Summary: A lawyer should not represent a present client in an adversary matter against a former client if his representation of the present client in such matter may involve the use of confidences or secrets of the former client or even may appear to do so. A lawyer should not represent one present client in an adversary matter against another present individual client without the informed consent of both clients.
Facts: Our advice has been requested with respect to four different factual situations, which, because they involve related ethical problems, we will discuss in a single opinion.
Situation 1. XH and XW are divorced. Their marriage had been the second marriage for each of them. Attorney A formerly represented XH in proceedings relating to his first wife (the nature of which is not disclosed to us, but presumably involving some aspect of his first marriage), and has been representing XW on a regular basis in child support proceedings against her first husband. Now A has been asked to represent XW in a proceeding against XH (the nature of which also is not disclosed to us, but presumably relating to support), and A inquires whether he properly may do so.
Situation 2. Attorney E formerly was a staff attorney for the rent control board of the Town of Z. In that capacity he represented the board in a dispute between landlord L and tenants of L, as to whether or not a parking area used in conjunction with L's building was subject to the jurisdiction of the board. E also represented the board in a suit in equity brought by L against the board. In connection with these matters he gave occasional informal advice to tenants of L. Now the tenants of L have asked E to represent them in connection with a petition by L to the board for rent increases. The petition was pending while E was with the board, but E did no work with respect to it. E asks whether his representation of the tenants would be in violation of Disciplinary Rule DR 9-101.
Situation 3. Attorneys F and G purchased a parcel of land in the Town of Y and gave a mortgage to a bank. The mortgage remains undischarged. In 1973, while F and G were serving as town counsel for the Town of Y, they sold the land to X, the trustee of a realty trust. In 1974 X applied to the planning board of the town for approval of a plan to subdivide the land and sell part of it. The planning board refused approval, and X has sought review of this decision by the superior court. F, who still is town counsel for the Town of Y, has been asked to represent the planning board in the pending action, and the question is presented whether he properly may do so.
Situation 4. Attorney J is "of counsel" to the law firm of M & N; although not a partner or associate of the firm, J does substantial work for the firm on a continuing basis. P is a regular client of M & N. R and S are the trustees of a Massachusetts realty trust. For many years M & N served as counsel to R and S in their capacity as trustees, but M & N no longer represents them. In the past J has performed legal services for R and S as trustees, in his capacity as "of counsel" to M & N, and J presently represents R as an individual in a matter unrelated to the realty trust. P now has asked J to represent P in an action for breach of contract against R and S, both individually and as trustees. J states that he does not believe that his past representation of R and S as trustees has provided him with any information which he would use against them in the litigation, and asks whether he properly may take the case offered to him by P.
Discussion: Although none of the four factual situations set forth above is identical to another in its facts, we believe that the ethical problems presented are related and that a single opinion discussing all four situations may be most helpful to the bar.
We first shall consider some fundamental ethical considerations and the related disciplinary rules, and then turn to a discussion of the specific situations.
It is not uncommon for a lawyer to be asked to handle an adversary matter against a former client of himself or his law firm, with whom the lawyer and his firm have no present relationship. We believe that the lawyer is free to do so, subject only to the restrictions noted below. (In this opinion we use the phrase "adversary matter" to include any situation of conflicting or inconsistent interests, not limited to litigation matters.)
Disciplinary Rule DR 4-101(B) provides that, with certain exceptions noted below, a lawyer shall not knowingly reveal a secret or confidence of his client, use a secret or confidence of his client to the disadvantage of his client, or use a secret or confidence of his client to the advantage of himself or a third person. The exceptions are that the confidences or secrets of the client may be revealed or used by the lawyer with the consent of the client after full disclosure, and may be revealed by the lawyer when permitted by the Disciplinary Rules, when required by law or by court order, when necessary to prevent a crime intended by the client, and when necessary for the lawyer to collect his fee or to defend himself against accusations of misconduct. See DR 4-101(C).
