PR: frequently tested- conflict of interest

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PR: frequently tested- conflict of interest
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bar exam PR: frequent topics
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  1. When addressing a conflict of interest problem on the exam:
    • i) identify clearly the client or clients
    • (ii) determine whether a conflict of interest exists
    • (iii) decide whether the representation may be undertaken despite the existence of a conflict (i.e. client waiver)
  2. conflict of interest: personal interest: general rule: a lawyer must not represent a client if a reasonable lawyer would conclude that there is a significant risk that the lawyer's professional judgment will be adversely affected by her own personal interest.
  3. conflict of interest: exceptions to general rule:
    i)    The lawyer reasonably believes that she will be able to provide competent and diligent representation to the affected client;

    ii)   The representation is not prohibited by law; AND

    iii)   The affected client gives informed consent, confirmed in writing.
  4. conflict of interest: personal interest: Both the specific lawyer’s subjective belief and a disinterested lawyer’s reasonable belief are required in the analysis of whether there is a significant risk that the lawyer’s professional judgment will be adversely affected by the lawyer’s own interests.
  5. Opposing Lawyers Related
    A lawyer related to another lawyer (e.g., parent, child, sibling, or spouse) may not represent, in any matter, a client whose interests differ from those of another party to the matter who the lawyer knows is represented by the other lawyer, unless the client gives informed consent and the lawyer concludes that he can adequately represent the client’s interests. RPC 1.10(h). Disqualification arising from a close family relationship is personal and ordinarily is not imputed to members of firms with whom the lawyers are associated.
  6. Sexual Relations With Client
    A lawyer is prohibited from engaging in sexual relations with a client in domestic relations matters during the course of the lawyer’s representation of the client. RPC 1.8(j)(1)(iii). This prohibition applies even if the sexual relationship is consensual and even if prejudice to the client is not immediately apparent. The rule does not permit the client to waive the conflict through informed consent.
  7. This rule does not apply to sexual relations between lawyers and their spouses or to ongoing consensual sexual relationships that predate the commencement of the lawyer-client relationship. RPC 1.8(j)(2).
  8. Before proceeding with a representation under such circumstances, the lawyer should consider whether the lawyer’s ability to represent the client will be materially limited by the sexual relationship and therefore constitute an impermissible conflict of interest.
  9. Demanding sexual relations as condition of representation
    A lawyer is prohibited from demanding or requiring sexual relations with any person as a condition of entering into or continuing any professional representation by the lawyer or the lawyer’s firm. RPC 1.8(j)(1)(i). A lawyer also must not employ coercion, intimidation, or undue influence in entering into sexual relations incident to any professional representation by the lawyer or the lawyer’s firm. RPC 1.8(j)(1)(ii).
  10. When client is an organization
    If the client is an organization, the lawyer for the organization (whether in-house or outside counsel) is prohibited from having a sexual relationship with a constituent of the organization (e.g., employee of a corporation) who supervises, directs, or regularly consults with the lawyer with regard to the organization’s legal matters.
  11. Other lawyers in the firm
    If a lawyer in a firm has sexual relations with a client, but does not participate in representation of that client, the lawyers in the firm will not be subject to discipline solely because of the occurrence of such sexual relations. RPC 1.8(k). There may be circumstances, though, when sexual relations with a client by one lawyer in a firm could give rise to a conflict of interest that may be imputed to the other lawyers in the firm.
  12. Lawyer as Witness
    Due to a potential conflict between the interests of a client and the interest of the lawyer in testifying truthfully, the lawyer may be disqualified from representing the client if the lawyer is likely to be a necessary witness in the action in which she is representing the client.
  13. lawyer as witness: general rule and exceptions:
    • A lawyer is not permitted to act as an advocate at a trial in which the lawyer is likely to be a necessary witness unless:
    • i) The testimony relates solely to an uncontested issue;
    • ii) The testimony relates solely to the nature and value of legal services rendered in the matter;
    • iii) Disqualification of the lawyer would work substantial hardship on the client;
    • iv) The testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or
    • v) The testimony is authorized by the court or other adjudicative body.
