Ethics Advisory Opinion 92-23
(Note: Since receipt of the initial inquiry, the committee has received a second similar inquiry which has been incorporated in this opinion.)
1. Lawyer A represents wife W in a divorce action and Lawyer B represents husband H. After the issuance of the final decree, some issues remain to be settled by the parties or by the Court. These issues deal primarily with how the Court's Order will be enforced. Lawyer A then joins Lawyer B's firm.
2. Lawyer C investigated a matter for client X, prepared the pleadings, and filed a lawsuit on behalf of X against Y. Lawyer C's firm then merged with Lawyer D's firm. D has been hired by the insurance company to defend Y.
1. May Lawyer B represent H in future litigation regarding the divorce decree between H and W?
2. May Lawyer D continue to represent Y if the Lawyer C withdraws from the representation of X?
3. If X and Y each consent, could Lawyer C withdraw from the pleadings but continue to receive a portion of the fee from X?
1. Lawyer B may continue to represent H if five conditions are satisfied. First, A must withdraw from representing W. Second, B reasonably must believe that the representation of H will not affect adversely the loyalty and confidentiality interest of W. The reasonability of that conclusion may depend upon whether A is screened from any contact with or benefits from the matter. Third, W must consent to the firm's continued representation of H. Fourth, Lawyer A may not use or reveal any information relating to the representation of W. Finally, H must consent after consultation to the representation despite Lawyer A's presence in the firm.
2. The same analysis would apply with regard to D's continued representation of Y.
3. Lawyer C must withdraw completely from any representation of X in the matter if Lawyer D is to continue to represent Y. Lawyer C may receive a portion of the fee earned for work performed for X prior to withdrawal. We have opined previously that if the fee is contingent, a lawyer who is disqualified for reasons other than intentional misconduct may receive a fee, upon successful completion of the case, based on quantum meruit and not disproportionate to the amount of time worked by the lawyer prior to withdrawal. Lawyer C cannot share in any part of the fee earned form the representation of Y.
These two fact situations presented are answered together since they raise similar issues. In each case, lawyers who were actively representing adverse clients in the same litigation matter become members of the same firm. Resolution of each inquiry requires consideration of several competing interests. On the one hand, the Rules of Professional Conduct should not be interpreted so narrowly as to impose unnecessary restrictions upon the mobility of a lawyer who seeks to move between firms. Also, the client has a significant interest in being able to hire and retain a lawyer of the client's own choice. On the other hand, the Rules must be interpreted so as to protect adequately a client's expectations of loyalty on the part of his or her lawyer as well as the client's interests in protecting confidentiality.
Lawyer A joins Lawyer B's firm The first inquiry raises the question of whether Lawyer A's association with Lawyer B should prevent Lawyer B from any further representation of H, the same client that Lawyer B represented in the divorce action. We note at the outset that, if as a matter of law the representations of H and W are not terminated before Lawyer A joins Lawyer B's firm, then at least one of the representations, if not both, must cease when the event occurs. A single law firm cannot represent both adverse parties in the same litigation matter.
Assuming from the inquiry that it is Lawyer A who withdraws from representing W, the question remains whether that withdrawal makes it possible for Lawyer B ethically to continue to represent H. If not, Lawyer B also must withdraw. The propriety of Lawyer B representing H in further matters related to the divorce must be viewed from the perspective of the interests of both H and W.
Interests of W.
As a client of Lawyer A, W is entitled to certain expectations of loyalty on the part of Lawyer A. The expectations of loyalty continue to be protected at least to some extent even after Lawyer A's representation of W ends. Thus, even if Lawyer A terminates the representation of W, Lawyer A, having represented W in the divorce, would be prohibited under Rule 1.9 from now representing H in the same or a substantially related matter with out the consent of W . Under Rule 1.10, Lawyer B, as a member of the same law firm, then also would be disqualified from representing H under principles of imputed disqualification. "When lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8 (c), 1.9 or 2.2." Rule 1.10(a).
Since any imputed disqualification of Lawyer B under Rule 1.10 (a) is designed to protect the interests and expectations of W, however, even if W would not consent to the direct representation of H by Lawyer A, W could consent under Rule 1.10(c) to waive the imputed disqualification of Lawyer B. The conditions under which such a consent could be obtained are somewhat ambiguous. Rule 1.10 (c) provides that waiver of consent maya be obtained only "under the conditions stated in Rule 1.7." We believe that a fair interpretation is that the consent may be obtained only after consultation and only if Lawyer B reasonably believes the representation of H will not adversely affect the loyalty and confidentiality interests of W.
