Model Rule 1.9, which precludes an attorney from working on a matter on behalf of a client if that client’s interests are materially adverse to the interests of a former client of the attorney and the attorney represented that former client in the same or a substantially related matter (unless the attorney secures the informed consent, confirmed in writing, of the former client). Such a conflict situation might arise when an in-house attorney finds themselves across the table from a former client (from when the in-house attorney worked at a law firm) or a former employer (if the in-house attorney worked in-house at another company).
Model Rule 1.10, which provides that the conflict of interest of one attorney in a law firm (defined in the Model Rules to include a legal department) is imputed to all other attorneys in the firm, such that none of them may represent a client when any one of them practicing alone would be prohibited from doing so. This is particularly troublesome in a legal department, where the conflict of one in-house attorney may be imputed to all of the other in-house attorneys in the legal department, thereby precluding the in-house team from working on a particular matter on behalf of their employer client.
Model Rule 1.13, which makes clear that an attorney employed or retained by an organization represents the organization acting through its duly authorized constituents (e.g., officers, directors, etc.), although such rule also permits the attorney to represent any such constituent in addition to the organization. However, if the organization’s consent to such a dual representation is required by Model Rule 1.7, the consent must be provided by an appropriate official of the organization other than the individual constituent who is also being represented.
In addition, although the attorney-client privilege generally applies to communications between clients and their attorneys, where an in-house attorney is acting in their capacity as a businessperson or principal of the organization (and not as an attorney), such communications may not be privileged. This same risk may apply to outside attorneys as well if they are also interacting with their entity clients in a non-legal capacity, such as by serving as a member of the entity’s board of directors.
As a result, it is important for both in-house and outside counsel to consider and address the following requirements:
- properly identifying who is, and who is not, the client with respect to an entity client;
- dealing with conflict of interest in an entity client context, especially with the respect to dealing with entity constituents, the inadvertent creation of attorney-client relationships, possible joint representations, and affiliated entities and joint ventures (Model Rules 1.7, 1.9, 1.10, and 1.13);
- addressing Model Rule 1.6 confidentiality, the attorney-client privilege, and the work product doctrine in the entity client context; and
- gaining a better understanding of the application of other Model Rules to the attorney (in-house or outside counsel) representing an entity, including Rule 1.8 (business transactions and other relations with a client); Rule 5.5 (the unauthorized practice of law and multi-jurisdictional practice, in the cross-border context); and Rule 1.13(b) and (c) (reporting up and out when representing an entity client).