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Comments By Lacba Ethics 2000 Liaison Committee

On Draft No. 6, Rule 1.7 (11-16-98)

January 7, 1999

1. Section (b)(3)

We question the justification for including (b)(3) as a separate subsection and thereby treating the representation of both sides in contested litigation as different in kind from other conflicts. Serving as an advocate for both sides in a contested nonlitigation claim raises the same concerns as doing so in a litigation matter. We are unconvinced that the situation covered by (b)(3) is any more troublesome than, for example, representing both the lienholder and borrower in a nonjudicial foreclosure.

Comment [7A] states that Paragraph (b)(3) conflicts are non-consentable because of Athe institutional interest in vigorous development of each client=s position.@ Contested litigation, however, is not the only situation where Ainstitutional@ interests may forbid representing both sides: for example, the institutional interests of securities markets in independent advice to both sides in a contested securities offering.

Representing both sides in contested litigation, which (b)(3) prohibits, is simply another situation in which a lawyer cannot competently represent a client: the lawyer cannot possibly exercise independent judgment on behalf of or faithfully represent both clients on opposite sides of the contested issue in such an engagement. Because (b)(3) is simply a subset of (b)(1), we propose that it be deleted, and that the comment be revised to state that representing both sides of a contested matter is an example of a representation that fits within (b)(1) and (b)(2).

The language of subsection (b)(3) could also be improved. While it is clearly intended to apply when a lawyer is advocating both sides in contested litigation, the wording of the rule could be read more broadly. Because the referent for the phrase Ain the same litigation@ is ambiguous, the rule could apply when one client (who may or may not be represented by the lawyer in the matter) is asserting a client against another client who the lawyer is representing in the litigation in which the claim is asserted. If the Commission intends to keep (b)(3), it should be revised to state: Athe representation of both sides in contested litigation.@

2. Comment [1a] C Conflicts Procedures

The Comment should make clear that the directive that lawyers should adopt reasonable conflicts procedures is intended only to suggest how lawyers may protect themselves against entering into prohibited representations. As now drafted, it could suggest that an inadequate conflicts procedure is grounds for discipline in and of itself, apart from whether any prohibited representations are undertaken. One possibility is to change the second sentence to read: ATo avoid inadvertent violations, lawyers should adopt reasonable procedures to determine whether a conflict of interest exists, appropriate for the size and type of firm . . . .@

3. Comment [5] C Nonconsentable Conflicts

With respect to nonconsentable conflicts listed in subsection (b), Comment [5] continues the prior version=s position that Athe lawyer involved cannot properly ask for such agreement@ (emphasis added). This suggests that the mere request for client consent to a nonconsentable conflict warrants attorney discipline, which we believe is too harsh. Rule 1.7 by its terms states only that a lawyer Ashall not represent a client@ when there is a conflict of interest. Making consent ineffective in cases of nonconsentable conflicts is sufficient to carry out the rule. Although there is certainly no valid reason for a lawyer to seek consent in such cases, neither is there reason to discipline a lawyer simply for requesting such consent if it is not granted and the representation does not go forward.

 4. Comment [10] C Prospective Waiver

The Comment correctly states that a lawyer may properly request that a client waive conflicts that might arise in the future. However, the discussion that follows that statement does not adequately discuss the standard by which such waivers are judged.

First, the Comment states that Ageneral and open-ended@ waivers ordinarily will not be effective. That statement would be true if the client were not informed of the actual or reasonably foreseeable adverse consequences of being adverse to the client in the future. In that situation, the client would not be adequately informed in order to give the consent. Unfortunately, the Comment appears to miss this point, by focusing in its examples on the subject matter of the future adversity, rather than on the actual and reasonable foreseeable adverse consequences, which is the key issue. The Comment would require the lawyer to engage in the nearly impossible task of predicting the type of dispute that would arise in the future. While the lawyer cannot be expected to accurately predict the future, a lawyer can explain to a client the likely adverse effect on the lawyer-client relationship if the lawyer accepts a representation against that client in the future.

Second, the Comment suggests that only a Asophisticated@ client may consent to future waivers. The example given is a Asophisticated user of legal services involved@ who consents Ato a particular type of conflict with which the client is already familiar.@ Neither of these elements is required to make a prospective consent valid. In Zador v. Kwan (1995) 31 Cal.App.4th 1285, there was no indication that the party giving the prospective consent met either of the elements in the Comment. In our view, the sophistication of the client is a factor to be considered in assessing whether the client may give informed consent, but unsophisticated clients who otherwise fully understand the possible adverse consequences should also be able to do so. We expect even unsophisticated clients to be intelligent enough to contract with a lawyer for legal services and to be responsible for their decisions and instructions to their lawyer in a representation. There is no reason why these clients should be treated any differently when consenting to a conflict, provided the client is adequately informed.

5. Comment [15] C Inconsistent Legal Positions

It is one thing to apply this rule to a single lawyer advancing inconsistent positions for different clients. Some clarification is needed, however, about whether this applies to inconsistent positions taken by different lawyers in a large law firm. Tracking the positions taken by all lawyers in a firm would be difficult if not impossible. Perhaps the rule should be limited to inconsistent positions that the lawyer knows that s/he or the firm is taking, so that not all inconsistent positions a lawyer=s firm takes can be imputed to the lawyer for purposes of discipline.

6. Comment [16a] C Class Actions

The addition of the new comment clarifying that non-named class members are not clients or opponents for conflicts purposes solves a vexing problem many attorneys face, and we support it.