Nothing in Rule 1.10 expressly permits Lawyer B to represent H and avoid imputed disqualification merely by screening Lawyer A from any part of the representation. Nevertheless, a screen or so-called "Chinese Wall" appears to be an appropriate device for protecting W's consent to waive the imputed disqualification. At the very least, in any subsequent representation of H by the law firm, Lawyer A may not use or reveal any information relating to the prior representation of W.
Rule 1.9 (c).
Interests of H.
Even if Lawyer B obtains W's consent so as to avoid any imputed disqualification, it appears that Lawyer B also ought to obtain the informed consent of H to the continued representation. Rule 1.7 (b) provides that if Lawyer A's presence in the firm may materially limit Lawyer B's representation of H, then Lawyer B may continue to represent H only if Lawyer B reasonably believes the representation will not in fact be adversely affected and if H consents.
Thus, in summary, Lawyer B may continue to represent H if five conditions are satisfied. First, A must withdraw from representing W. Second, B reasonably must believe that the representation of H will not affect adversely the loyalty and confidentiality interests of w. The reasonability of that conclusion may depend upon whether A is screened from any contact with or benefit from the matter. Third, W must consent to the firm's continued representation of H. Fourth, Lawyer A may not use or reveal any information relating to the representation of W. Finally, H must consent after consultation to the representation despite Lawyer A's presence in the firm.
Lawyer C merges with Lawyer D's firm The same analysis would apply with regard to the merger of Lawyer C's and Lawyer D's firms. It should not matter whether Lawyer D was hired to represent Y before or after the merger of the firms. We recognize that the consequence of the position is that a law firm might withdraw from representing one client in a matter in order to accept the representation of a directly adverse party in the same matter. That result is permitted, however, only when the conditions set forth above are met, including the consent of both parties. It may indeed be rare for the parties to consent, thus preventing the subsequent representation. Lawyer A also would normally be required under applicable rules of procedure to obtain court permission to withdraw from the representation of a party to ongoing litigation.
The additional question is raised in that situation of whether Lawyer C may receive any part of the legal fee in the matter. We do not believe it sufficient that Lawyer C simply be removed from the pleadings on behalf of client X. Lawyer C must withdraw from any representation of X in the matter if Lawyer D is to continue to represent Y.
Lawyer C may receive a portion of the fee earned for work performed for X prior to withdrawal. We have opined previously that if the fee is contingent, a lawyer who is disqualified for reasons other than intentional misconduct may receive a fee, upon successful completion of the case, based on quantum meruit and not disproportionate to the amount of time worked by the lawyer prior to withdrawal. S.C. Bar Adv. Op. 90-13.
Lawyer C cannot share in any part of the fee earned from the representation of Y.
While this conclusion may be so apparent as not to require further explanation, we note that adequate support for the proposition exists in Rule 1.7 and 1.10. Under Rule 1.7, one lawyer may not represent directly adverse parties, even with consent, unless the lawyer reasonably believes that the representation of one client will not be adversely affected by the other representation. The Comment to Rule 1.7 states clearly that this provision "prohibits representation of opposing parties in litigation." If one lawyer in the firm representing a party could not also represent the adverse party in litigation, neither may any other lawyer in the same firm represent the adverse party under Rule 1.10(a). The clients could not waive the imputed disqualification under Rule 1.10(a), since it would never be reasonable to believe that the representation of one client in litigation would not be adverse to the representation by the same firm of another client who is an adverse party in the same litigation.
This situation differs from the case in which a lawyer represents Client 1 in one matter and then wishes to represent Client 2 in litigation against Client 1 unrelated to the current representation of Client 1. In that case, if unable under Rule 1.7 to represent Client 2 while simultaneously representing Client 1, the lawyer might be tempted withdraw from the representation of Client 1 in order to take advantage of Rule 1.9 and its narrower grounds for disqualification. Since the matters are unrelated, Rule 1.9 would seem to allow the lawyer to represent Client 2 without the consent of now former Client 1. Such a result is not allowed, however, in order to protect the loyalty interests of Client 1. In this inquiry, Lawyer A has no similar temptation. Lawyer A could not represent H under either Rule 1.7 or Rule 1.9 without the consent of W, since any representation of H would appear to be substantially related to the prior representation of W.