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Ethics Advisory Opinion 05-05

April 13, 2005

South Carolina Bar Ethics Advisory Opinion 05-05

RULE 1.9(a)

Date: February 18, 2005

Facts
Law firm has represented buyer in purchase of home in 1998 in subdivision of homeowners association. Law firm now represents homeowners’ association itself and has done nothing on behalf of buyers since closing. Homeowner’s association has asked law firm to place lien on house for dues owed by buyer.

Question
Does law firm’s former representation of buyer in purchase of house preclude it from representing homeowner’s association in filing lien?

Summary
Law firm may not represent homeowner’s association in filing lien, unless the former client consents after consultation.

Opinion
Rule 1.9(a) states: A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interest are materially adverse to the interest of the former client unless the former client consents after consultation. Rule 1.9(a). The comments to Rule 1.9 state, “When a lawyer has been directly involved in a specific transaction subsequent representation of another client with materially adverse interests is clearly prohibited.”

To undertake filing the lien for the homeowner’s association would contravene Rule 1.9. To file a lien on a former client’s home would be to place the lawyer in a position contrary to a former client in a substantially related matter. Enforcement of the homeowner’s association’s rights would necessarily delve into the critical documents addressed at the closing for the former client and could also seriously compromise the client’s use and enjoyment of his home.

It has already been opined by this Committee that a loan transaction and a subsequent foreclosure of that loan are substantially related. SC Bar Advisory Opinions 84-24 and 90-22. As we stated in Opinion 90-22: Representing the client at a closing necessitates a review of the loan documents and advice to a client as to his responsibilities and liabilities thereunder. For a lawyer later to pursue the foreclosure against the client would be taking a position adverse to a former client in a substantially related matter and would also be a violation of loyalty. Ethics Advisory Opinion 90-22 is persuasive in this case. Similar facts obtain here and a comparable analysis leads to disqualification of the firm. See S.C. Bar Advisory Opinions 84-24 and 90-22.

One of the signal events in a client’s life is the purchase of a home. A lawyer representing a client purchasing a home finds herself in the role of helping a client acquire a valuable and enduring possession. The expected duty of loyalty is profound. For a lawyer to ultimately take a position endangering home ownership when that lawyer had previously used his or her best efforts to help the client obtain a home would be an expression of hostility to a former client in violation of Rule 1.9 and a breach of the corresponding duty of loyalty owed to that former client. Even if the filing of a lien is seen only as a ministerial act, it creates a cloud on the title and represents action inconsistent with the interests of the former client in a substantially related matter.

The only way that the lawyer could handle the lien filing would be to obtain the consent of the former client after consultation. Rule 1.9(a).

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