A lawyer may represent a new client who is a direct competitor of a former client in an unrelated action against a third party, even where it would be in the former client’s best interest for the new client to lose the suit. Fashioned
This representation would be in accordance with the New York State Bar Association’s recent opinion stating that economic adversity between two corporations does not necessarily mean there is a “material adversity” that would violate Rule 1.9 governing duties to former clients.
The rule currently states that a “lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.”
The rivalry between the two companies itself is not enough to be “materially adverse.” Therefore, mere competition between the companies is not a current client conflict or a former client conflict under the rules. This holds true for companies in the same industry and same geographic area that provide services to the same customer base.
However, the opinion also went one step further. It concluded that even if the former client is threatening to sue the new client in the matter, representation of the new client is still proper—so long as the previous and current matter aren’t substantially related.
Click here to read the opinion.
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