In light of Ethical Consideration EC 4-6, which provides in part that "The obligation of a lawyer to preserve the confidences and secrets of his client continues after termination of his employment," we believe that the term "client" as used in DR 4-101(B) must include a former client as well as a present or continuing client.
DR 4-101 must be read in conjunction with Canon 9, which states the general principle that "A lawyer should avoid even the appearance of professional impropriety" and with Ethical Consideration EC 9-6, which provides in relevant part that "Every lawyer owes a solemn duty ... to strive to avoid not only professional impropriety but also the appearance of impropriety."
Obviously a lawyer would be in violation of DR 4-101(B) if he accepted employment in an adversary matter against a former client under circumstances such that his employment could involve using confidences and secrets of the former client to the disadvantage of that former client.
Although no disciplinary rule deals squarely with the problem, we believe that the lawyer also would be acting improperly if he accepted employment in an adversary matter against a former client under circumstances such that the former client reasonably would be apprehensive that the lawyer's employment might involve the use of secrets or confidences of the former client, even if no such use of secrets or confidences is intended by the lawyer. In these circumstances, we believe that there would be "an appearance of impropriety," forbidden by Ethical Consideration EC 9-6, even if there were no violation of DR 4-101(B) or any other disciplinary rule. We express no opinion as to whether the lawyer would be subject to disciplinary proceedings in such circumstances.
Secrets and confidences of the client (or former client) include not only information protected by the attorney-client privilege, but also any other information disclosed to the lawyer if the client has requested that the information be held inviolate or if the disclosure of the information would be embarrassing to the client or would be likely to be detrimental to the client. Disciplinary Rule DR 4-101(A).
A lawyer who previously has handled a matter as a public employee is subject to a related, but perhaps broader, restriction. Disciplinary Rule DR 9-101(B) provides that "A lawyer shall not accept private employment in a matter in which he had substantial responsibility while he was a public employee." Ethical Consideration EC 9-3 points out that to do so "would give the appearance of impropriety even if none exists." Thus the former public employee is disqualified from acting in certain matters even if no violation of DR 4-101(B) could be involved.
We now consider whether a lawyer may accept employment to handle a matter against someone who is a present client of the lawyer or his law firm, where the matter neither will involve the use of any secrets or confidences of such client nor will appear to do so, and where the matter is unrelated to any work which the lawyer or his firm presently is handling for such client.
No disciplinary rule expressly forbids the lawyer to accept employment in a matter in which he will represent interests contrary to those of another present client of the lawyer or his firm. Perhaps Disciplinary Rule DR 5-105(A) was intended to cover such a situation. It provides that "A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment ...," unless all clients who are involved consent to such employment of the lawyer after full disclosure.
It seems to be a generally accepted standard of ethical conduct that a lawyer should not take a case against a present client of himself or his firm, unless the client consents, at least where the client is an individual person. One court has stated the proposition in unequivocal terms:
When a client engages the services of a lawyer in a given piece of business he is entitled to feel that, until that business is finally disposed of in some manner, he has the undivided loyalty of the one upon whom he looks as his advocate and his champion. If ... he is sued ... by his own attorney, who is representing him in another matter, all feeling of loyalty is necessarily destroyed ... .
Grievance Committee of the Bar of Hartford County v. Rottner, 152 Conn. 59, 203 A. 2d 82 (Conn. S. Ct. of Errors 1964).
To the same general effect, see Ethical Consideration EC 5-1:
The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client.
The decision in the Rottner case, in which two experienced members of the Connecticut bar were disciplined for permitting their law firm to commence an action against one of its existing clients, is consistent with the opinions of the ethics committees of a number of bar associations.
However, we are concerned with the implications of the Rottner rationale if it is extended to large commercial clients. It is obvious that a large bank, insurance company, or industrial company which has a considerable volume of legal work may find it advantageous to spread that work among a number of local lawyers or law firms in the expectation that none of them then will be left free to handle cases against the company.
