Fred has a practice that concentrates in insurance defense matters. On many occasions over the past several years, Ruth, a personal injury lawyer, has been Fred’s opposing counsel.
In every encounter with Ruth, Fred has been very impressed by the manner in which she represents her clients. In particular, Fred has admired her diligence and her thorough understanding of the issues involved, not to mention the fact that based on her arguments he often felt compelled to recommend to his clients that they agree to settlement terms that substantially exceeded his estimate of what he initially thought the matter was worth.
Fred currently has a matter pending on behalf of his client, Alpha Insurance Co., in which Ruth is the opposing counsel representing Mr. Beta, who was involved in a car accident with one of Alpha Co.’s insureds.
Recently, Fred was injured in a car accident that appears to have been caused by the other driver. He decides to file a claim and considers hiring Ruth to represent him in the matter.
Can he do so?
If he can, must Fred inform his third party client, Alpha Co.?
Must Ruth inform hers?
In Formal Opinion 97-406 Conflicts Of Interest: Effect Of Representing Opposing Counsel In Unrelated Matter (1997) the ABA Standing committee on Ethics and Professional Responsibility considered the conflicts issues involved under Model Rule 1.7 Conflict of Interest: Current Clients when a lawyer who currently represents a client with interests adverse to a party represented by opposing counsel considers retaining the opposing counsel to represent him in an unrelated matter. In this opinion, the committee focused its analysis on subpart (b) of Rule 1.7 that states as follows:
…(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
The key questions here are whether Ruth’s representation of Fred will present a conflict that materially limits either Ruth’s or Fred’s ability to represent their third party clients, Alpha Co. and Mr. Beta, and also whether Ruth’s representation of Fred will be similarly limited by her relationship with Mr. Beta.
To determine whether the conflict is material, the committee listed several factors including:
…(1) the relative importance of the matter to the represented lawyer; (2) the relative size of the fee expected by the representing lawyer; (3) the relative importance to each lawyer and to his client, of the matter involving the "third-party" clients; (4) the sensitivity of each matter; (5) the substantial similarity between the subject matter or issues of the two representations; and (6) the nature of the relationship of one lawyer to the other and of each lawyer to his third-party client.
As the committee noted, “No one of these considerations is necessarily dispositive, nor does this list encompass every circumstance that may create a material limitation.”
To the extent that either Ruth or Fred determines that the representation of their third party clients will be materially limited because of their prospective lawyer-client relationship, they must then consider whether they reasonably believe that they will be able to “provide competent and diligent representation” despite this limitation to their third party clients. If the answer to this question is no, then Ruth must decline the representation, and Fred must find another lawyer. If the answer is yes, then Ruth and Fred must get the Alpha Co. and Mr. Beta’s informed consent before proceeding with the representation. Under Rule 1.0 (e) Terminology, Informed Consent is defined as the "communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question."
The committee also noted that under some circumstances either lawyer may be reluctant to disclose the facts of the representation their third party clients, and may be precluded from doing so by Rule 1.6 Confidentiality of Information without their client’s consent. For example, Fred may not want the facts of the representation known to Mr. Beta or for that matter even to Alpha Co. To the extent that the lawyers are unable to provide adequate information to their third party clients so that they can make an informed consent they cannot proceed with the representation.
These same principles apply to Ruth and her prospective client, Fred. If Ruth determines that there will be a material limitation on her ability to represent Fred because of her representation of Mr. Beta, but nonetheless determines that she can provide Fred with competent and diligent representation despite the conflict, she must get Fred’s informed consent. This may be challenging particularly under circumstances where Mr. Beta may not wish to have information relating to his representation disclosed to Fred.
Notwithstanding the circumstances under which lawyers must seek the consent of their third party clients to the representation of opposing counsel, the committee counseled that lawyers who enter into such relationships should always disclose them to their clients:
…we note that although we conceive of situations in which Rule 1.7(b) does not require client consultation and consent because the client-lawyer relationship between two lawyers will not materially limit the representation that either gives a third party client, it may be prudent for lawyers in these situations to disclose their client-lawyer relationship to their respective third party clients. The existence of a client-lawyer relationship between a client's lawyer and the opposing counsel is a fact that a client may deem important, even if that relationship cannot reasonably be judged to limit the representation. Disclosing the relationship at the outset will not only avert the questions or embarrassment that might arise from belated revelation, but it will also assist the client in making informed decisions regarding the representation.
State and local bar association ethics opinions
State bar ethics committees that have issued on this topic follow the reasoning of ABA Opinion 97-406. See, e.g., Connecticut Bar Association Opinion 2012-10 (2012), a digest of which as it appears in the ABA/BNA Lawyers’ Manual on Professional Conduct states as follows:
A personal injury lawyer and an insurance defense counsel who have worked with each other for many years have developed a good working relationship, and one has asked the other to represent him personally as plaintiff in a proposed suit for violations of federal privacy laws. Each must determine if the representation would materially limit the representation of his or her existing clients and, if it would, must obtain the affected clients' informed consent, confirmed in writing.
See Also Maine Board of Overseers to the Bar Opinion 205 (2011).
Pennsylvania State bar opinion 2007-27 considered whether a lawyer could represent the child of opposing counsel in an unrelated matter. Using an analysis similar to that in Opinion 97-406, the Pennsylvania committee stated that the lawyer could do so provided that both lawyers obtained the informed consent of both of their clients.
For further information on this topic, See the discussion under the heading, Lawyers Representing Lawyers in the chapter entitled, Conflicts of Interest: Lawyer's Interests Adverse to Client (last updated in 2016) as it appears at age 51:419 of the ABA/BNA Lawyers’ Manual on Professional Conduct. See also the materials on William Freivogel’s Freivogel on Conflicts website under the same heading that are located here.
As always, consult the rules of professional conduct, ethics opinions and case law of the applicable jurisdiction.