The ABA Standing Committee on Ethics & Professional Responsibility release Opinion 497 to advise on an issue that plagues many lawyers in determining whether a conflict of interest precludes representation of a current client when the representation may involve material adversity as to a former client or a prospective client.. The ABA Model Model Rules and the rules adopted in most states prohibit representation of a current client whose interests are materially adverse to those of a prospective or former client in the same or substantially related manner.
The opinion provides an interesting background on the history of material adversity and divides the contemporary analysis into three categories of material adversity: 1) a lawyer being on the other side of a former client in a litigation or transactional matter, 2) a lawyer attacking work that he performed for a former client, and 3) a lawyer examining another a former client in a proceeding. The opinion also explains that a waiver may be possible so that a lawyer may continue the representation of a current client in a case in which there may be an issue of material adversity to a former client.
Interestingly, the opinion does not tackle the definition of “substantially related,” which is another piece of the equation. Substantially related is often debated in situations where the case is of the same type—a negligence case against a nursing home–and a lawyer who has previously defended the nursing home later represents a plaintiff. If it is a different plaintiff with his or her own set of facts, then the courts have allowed it. Alternatively, if it is a different type of matter–a divorce as opposed to legal assistance with a small business- it may nonetheless result in an impermissible conflict. The conflict arises in the substantially related zone because a lawyer who represents a husband in a divorce matter after learning about the wife’s business finances when representing her in business matters has information that the lawyer may use adversely to the wife.
The main take away…lawyers need to pay attention to conflicts with prospective and former clients…material adversity in the same or substantially related matter must be identified and appropriately handled whether it involves obtaining a waiver, declining representation, or withdrawing from a matter.
ABA ABA ABA ABA
