UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 92-36
Lawyer L has previously represented former client F in various matters starting in 1987. These matters are generally as follows:
(1) 1987: Represented F and her corporation in a suit with city over the imposition of increased water and sewer impact needs. This representation has ended and L is preparing to sue F over failure to pay his fees.
(2) Late 1987: Represents F and her corporate interests in a claim against the corporation. This representation has ended.
(3) 1989: Representation of F and her corporate interests in a suit over failure to pay under a contract to install satellite TV system at F corporation's mobile home park. This representation has ended.
(4) December 1989 to August 1990: Represented F in individual capacity as a partner in a general partnership. This representation ended with L withdrawing as counsel and filing suit against F for non-payment of fees.
Prospective client P has now contacted L requesting that he represent him in a lawsuit arising out of P's involvement with F in a business transaction. The substance of this case is that P, F and a bank entered into a loose agreement to purchase property at a foreclosure sale owned by the mother of F's boyfriend. The mother has now filed suit against F, P, the boyfriend/son and the bank. In this suit, there are a variety of cross claims. The bank has also filed a separate foreclosure action against F and P for non-payment of the note for the money used to purchase the property at the foreclosure.
During L's previous representation of F, he has secured no information that would in any way be material or relevant to the present dispute between P and F. L is in no way presently representing F or her corporate interest, nor is there any such expectation. L has thoroughly informed P of his present suit against F and his anticipated suit against F for non-payment of fees and the fact that L may very well become a judgment creditor ahead of P. P is not concerned with this due to the large net worth of F. L has also informed P that F may object to L representing P and should F be successful, it would delay P's suit until he secured substitute counsel. P is still willing for L to represent him.
Question:
May a lawyer represent a client against a former client if the lawyer has not secured any information from this former representation that would be material or relevant to the present case, and if the lawyer presently has a lawsuit pending against the former client for non-payment of fees.
Summary:
L may only represent P if the representation of P would not require him to use any information acquired from prior representations of F against her or if the representation of P would not injuriously affect F on any matter that L has previously represented her. Furthermore, L may only represent P if he reasonably believes that the representation will not be affected by his own suits against F and P consents after full disclosure.
Opinion:
Rule 1.9(a) states: "A lawyer who has formally represented a client in a matter shall not thereafter represent another person in the same or substantially related matter in which that person's interests are materially adverse to the interest of the former client unless the former client consents after consultation". The comment to Rule 1.9 states: "When a lawyer has been directly involved in a specific transaction, subsequent representation of other clients with material adverse interests clearly is prohibited. On the other hand, a lawyer who currently handled a type of problem for a former client is not precluded for later representing another client in a wholly distinct problem of that type even thought the subsequent representation involves a position adverse to the prior client. ....The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question." Therefore, the question becomes whether this case presents a substantially related matter. In Madison v. Graffix Fabrix, Inc., 304 S.C. 321, 404 S.E.2d 37 (1991), the South Carolina Court of Appeals held that the test is whether acceptance of the other new retainer will require the lawyer to do anything that would injuriously affect the former client in any matter in which he formally represented him and also whether the lawyer will be called upon to use any knowledge or information acquired in the prior representation against the former client. See also Advisory Opinion 90-34.
Therefore, lawyer L may represent P if the representation of P will not require L to use any knowledge or information acquired in his former representation of F against F in L's present representation of P against F or if the representation of P will require L to injuriously affect F in any matter in which he formally represented F.
Rule 1.7(b) states: "A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interest, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation.
One consideration would be whether the lawyer reasonably believes his suit will not impair the ability of P to recover. Therefore, the question becomes whether L's suits against F for his unpaid fees would adversely affect him in his representation of P against F. Since L has sued F for his representation of P will not be adversely affected by his own suits against F and P consents after consultation, fully disclosing L's financial interests.