  14. 2. Other Lawyers in Firm
    • A lawyer may not act as an advocate before a tribunal in a matter if:
    • i) Another lawyer in the lawyer’s firm is likely to be called as a witness on a significant issue other than on the client’s behalf, and it is apparent that such testimony will be prejudicial to the client; or
    • ii) If the conflict of interest rules preclude the lawyer from doing so.
    • RPC 3.7(b).
  15. C . Acquiring an Interest in Litigation: Proprietary Interest in Causes of Action: A lawyer must not obtain a proprietary interest in the cause of action or subject matter of litigation in which a client is represented, except when the lawyer:
    • i) Acquires a lien granted by law to secure payment of a fee; or
    • ii) Contracts for a reasonable contingent fee, provided the case is not a criminal or domestic relations matter.
  16. 2. Financial Assistance
    A lawyer is prohibited from providing or guaranteeing financial assistance to a client with respect to pending or planned litigation, except that a lawyer is permitted to advance court costs and litigation expenses to the client. Although the client usually must remain ultimately liable for such costs, repayment may be made contingent on the outcome of the case. RPC 1.8(e)(1),(3). Lawyers representing indigent or pro bono clients may advance court costs and litigation expenses, regardless of whether the funds will be repaid. RPC 1.8(e)(2).
  17. D . Entering Into Business Transactions With Client
  18. 1. Business Transactions With Client
    In general, a lawyer must not enter into a business transaction with a client if they have differing interests in the transaction and if the client expects the lawyer to exercise professional judgment in the transaction for the protection of the client. The lawyer may, however, enter into such a transaction if:
  19. i) The transaction is fair and reasonable to the client, and the terms are fully disclosed and transmitted in writing in a way that can be reasonably understood by the client;
    • ii) The client is advised in writing of the desirability of seeking independent counsel for the transaction and is given a reasonable opportunity to seek such counsel; and
    • iii) The client gives informed consent in a signed writing to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.
  20. RPC 1.8(a).
  21. Note that this rule does not apply to business transactions with former clients. However, a lawyer entering into a business transaction with a former client may not use information relating to the representation to the disadvantage of the former client unless the information has become generally known. RPC 1.9(c).
  22. Standard commercial transactions between the lawyer and the client for products or services the client generally markets to others (e.g., banking or brokerage services, medical services, products manufactured or distributed by the client, utilities’ services) would be exempt from this rule.
  23. 2. Literary or Media Rights
    A lawyer is prohibited from negotiating for or entering into any arrangement for literary or media rights relating to representation of a client or prospective client prior to the conclusion of all aspects of the matter that gave rise to the representation. RPC 1.8(d).
  24. A lawyer may represent a client in a transaction concerning literary property and agree that the lawyer’s fee will consist of a share in ownership in the property if the arrangement does not result in an illegal or excessive fee and meets the rules regarding business transactions with a client (see supra).
  25. 3. Soliciting Gifts
  26. A lawyer is prohibited from soliciting any gift from a client, including a testamentary gift, for the benefit of the lawyer or a person related to the lawyer. RPC 1.8(c)(1). In addition, unless the lawyer is related to the client and a reasonable lawyer would conclude that the transaction is fair and reasonable, a lawyer may not prepare an instrument that gives a gift to the lawyer or a person related to the lawyer (such as in a will, trust agreement, or deed). RPC 1.8(c)(2). Related persons include a spouse, child, grandchild, parent, grandparent, or other relatives or individuals with whom the lawyer maintains a close, familial relationship. RPC 1.8(c).
  27. Note that a lawyer may accept an unsolicited gift from a client, if the transaction meets general standards of fairness. For example, a present given at a holiday or as a token of appreciation is permitted. If a client offers the lawyer a more substantial gift, the rule does not prohibit the lawyer from accepting it, but such a gift may be voidable by the client.
