Twenty-two years ago, 9/11 was a recent national trauma and music was still sold on both CDs and cassette tapes. (Younger readers should ask their elders.) That year, the ABA also approved the first thorough revision of the Model Rules of Professional Conduct in two decades.
The updated version of the ABA Model Rules contained much that was new for lawyers, and the jurisdictions moved reasonably promptly to adopt most of the changes. In fact, within a few years, the versions of the Rules adopted by U.S. jurisdictions varied less among themselves than they had in well more than a generation.
But even three years ago in 2021, 19 years after the ABA’s adoption, I published an article in this space on ABA Model Rule 1.18. I called it “The Least-Known Ethics Rule” (March/April 2021). I observed then that it might be the most useful ethics rule you’ve never heard of.
Even in 2021, with some 46 jurisdictions having a version on their books, we ethics lawyers continued to get calls from lawyer clients that demonstrated that lawyers had no idea the law touched by this Rule had changed. Remarkably, those calls continue today.
And today, 22 years after the Rule’s adoption, the ABA Standing Committee on Ethics and Professional Responsibility has offered fresh guidance on this useful Rule in its new ABA Formal Opinion 510, Avoiding the Imputation of a Conflict of Interest When a Law Firm is Adverse to One of its Lawyer’s Prospective Clients (March 20, 2024).
Prior to 2002, the law was simple: if a lawyer received any confidential information from a prospective client—one that consulted, but never hired, the lawyer—then that lawyer and her law firm were disqualified from representing any new client adverse to that prospective client on any matter related to the same subject. Because the ABA Model Rules define client confidential information so broadly—including all information relating to the representation—this was a fairly harsh result, leading to broad disqualification.
In 2022, new Rule 1.18 dramatically narrowed that result to provide a more reasonable scope of protection to a prospective client. After all, they never became the lawyer’s client and should not be entitled to the same loyalty as a current or former client.
Now, under Rule 1.18, a lawyer who is consulted by, but not retained by, a possible client is only personally disqualified from being adverse to that person in a new matter where: 1. the new matter is the same or a substantially related matter (e.g., the prospective client consults the lawyer about a divorce, and the new matter would be to represent the prospective client’s spouse in that divorce), and 2. the lawyer received from the prospective client “disqualifying information” (i.e., information that could be “significantly harmful” to the prospective client in the matter).
Note that the information the lawyer had received could well be confidential, but if it was not “significantly harmful,” the same lawyer is permitted to take the new matter, and act directly adversely to the prospective client. That alone was an epic change in the law.
For a nice primer on what “significantly harmful” means, see ABA Formal Opinion 492, Obligations to Prospective Clients: Confidentiality, Conflicts and “Significantly Harmful” Information (June 9, 2020). The Opinion, quoting a New Jersey opinion, said the question is “exquisitely fact-sensitive and -specific.” Indeed.
More importantly, Rule 1.18 significantly limits the imputation of any conflict to the lawyer’s firm in this situation—that is the Rule changes when the individual consulted the lawyer’s conflict; if the lawyer is disqualified, it means that the lawyer’s whole firm is also disqualified.
It works this way. If the individual consulted lawyer is disqualified because she heard something “significantly harmful,” the law firm may take on the new matter adverse to the prospective client if 1. the lawyer “took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client,” and if 2. the firm screens the individual consulted lawyer and gives notice to the prospective client. (Of course, all this works without the consent of the prospective client. Another path that allows the law firm to accept the new representation is informed consent by the prospective client.)
This is where this year’s ABA Opinion steps in. What are “reasonable measures” that the individual consulted lawyer must take to avoid her firm being later disqualified?
First, the easy part.
The Opinion teaches that a lawyer may safely ask for and receive information to help her determine whether she may represent the prospective client, and whether she wants to do so.
Does a conflict of interest exist? Can the lawyer do the work competently? Is the prospective client seeking assistance in a crime or fraud? Are the prospective client’s claims meritorious?
Plus, the lawyer is entitled to obtain information to decide whether the engagement is one the lawyer is willing to take, as a business matter for herself and her firm. Does pursuing the claim for the prospective client work economically for the lawyer and client, given the client’s needs and the lawyer’s business model?
The Committee also makes clear the newly revised due diligence requirements imposed by ABA Model Rule 1.16 before we take on new clients are included in this initial required scope of inquiry.
Second, the hard part. And this is where the Opinion breaks a little new ground.
To avoid imputation and allow the individual consulted lawyer’s firm to later take on the new matter, the information sought must be “reasonably necessary” to allow the consulted lawyer to make that original determination. It’s very clear that the Committee thinks this is a quite different, and tougher, determination.
The Committee writes:
A lawyer might permissibly undertake a very detailed inquiry into the matter before deciding whether to accept it. But such a permissible inquiry may not be the same as an inquiry that is “reasonably necessary” such that the lawyer’s conflict is not imputed to the firm.… It is easier to show that the lawyer’s conduct was intended to serve a legitimate purpose than to show that it was necessary to serve that purpose.
The Opinion also makes clear that, when the conversation turns from vetting the potential new matter and client to pitching the prospective client on hiring the lawyer, the “reasonably necessary” line may well have been crossed. The Committee points to one 2018 federal case where just this appears to have happened, in SkyBell Techs., Inc. v. Ring, Inc., No. SACV 18-00014JVS (JDEX), 2018 WL 6016156, 2018 U.S. Dist. LEXIS 217502 (C.D. Cal. Sept. 18, 2018).
Third, the Opinion goes further. If the lawyer did not take steps to avoid receiving more information than “reasonably necessary,” then her firm will be disqualified. To permit the lawyer’s firm to later accept adverse representation, the individual lawyer has to take steps to limit the information requested from the prospective client.
The Opinion even recommends that the lawyer “should caution the prospective client at the outset of the initial consultation not to volunteer information pertaining to the matter beyond what the lawyer specifically requests.”
One further note, as the Opinion points out, “failing to take ‘reasonable measures’ … is not misconduct” by the lawyer. It just means that her law firm will not be able to take on a new matter.
Any prudent lawyer can learn a lot from the Rule. That’s especially true for a lawyer with a practice where there’s a decent likelihood that she or her partners may be approached by multiple players in one case or deal. (Consider a small-town practitioner, or a lawyer with a highly specialized practice, or any divorce practitioner.)
The key point: Keep your powder dry. Discipline yourself to ease into a representation in stages. Get enough information to run conflicts. Pause and run conflicts. Then get enough information to figure out if you can—and want to—take the matter. But slow-walk the full data dump until the client is fully signed up. And when in doubt, read the Rule and these two ABA Opinions.
You and your partners may later be glad you did when another new client comes calling.
