March 17, 2014 Top Story

Beware of Conflicts in Joint Representation

In-house attorney's assurance to "protect" employee at deposition leads to malpractice claim

Teresa Rider Bult

A company attorney should carefully analyze potential conflicts of interest before agreeing to represent an employee at a deposition, one California state appeals court reminds us. Otherwise, the witness may have a valid malpractice claim against the attorney for failure to adequately protect his or her interests.

In-House Counsel Defends Employee’s Deposition

In Yanez v. Plummer, an in-house attorney for Union Pacific Railroad, assigned to defend the company in a wrongful discharge action, defended the deposition of Michael Yanez, an employee-witness. Prior to the deposition, Yanez told the attorney he feared his testimony would be unfavorable to the company, and he asked the attorney who would “protect” him. The attorney told Yanez that he “was his attorney for the deposition” and “as long as Yanez told the truth in the deposition, his job would not be affected.”

At the deposition, opposing counsel questioned Yanez about whether he had witnessed the plaintiff’s work-related accident, and Yanez admitted he had not. Opposing counsel did not question him further on this point.

On cross-examination, however, without preparing the employee-witness for what was coming, Union Pacific’s in-house attorney confirmed Yanez could not have seen the accident because it was not within his “line of sight.” He then presented Yanez’s later contradictory written statement submitted during Union Pacific’s investigation of the accident, in which Yanez had stated, “I saw [the plaintiff] slip and fall.” The attorney did not ask any further questions that would have allowed the witness to explain why the statements were contradictory.

Termination of Employee Based on Cross-Examination Leads to Lawsuit

The Union Pacific facility director, who was also present at the deposition, requested a transcript of the deposition testimony to confirm Yanez had lied on his prior written statement. He ultimately terminated Yanez’s employment for dishonesty.

After his termination, Yanez sued Union Pacific for wrongful termination, as well as the in-house attorney for legal malpractice, breach of fiduciary duty, and fraud. He claimed that the contradictory statement was written hastily and mistakenly and that the in-house attorney asked questions so as to misconstrue his testimony to the benefit of Union Pacific. He alleged that this conduct, combined with Union Pacific’s action of terminating his employment, caused his discharge.

Attorneys’ Cross-Examination May Be “But For” Cause of Termination

The in-house attorney moved for summary judgment, arguing Yanez had failed to show that but for the attorney’s conduct, the termination would not have occurred. The attorney argued that the discipline was due to the false statement and that he had no role in the disciplinary process. The appellate court disagreed. In its order reversing the trial court’s grant of summary judgment, the opinion first noted the uphill battle the defendant faced in obtaining summary dismissal, in that causation is typically an issue of fact for the jury to decide in legal malpractice actions.

Failure to Obtain Written Consent Equals Violation of Ethics Rules

The opinion did not stop at legalities, however. Instead, it reproached the defendant-attorney, finding the attorney should have known there were “conflicting interests” between Union Pacific and Yanez. The court found that the attorney violated state rules of professional conduct when he agreed to represent both Union Pacific and Yanez at the deposition without first securing the employee’s written consent. This fact, it said, constitutes “evidence of malpractice liability and breach of fiduciary duty but does not, standing alone, prove the malpractice or the fiduciary breach.”

Even so, the court determined there was enough evidence that the in-house attorney’s conduct contributed to Yanez’s termination to deny summary judgment. The appellate court remanded the case to the trial court for further proceedings.

Joint Representation Red Flags

While the case presents several lessons about joint representation, attorneys should not be reluctant to enter into joint representation agreements merely based on a fear of malpractice. “Joint representations are not inherently improper in the employee-employee context, as the court noted,” says Thomas G. Wilkinson Jr., Philadelphia, PA, cochair of the Conflict of Interest Subcommittee of the ABA Section of Litigation’s Ethics and Professionalism Committee.

Rather, the opinion provides a case study on how litigators must recognize when they are entering into dual representation and explore the implications. “Lawyers representing companies often do not carefully consider the ramifications of undertaking the representation of employee witnesses,” Wilkinson notes.

Indeed, Dori Ann Hanswirth, New York, NY, cochair of the Section of Litigation’s Commercial & Business Litigation Committee, says this case seems to provide a perfect example of someone slipping into dual representation with little forethought. “When the employee asked ‘who protects me?’ the attorney should have recognized the red flag and thought back to basic ethics we all learn in law school,” explains Hanswirth. Wilkinson believes another glaring red flag was the simple fact that the employee had provided conflicting written witness statements, which not only indicated that the witness might have credibility problems, but also that his testimony might have an adverse impact on the company’s defense.

If the attorney had stopped to recognize those red flags, he may have realized he had an obligation to inform the employee that he solely represented the company and that the employee had a right to obtain his own counsel, suggests Hanswirth.

Difficulty of Relying on Conflict Waiver 

Although the court focused on the attorney’s failure to get a written conflict waiver as the violation of professional conduct, “an advance waiver would not necessarily have solved the problem here,” because it was the attorney’s act of cross-examining his own client that was contrary to the employee’s interests, Wilkinson explains. “The crux of the problem here was that the staff counsel lost sight of the fact that he owed equal duties of loyalty to both clients,” he says.

Hanswirth notes a waiver also would not have solved the conflict created by the attorney’s failure to prepare his client for the deposition. “Typically, if you’re prepping a witness to testify, you are going to show them the statements they have made about the subject matter, and go over them with your witness to refresh the witnesses’ recollection, and make sure the client doesn’t experience anything unexpected,” she says. “That is your obligation,” she says, and precisely what did not happen in this case.

Opinion Provides Case Study for Handling Joint Representation

“One obvious way to avoid such conflicts is for in-house counsel to solely represent the employer in such cases,” Wilkinson says. In fact, he says, it was somewhat perplexing why the company’s counsel agreed to represent the employee at all, considering no claim had been asserted against the employee witness, and the employee gave conflicting witness statements. “If the employee witness has violated a work rule, then it is generally unwise for in-house counsel to represent the employee if the company is going to reserve the right to initiate discipline,” he opines.

If, however, you have somehow gotten yourself into the position of agreeing to dual representation, then you must follow through with that representation, Hanswirth advises. “Make sure you prepare them fully for their depositions, and whatever you do, don’t cross-examine them at the deposition unless you are doing it to clarify a piece of testimony that was mistaken by the witness,” she says. Even if you are in-house or your underlying client relationship is with the company, once you enter into the dual representation, you have to always remember you represent both parties. “A lawyer has to be a lawyer first. If you are the lawyer signing litigation papers, you have to put that responsibility ahead of everything else,” Hanswirth cautions.

Conversely, as soon as there is a hint of any conflict, you need to act, says Hanswirth. “The second you have any inkling that there may be a rift between the company and the person you are representing at the deposition, you have to step out or find a way to get the individual different counsel. You, as a lawyer, cannot put yourself in the position of having a conflict,” Hanswirth explains.

Teresa Rider Bult is a contributing editor for Litigation News.

Keywords: deposition, cross-examination, joint representation, ethics

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