  28. E . Conflicting Interests Between Clients:Current Clients
    • General rule:
    • A lawyer must not represent a client if a reasonable lawyer would conclude that the representation will involve the lawyer in representing differing interests, unless:
  29. i) The lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
    • ii) The representation is not prohibited by law;
    • iii) The representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
    • iv) Each affected client gives informed consent, confirmed in writing.
  30. b. Differing interests
  31. Under no circumstances may a lawyer represent opposing parties in the same lawsuit or transaction. Absent informed consent in writing, a lawyer also may not act as an advocate in one matter against a person the lawyer represents in some other matter, even when the matters are wholly unrelated.
  32. Differing interests can also arise in transactional matters. Thus, if a lawyer is asked to represent the seller of a business in negotiations with a buyer represented by the lawyer in another, unrelated matter, the lawyer could not undertake the representation without the informed written consent of each client. Simultaneous representation in unrelated matters of clients whose interests are only economically adverse, however, such as representation of competing economic enterprises (two baseball teams, for example) in unrelated litigation, does not ordinarily constitute a conflict of interest and thus may not require consent of the respective clients.
  33. c. Material limitation
  34. Even if clients are not directly adverse, a conflict of interest will exist if there is a significant risk that a lawyer’s ability to consider, recommend, or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer’s other responsibilities or interests. Thus, if a lawyer is asked to represent several persons seeking to form a partnership, the lawyer is likely to be materially limited in his ability to recommend or advocate all possible positions that each partner might take because of the lawyer’s duty of loyalty to the others. The mere possibility of subsequent harm, however, does not require disclosure and consent. The lawyer must evaluate the likelihood that a difference in interests will occur and whether it will materially interfere with the lawyer’s independent professional judgment in considering alternatives that reasonably should be pursued on behalf of the client.
  35. d. Aggregate settlements
  36. A lawyer representing two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients unless each client gives informed consent in a signed writing or there is court approval for the settlement. The lawyer must disclose the existence and nature of all claims involved and the participation of each person in the settlement. RPC 1.8(g).
  37. 2. Conflicts Between Current and Former Clients
  38. The duty of loyalty to a client extends beyond the duration of the representation and can limit a lawyer’s ability to represent other clients or use information obtained in representing the client.
  39. a. Representation materially adverse to former client
  40. A lawyer who has previously represented a client in a matter must not subsequently represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client, unless the former client gives informed consent, confirmed in writing. RPC 1.9(a).
  41. 1) Scope of a matter
  42. The scope of a “matter” for purposes of determining a conflict depends on the facts of each particular situation or transaction. If a lawyer was directly involved in a specific transaction, subsequent representation of other clients with materially adverse interests in that transaction is clearly prohibited. If the lawyer commonly handled a type of problem for a former client, the lawyer is not prohibited from later representing another client in a factually different problem of the same type even though the subsequent representation involves a position adverse to the prior client.
  43. 2) “Substantially related”
  44. “Substantially related” matters involve the same transaction or legal dispute, or involve substantial risk that confidential factual information normally obtained in the prior representation would materially advance the new client’s position in the subsequent matter. Thus, a lawyer who has represented a businessperson and learned extensive private financial information about the person may not then represent that person’s spouse in a divorce. Information previously disclosed to the public or to other parties adverse to the former client generally will not cause disqualification.
  45. b. Use of information obtained in former representation
  46. A lawyer who has formerly represented a client or whose present or former firm has formerly represented a client in a matter is not permitted to use information relating to the representation to the disadvantage of the former client except when the ethics rules allow confidential information to be revealed (see supra) or when the information has become generally known. The former client can waive this impediment through informed written consent. RPC 1.9(c).
  47. c. When lawyer switches private firms: Limitations on new firm
    A lawyer is not permitted to knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer was formerly associated previously represented a client whose interests are materially adverse to that person and about whom the lawyer had acquired confidential information that is material to the matter. However, the former client may give informed consent, confirmed in writing, to permit such representation. RPC 1.9(b).
