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 96-02
Lawyer L represents a non-profit corporation that is a homeowner's association. L's husband owns a property management company that has contracted to manage the association. The Board of Directors retained Lawyer L's prior firm to represent the Association. Lawyer L was then an associate with the law firm and performed all of the legal work for the Association. L's marriage to the owner of the management company was known to the Board at the time. L has now become a shareholder in a new law firm, and the Board of Directors has elected to use L's new firm as counsel for the Association. The retainer was entered into after disclosure of the marital relationship to the Board and with Board approval. Several homeowners have raised questions about a potential conflict of interest.
Question:
May a lawyer represent a corporate homeowner's association if the spouse of the lawyer is under contract to manage the client?
Summary:
Although a conflict between the personal interests of the lawyer and the client could later arise, there is no existing actual conflict, and it appears reasonable for the lawyer to believe that the representation will not be affected adversely by the lawyer's own interests. Thus, the representation appears proper, provided that the client has been adequately informed of any potential conflict and has consented to the representation.
Opinion:
We note at the outset that the lawyer appears to represent only the corporate client and not the individual homeowners. Rule 1.7(b) provides that a lawyer may not represent a client if the representation "may be materially limited...by the lawyer's own interests, unless the lawyer "reasonably believes the representation will not be adversely affected" and the client consents after consultation. Although the situation described is one in which conflicts might arise that could materially affect the representation, no such conflict yet exists. Under these circumstances, the lawyer could reasonably believe that the representation will not be adversely affected by her marriage to the owner of the management association. Assuming that full disclosure of the marriage and of any potential problems stemming from that relationship was made to the Board of the client and the Board consented, the representation then appears proper. We note that the consent should preferably be obtained in writing from the client. If an actual conflict were later to arise or if the consent were withdrawn, then the lawyer's withdrawal may be necessitated.