants her help rescinding it. Allowed?

(A) YES, without restriction. A rubber-stamp signature isn't personal and substantial participation.

Private practice → government

Ordinary current and former client conflict rules apply. Also, can't work on a matter they handled personally and substantially in private practice unless the GOVERNMENT EMPLOYER consents, confirmed in writing (and the former private client conflict must also be addressed).

Former judge, law clerk, arbitrator, or mediator — conflict rule

Can't represent a private client in a matter they worked on PERSONALLY AND SUBSTANTIALLY in that role unless ALL PARTIES give informed consent, confirmed in writing.