  48. 2) Limitations on old firm
    If a lawyer has terminated an association with a firm, the firm is not prohibited from subsequently representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless (i) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client and (ii) any lawyer remaining in the firm has confidential information that is material to the matter. RPC 1.10(b). A client may give informed consent, in writing, to overcome a disqualification. RPC 1.10(d).
  49. d. Government lawyers 1) Former government officers or employees
    A lawyer who is a former government lawyer, public officer, or employee is prohibited from representing a client in a matter in which the lawyer participated personally and substantially as a lawyer, public officer, or employee, unless the appropriate government agency gives its informed written consent to the representation. RPC 1.11(a).
  50. The prohibition applies regardless of whether the lawyer is adverse to the government in attempting to represent the new client. Thus, a lawyer who has pursued a claim on behalf of the government may not pursue the same claim on behalf of a subsequent private client after the lawyer has left government service, except when the government agency gives its informed, written consent.
  51. 2) Disqualification of former government officer or employee’s firm
    If a lawyer who is a former government officer or employee is disqualified from representation, no lawyer in her firm may knowingly undertake or continue representation in such matter unless the firm acts promptly and reasonably to (i) notify, as appropriate, lawyers and personnel at the firm that the lawyer is prohibited from representing the client, (ii) ensure that the disqualified lawyer is timely screened from any participation in the matter and gets no part of any fee from the matter, and (iii) provide written notice to the appropriate government agency to enable it to ascertain whether the lawyer and firm are in compliance with the conflict rules. RPC 1.11(b).
  52. Screening requires the isolation of the lawyer from any participation in the matter through the timely imposition of procedures within a firm that are reasonably adequate under the circumstances to protect information that the isolated lawyer is obligated to protect.
  53. 3) Use of confidential information obtained during government service a) General rule
    Except as the law expressly permits, a lawyer who was a government employee or officer and acquired known confidential government information about a person may not represent a private client whose interests are adverse to that person in a matter in which the information could be used to that person’s material disadvantage. RPC 1.11(c).
  54. b) Confidential government information
    “Confidential government information” means information obtained under governmental authority and which, at the time the rule is applied, the government is prohibited by law from disclosing to the public or has a legal privilege not to disclose and which is not otherwise available to the public. RPC 1.11(c).
  55. c) Former government employee or officer’s law firm
    A law firm with which a former government employee or officer is associated may undertake or continue representation in a matter in which the former government employee or officer is disqualified due to possession of confidential government information only if the disqualified lawyer is timely screened from any participation in the matter and receives no part of the fee from the representation. RPC 1.11(c).
  56. 4) Current government lawyer a) General conflict rules apply
    Except as expressly provided by law, a lawyer currently serving as a government employee is subject to the general ethics rules relating to current and former clients. In addition, the government lawyer is not permitted to participate in a matter in which the lawyer participated personally and substantially while in private practice or non-governmental employment, unless under applicable law no one is or may be authorized to act in the lawyer’s place in such matter. RPC 1.11(d)(1).
  57. b) Negotiation for private employment
    A current government lawyer is not permitted to negotiate for private employment with any person who is involved as a party or lawyer for a party in a matter in which the lawyer is participating personally and substantially. RPC 1.11(d)(2).
  58. 5) Meaning of “matter”
    To determine the existence of a conflict affecting a current or former government lawyer, the RPC defines the term “matter” to include any litigation, judicial or administrative proceeding, case, claim, application, request for a ruling or other determination, contract, controversy, investigation, charge, accusation, arrest, negotiation, arbitration, mediation, or any other representation involving a specific party or parties. RPC 1.0(l). The term does not include agency rulemaking functions. RPC 1.11(e).
