Summary: A lawyer may not represent a party as a class representative in a class action while at the same time he is opposing that party in a separate civil action even if both parties to the second action have consented because (1) on the facts presented the clients' consent is ineffective because the lawyer failed to inform the clients sufficiently about the possible adverse consequences of the dual representation and (2) it is not obvious that the lawyer can adequately represent the interests of each client.
Facts: A lawyer who is representing a group of New England franchisees as a class in an antitrust action against the regional distributor of a product they sell has been asked to represent one of the franchisees "A," as a representative of the class. The members of the class are seeking treble damages and injunctive relief under the Sherman Act for the regional distributor's alleged tying of product purchases to purchases of freight and advertising.
The lawyer is, however, already opposing A in an independent action brought by another member of the class, "B," against both A and the regional distributor. In this second action, B has alleged that the regional distributor violated a Massachusetts statute by placing a new franchisee, A, within B's "relevant market area."
The lawyer states in his letter of inquiry that "I have ... written to both [A] and [B] advising them that I have made a complete disclosure [of the dual representation] to [A] and [B]" and that "I have been assured orally and I will confirm in writing that they have no objections to my representing [A] and [B] in the antitrust suit." In his letter to client A, the lawyer asked A to
initial and return a copy of the letter ... to indicate that when we met there was a full disclosure of the fact that I am representing [B] in an action against [A] and [the regional distributor], and that you were aware of that, and nevertheless asked me to send you the papers so that you could join in the antitrust suit ... . The reason for my request ... is that it is, of course, unusual for an attorney representing a plaintiff suing you as defendant to represent you as a plaintiff in another case. But you would be represented anyway, if the Court certifies all [franchisees] as a class, which I expect the Court to do in the anti-trust case.
Discussion: This inquiry presents three key questions: Will the proposed representation of "A" put the lawyer in a position in which it is likely that he will obtain or have access to confidences or secrets of "A" that he could use to "A"'s detriment in his representation of "B"? Did the lawyer disclose sufficient information to "A" and "B" concerning the potential adverse consequences of the proposed representation for their consent to have been knowing and, therefore, effective under the Disciplinary Rules? Is it obvious that the lawyer can adequately perform both representations? This last question raises the interesting issue of what significance, if any, should be attached to the fact that the proposed representation of "A" is not as an individual party, but rather as a representative of a class.
1. Access to Secrets and Confidences. For the lawyer ade-quately to prepare the antitrust action, he will likely need to ask the class representatives to reveal to him secrets and confidences both to establish that they are adequate representatives of the class and to obtain the background information and facts he will need to present the case. The use of such confidences or secrets by the lawyer to the detriment of "A" without "A"'s consent would be prohibited by DR 4-101(B), although it cannot be determined from the facts given whether such a problem would arise. It is not, however, necessary to speculate as to what might happen, for the proposed representation is prohibited on other grounds.
2. Conflict of lnterest. Quite apart from the possible Canon 4 problem, the proposed dual representation creates a conflict of interest that under DR 5-1051 requires the lawyer to decline the representation of "A." Where, as here, there exists a conflict2 within the meaning of DR 5-105(A), consent alone does not resolve the problem, it must also be obvious that the lawyer could adequately represent the interests of each client. MBA Opinion 78-12. A. Validity of Consent. For a client's consent to be effective under the Disciplinary Rules, it must be given after full disclosure to the client of the possible adverse consequences to the client of the proposed representation. Cf. MBA 0pinions 78-1; 76-14. Merely mentioning the proposed representation to the client is not enough, the lawyer should "explain fully to each client the implications of the common representation" so that each client will be in a position to "evaluate his need for representation free of any potential conflict and to obtain other counsel if he so desires." EC 5-16. See International Business Machines Corp. v. Levin, 579 F.2d 271, 279-80 (3d Cir. 1978). See also EC 7-8. Having explained this to the client, the lawyer should make no attempt to pressure the client's decision; the decision is the client's alone.
The facts presented here reveal no explanation to either "A" or "B" of the potential adverse consequences of the proposed representation; rather, they suggest an attempt to elicit consent. Accordingly, the committee considers the consent given by the clients under the circumstances set out in the portion of the letter quoted above to be ineffective.
B. Adequacy of Representation. As to the lawyer's ability adequately to represent the interests of both clients, it should be noted that prima facie a lawyer ought not be in a position in which he must simultaneously represent and attack the same party zealously in two different litigated matters. MBA Opinion 80-1. Were the lawyer proposing to represent "A" not in a class action, but rather as a single party in a similar action, it would be highly unlikely that the lawyer could adequately represent and oppose "A" at the same time. Not only might the lawyer's representation of "A" be adversely affected by the Canon 4 problems discussed above, his representation of "B" might be adversely affected as well by a loyalty to client "A," or a reluctance to oppose "A" with the same vigor he would a non-client.
On the other hand, if the proposed representation of "A" were to be solely as a member of a class, different concerns would emerge. They are not addressed here except to note that in most instances they would dictate a result different from that above.
The situation of a class representative in a class action falls somewhere between that of the ordinary party litigant and the unnamed member of a class. At least in a case such as that presented here, in which a lawyer is opposing the prospective class representative in an action involving legal and factual issues that are not unrelated to those in the class action, it is not obvious that the lawyer can adequately represent the interests of both clients, both because of the potential Canon 4 problems and the danger of divided loyalties. Consequently, the lawyer may not represent "A" as a class representative in the class action.
1. DR 5-105 reads, in pertinent part, as follows:
(A) A lawyer shall decline proferred employment if the exercise of his independent judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proferred employment, of it is would be likely to involve him in representing differing interests, except to the extent permitted under DR 5-105(C).
(C) In the situations covered by DR 5-105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his professional judgment on behalf of each.
2. A "conflict" exists under DR 5-105(A) where a simultaneous representation would be likely to adversely affect a lawyer's exercise of his professional judgment on behalf of a client or to involve him in representing differing interests. Differing interests are defined by the code to include "every interest that will adversely affect either judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest." Definition (1). The code gives no guidance as to the degree of adverse effect that must be presented for a representation to be subject to the restrictions of DR 5-105(A); however, the relationship between DR 5-105(A) and DR 5-105(C) makes it clear that the phrase "adversely affected" as used in DR 5-105(A) must include at least those situations in which the adverse effect is sufficiently insignificant that it is obvious that it will not prevent a lawyer from adequately representing the interests of each client. See International Business Machines Corp. v. Levin, 579 F.2d 271, 279-80 (3d Cir. 1978). Hence, where as here there is at least a question as to whether a proposed multiple representation will prevent a lawyer from adequately representing the interests of all clients concerned, there must a fortiori exist some expected or likely adverse effect within the meaning of DR 5-105(A).
Permission to publish granted by the Board of Delegates on February 25, 1981. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.