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November/December 2018


Needed Warnings to Happy Joint Clients

Lucian T. Pera

From time to time, pretty much every lawyer in private practice jointly represents more than one client. Even in-house counsel.

Most lawyers know they have to do this with care. For example, they have to check for conflicts; see if any conflicts are waivable; and, if so, get informed consent and confirm it in a good letter. (That’s certainly not all they have to be careful about, but that’s another article. See my article titled “The Ethics of Joint Representation” in the Fall 2013 issue of Litigation on that broader topic.)

But whenever this topic comes up, I always get one question: Are you saying that I always have to do a joint representation letter, even if there are no conflicts?

For an ethics nerd like me, that’s a golden opportunity to educate. And a recent ethics opinion walks through all the important reminders.

Do I Always Need a Waiver?

Suppose you represent two (or more) clients in a matter. And suppose that, after careful consideration and full discussion with all of them, everyone agrees there are no conflicts of interest between them and no significant risk of a conflict on the horizon. Must you—or should you—make any disclosures about joint representation or do any sort of written disclosure to them or seek any sort of consent from them?

In recent Formal Opinion 2017-7, the New York City Bar Association’s ethics committee says you may not be required to do so, but you are in some instances, and you certainly should disclose certain key elements of joint representation to any new joint clients.

First, the opinion reminds us that every joint representation carries the risk of conflicts down the road.

Logic and experience teach that, for all the groups of clients going into the same business deal, and all the groups of plaintiffs or defendants in litigation, some percentage, no matter how small, end up in disharmony of some kind. Neither great lawyering nor perfect goodwill among clients on Day 1 of a joint representation can guarantee the absence of conflicts throughout the representation.

That simple fact, apart from everything else, often requires disclosure and discussion. Why? After all, if there’s no conflict, no conflict waiver is needed, right?

Well, yes, but there are other ethics rules, the opinion reminds us, including rules based on ABA Model Rule of Professional Conduct 1.4, the basic rule on client communication.

Rule 1.4(b) requires a lawyer to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” The opinion concludes, as do many other authorities, that the rule applies even to prospective clients thinking about becoming joint clients. And disclosures are often required to allow a client to make an informed decision about whether to become a joint client.

Needed Warnings

Two topics are the most important. First, prospective joint clients need to know the greatest risk of a joint representation: If the joint representation fails, for whatever reason, they will have to get new lawyers, and that will cost them time, expense and inconvenience. Second, they need to know how confidential and privileged information will be handled. Ordinarily, each joint client will be entitled to confidential information their joint lawyer has from or about the other joint clients, and there will be no privilege as between them. Despite that, you will keep their information secret from the world outside the joint attorney-client relationship. Comments 30 and 31 to ABA Model Rule 1.7, the basic current conflicts rule, discuss this, but many clients do not understand how this will work.

There are also other important things to discuss with any prospective joint client.

Will all clients be consulted on all decisions in the representation? Sure, each client must make decisions on settlement of its own claims or claims against it individually; the ethics rules require that. But what about other decisions on strategy and tactics? Will one (or more) of the clients be responsible for making those for all the clients?

Who will pay for the representation? If all attorney fees will not be paid by one client, how will they be apportioned? And even apart from apportionment, will they all be ultimately jointly and severally liable for fees? And what about expenses?

A Letter Every Time?

Do the ethics rules require that every lawyer entering into a joint representation discuss all these topics with every joint client and confirm all this in writing? No, they do not, and the New York opinion confirms that. But the rules do require disclosure in many instances.

Which ones? That depends. The opinion contrasts the spouses who come to a new lawyer for wills and who clearly express that they have the same estate planning objectives, with two large financial institutions acting as co-lenders on a new deal who hire a lawyer who has repeatedly represented them as co-lenders. The former probably need to hear about the risks and benefits of joint representation; the lenders probably do not.

Setting ethical requirements aside, though, the opinion confirms that prudent lawyers start from the presumption that they should discuss these topics with each client in a joint representation and from the presumption that they should confirm those discussions in writing.

Malpractice carriers tell us about their constant diet of claims arising from joint representation. They also insist that some of these could be avoided or seriously mitigated by clear disclosure to and discussion with clients, all evidenced by a nice, clear lawyer letter.

Preparing for Adversity

Finally, there’s one other topic—one not mandated for discussion by the ethics rules, but one some joint clients want their lawyer to have. Do the joint clients wish to agree, at the outset of the representation, that if a conflict of interest arises, you can withdraw from representing one client and continue representing another? That result is flatly contrary to the result ordained by the ethics rules, which would mandate the lawyer withdraw from representing all of the joint clients.

There is case law, however, that supports the idea that joint clients can consent in advance to allowing their lawyer to continue to represent only one of them in the event of a conflict of interest, even if that means being adverse to a former joint client. That case law further supports the idea that a joint client can consent to the lawyer’s use of otherwise privileged information against them in that situation.

That kind of advance waiver may allow just what some joint clients want. For example, the employer who wants you to also represent an employee in a suit against them both, but who also wants you to stay on as the employer’s lawyer, even if an unforeseen conflict develops. That kind of advance waiver certainly bears discussion up front, and the conflict rules require a writing confirming that waiver in most jurisdictions.

So, am I saying that you always have to do a joint representation letter, even if there are no conflicts?

No, I am not. But prudent lawyers do, for lots of very good reasons.

Be careful out there.

Lucian T. Pera

Lucian T. Pera is a partner in the Memphis, Tennessee, office of Adams and Reese LLP. He counsels lawyers, law firms, clients and those who do business with lawyers and law firms on ethics and professional responsibility issues. He’s the immediate past president of the Tennessee Bar Association and a past ABA treasurer. Email him.

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