  59. A “matter” may continue in another form. In determining whether two particular matters are the same, the lawyer should consider the extent to which (i) the matters involve the same basic facts, (ii) the matters involve the same or related parties, and (iii) time has elapsed between the matters.
  60. 3. Conflicts Involving Prospective Clients:General rule:
    In general, a lawyer may not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter. RPC 1.18(d).
  61. b. Exceptions 1) Informed written consent
    Representation is permissible if both the affected current and prospective clients give informed written consent to the representation. RPC 1.18(d)(1).
  62. 2) Limited exposure, screening, and notice
    • Representation is also permissible if:
    • i) The lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client;
    • ii) The disqualified lawyer is timely screened by his law firm from any participation in the matter and gets no part of the fee;
    • iii) Written notice is promptly given to the prospective client; and
    • iv) A reasonable lawyer would conclude that the law firm will be able to provide competent and diligent representation in the matter.
  63. c. Duty of confidentiality
    A lawyer may neither use nor reveal information learned during a discussion with a prospective client unless an exception to the duty of confidentiality applies. RPC 1.18(b). Lawyer-client privilege may also apply to any confidential communication with the prospective client.
  64. d. Definition of prospective client
    • A “prospective client” does not include a person who:
    • i) Communicates information unilaterally to a lawyer without any reasonable expectation that the lawyer is willing to discuss forming a lawyer-client relationship; or
    • ii) Communicates with a lawyer for the purpose of disqualifying the lawyer from handling a materially adverse representation on the same or a substantially related matter.
  65. Influence by Persons Other Than Client: Payment From a Third Party: A lawyer may not accept payment for representation from someone other than the client, unless:
    • i) The client gives informed consent;
    • ii) There is no interference with the lawyer’s professional judgment or with the lawyer-client relationship; and
    • iii) Lawyer-client confidentiality is preserved.
  66. EXAM NOTE: A common exam question involves a parent paying for representation of a son or daughter. Remember that a competent child, not the parent, is the client whose expressed interests govern.
  67. Organization as Client
    • A lawyer who represents an organization, such as a corporation, owes the duties of loyalty and confidentiality to the organization, not its individual constituents, such as officers, directors, or employees. RPC 1.13(a).
    • a. Representing both the organization and an employee
    • A lawyer may represent both the organization and its constituents (e.g., employees) as long as no other conflict exists. If the organization’s consent to the dual representation is required, the consent must be given by an appropriate official within the organization other than the individual who is to be represented, or by the shareholders. RPC 1.13(d).
  68. In dealing with an organization’s directors, officers, employees, members, shareholders, or other constituents, a lawyer must explain the identity of the client for whom the lawyer acts whenever it is or becomes apparent that the organization’s interests are or may become adverse to those of the constituents with whom the lawyer is dealing.
  69. The lawyer must not mislead such a constituent into believing that the constituent may communicate confidential information to the lawyer in a way that will not be used in the organization’s interest if that is or becomes adverse to the constituent.
  70. b. Rectifying misconduct
    Upon learning of an action (or intent to act or refusal to act) by a person associated with the organization (e.g., employee, officer, director) that (i) is a violation of a legal obligation to the organization or a violation of law that might reasonably be imputed to the organization and (ii) will likely cause substantial injury to the organization, the lawyer must proceed as is reasonably necessary in the best interests of the organization. RPC 1.13(b).
  71. In determining how to proceed, the lawyer must consider the seriousness of the violation and its consequences, the scope and nature of the lawyer’s representation, the responsibility in the organization and apparent motive of the person involved, the policies of the organization with regard to such matters, and any other relevant considerations.
  72. 1) Restrictions on reporting misconduct to authority outside the organization
    If the lawyer has reported to the highest authority that can act on behalf of the organization and that authority insists on or fails to address in a timely and appropriate manner an action, or a refusal to act, that is a clear violation of law and likely to result in substantial injury to the organization, the lawyer may reveal information relating to the representation but only to the extent permitted by RPC 1.6 (discussed at § II.C., Professional Obligation of Confidentiality, supra). Thus, for example, disclosure would be permissible to the extent the lawyer reasonably believes necessary to prevent reasonably certain death or substantial bodily harm or to prevent the client from committing a crime. RPC 1.13(c); 1.6(b).