If both clients give informed consent, we believe that a lawyer properly may undertake an adversary matter against such a commercial client even if it is his present client. We express no opinion at this time as to whether or not the lawyer could undertake such a case without the consent of the commercial client, preferring to defer consideration of that matter until it is put to us in a specific factual context.
We think it would be improper for a lawyer to accept employment in a case against an individual client whom the lawyer is representing in an unrelated matter, without the prior informed consent of both clients. We think that the same rule should apply to small or closely-held corporate clients. And while we leave open the question of whether or not the same rule should apply to a large commercial client, we think it preferable for the lawyer to reach some understanding with such a client at the outset as to whether or not the lawyer will remain free to handle cases against the client in unrelated matters. Informed consent of such a client might obviate any problem, but of course both clients should be fully informed of all relevant facts as to possible conflicts of interest and the lawyer should be alert to avoid any appearance of impropriety or undue influence upon a client to give consent.
We now turn to the specific factual situations presented to us, in light of the basic considerations which have been discussed above.
Situation 1. Here the lawyer is asked to represent a divorced wife in a case against her former husband, although the lawyer previously has represented the former husband in a matter involving his first wife. As we read between the lines of the inquiry presented to us, we infer that each matter involves to some extent the obligation and ability of the husband to support a former spouse. It appears likely that in the current proceeding the lawyer either would be using information disclosed to him in confidence by the husband in the prior proceeding, or would appear to be doing so in the view of the husband. We conclude that the lawyer should not represent the wife in the current matter, if our assumptions of the facts are correct.
Situation 2. A former staff attorney for a Rent Control Board has been asked to represent tenants against their landlord in a proceeding before the board, although he formerly represented the board in matters involving the same landlord and presumably at least some of the same tenants. Of course the board, and not the landlord, is the former client of the lawyer. On the other hand, as a practical matter the board may be the adversary of the tenants in any litigation arising from an unfavorable decision of the board. We are unable to determine whether the proposed employment of the lawyer may involve use or apparent use of "secrets and confidences" of the board; if so, the lawyer may not accept the employment; if not, we believe that the lawyer may represent the tenants in the pending matter without violation of DR 9-101(B), since he had no substantial responsibility in the present matter while he was employed by the board. A more sweeping interpretation of DR 9-101(B) would tend to discourage lawyers from accepting public employment, without serving any useful or necessary purpose. (We have assumed that the pending petition for rent increases does not include any rent increases for the parking area, as to which the lawyer had substantial responsibility for the board in another case; if it does, we think that DR 9-101(B) would preclude his proposed employment.)
Situation 3. We do not believe that the vendor-purchaser relationship which existed between the lawyer and the present land owner should prevent the lawyer from representing the planning board in pending litigation involving proposed subdivision of the land. The purchaser was in no sense a client of the lawyer. However, because the lawyer apparently remains liable upon the mortgage loan, another problem is present. If the proposed subdivision of the land, or lack of it, may have some effect upon the lawyer's ultimate liability on the mortgage loan, Disciplinary Rule 5-101 will apply:
Except with the consent of his client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property or personal interests.
Situation 4. For the reasons discussed above, we think it would be improper for the lawyer to represent one client in an action against another individual client whom the lawyer currently represents in an unrelated matter. Moreover, quite apart from the fact that the lawyer proposes to commence an action against a present individual client, we think that the fact the law firm to which he is "of counsel" regularly has represented the proposed defendants over a period of years means that it is highly likely that his proposed new employment will involve either an actual violation of DR 4-101(B) or an appearance of impropriety. The description "of counsel" indicates a continuing relationship with the firm (see Disciplinary Rule DR 2-102(A)(4) ), and the lawyer who is "of counsel" must be regarded as a member of the firm for purposes of conflicting interests. We conclude that the lawyer should not accept the employment unless the proposed defendants consent after full disclosure.
Permission to publish granted by the Board of Delegates, 1975. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.