  73. Withdrawal
    If the lawyer has reported to the highest authority that can act on behalf of the organization and that authority insists on or fails to address in a timely and appropriate manner an action or a refusal to act that is a clear violation of law and likely to result in substantial injury to the organization, the lawyer may resign (withdraw from representation) in accordance with RPC 1.16 (discussed at § I.C., Withdrawal or Termination from Representation, supra.). RPC 1.13(c); 1.16.
  74. Imputed Disqualification: In general, if one lawyer in a firm is unable to represent a client, the prohibition applies to all other lawyers in the firm. RPC 1.10(a).
  75. Such a disqualification may be waived by the affected client if:
    • i) The lawyer reasonably believes she will be able to provide competent and diligent representation to the affected client;
    • ii) The representation is not prohibited by law;
    • iii) The representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
    • iv) The affected client gives informed consent, confirmed in writing.
  76. Note that the rule of imputed disqualification does not prohibit representation by others in the firm when the person prohibited from involvement in a matter is a non-lawyer (e.g., paralegal, legal secretary). However, such persons must generally be screened from any personal participation in the matter to avoid communication to others in the firm of confidential information that both the non-lawyers and the firm have a legal duty to protect.
  77. Exceptions
    Certain types of conflicts are considered to be personal to the individual lawyer and are not imputed to other lawyers in the firm, e.g., opposing lawyers being related or a sexual relationship with client.
  78. H . Conflicts Based on Services as Arbitrator, Mediator, or Judge: General Rules
    A lawyer is not permitted to accept private employment in a matter on which he has acted on the merits in a judicial capacity. RPC 1.12(a). A lawyer may not represent anyone in a matter in which the lawyer participated personally and substantially as an arbitrator, mediator, or other third-party neutral, or as a law clerk to a judge or other adjudicative officer, arbitrator, mediator, or third-party neutral, unless all parties to the proceeding give informed, written consent. RPC 1.12(b).
  79. Example: A judge retired as the Chief Administrator of a multi-member court. The fact that she previously exercised administrative responsibility in the court would not prevent her from acting as a lawyer in a matter when she had previously exercised remote or incidental administrative responsibility that did not affect the merits of the case.
  80. Exception
    An arbitrator selected as a partisan of a party in a multi-member arbitration panel is not prohibited from subsequently representing such party. RPC 1.12(e).
  81. Disqualification of Firm
    If a lawyer is disqualified for having participated personally and substantially as a judge or other adjudicative officer, law clerk, arbitrator, mediator, or other third-party neutral, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in the matter unless (i) the disqualified lawyer is timely screened from any participation in the matter and gets no part of the fee, and (ii) written notice is promptly given to the parties and any appropriate tribunal to enable them to determine if the ethics rules have been met. RPC 1.12 (d).
  82. Negotiation for Employment
    A lawyer participating personally and substantially as a judge or other adjudicative officer, arbitrator, mediator, or other third-party neutral may not negotiate for employment with any person who is either a party or lawyer for a party in the matter. RPC 1.12(c).
  83. Lawyer Serving as Third-Party Neutral
    Under the RPC, a lawyer serves as a “third-party neutral” when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other matter that has arisen between them. Service as a third-party neutral may include service as an arbitrator, a mediator, or in such other capacity as will enable the lawyer to assist the parties to resolve the matter. RPC 2.4(a).
  84. A lawyer serving as a third-party neutral is required to inform unrepresented parties that the lawyer is not representing them. When the lawyer knows or reasonably should know that a party does not understand the lawyer’s role in the matter, the lawyer is required to explain the difference between the lawyer’s role as a third-party neutral and a lawyer’s role as one who represents a client. RPC 2.4(b).

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