By Joan C. Rogers
July 28 — A nuanced analysis rather than any bright-line test must be used to determine whether a conflict of interest exists when a lawyer wants to be hired by a client's opponent or the law firm representing the adversary, the District of Columbia bar's ethics committee advised in July.
The comprehensive opinion explains how lawyers should judge whether and when a job hunt may create a conflict. It also outlines what options a lawyer has if a conflict does exist, and discusses the responsibilities of supervisory lawyers when an associate's employment search gives rise to a conflict.
When a lawyer in a private firm is seriously angling for a job with a law firm or litigant she is opposing in a client's matter, the lawyer's representation of the client may be materially limited by the lawyer's personal interests. Model Rule 1.7 cmt. .
The lawyer facing such a conflict must let the client know so that the client can make an informed decision about whether to continue the relationship. According to the Restatement (Third) of the Law Governing Lawyers §125 cmt. d (2000), once discussion of employment has become concrete and the interest is mutual, the lawyer must promptly inform the affected client. Without effective client consent, the comment states, the lawyer must terminate all discussions concerning the employment, or withdraw from representing the client.
▸Atley v. Ault, 191 F.3d 865, 15 Law. Man. Prof. Conduct 464 (8th Cir. 1999) (pretrial inquiry into alleged conflict stemming from appointed defense counsel’s upcoming employment as prosecutor should have probed whether conflict would impair lawyer’s ability to cross-examine law enforcement officers with whom he would be working closely in his new job).
▸In re E. Sugar Antitrust Litig., 697 F.2d 524 (3d Cir. 1982) (to avoid appearance of impropriety, law firm for plaintiff in class action should have at least told court about merger negotiations with opposing party's law firm).
▸Stanley v. Richmond, 41 Cal. Rptr.2d 768 (Cal. Ct. App. 1995) (client stated triable claims for breach of fiduciary duty and malpractice against her divorce attorney who negotiated client’s property division while planning to go into practice with opposing counsel).
▸McCafferty v. Musat, 817 P.2d 1039 (Colo. Ct. App. 1990) (upholding jury's malpractice verdict against lawyer who arranged allegedly inadequate settlement for client after seeking and receiving offer of employment from opposing counsel).
▸Commonwealth v. Maricle, 10 S.W.3d 117, 15 Law. Man. Prof. Conduct 438 (Ky. 1999) (secret negotiations for employment with opposing firm defeated firm’s use of screen to prevent imputed disqualification).
▸Kala v. Aluminum Smelting & Ref. Co., 688 N.E.2d 258, 14 Law. Man. Prof. Conduct 27 (Ohio 1998) (lawyer's new firm had to be disqualified despite screening effort because he negotiated to join firm while still representing client in lawsuit against party represented by firm without telling client of negotiations).
▸ABA Formal Ethics Op. 96-400 (1996) (attorney interested in negotiating employment with firm representing client’s adversary must obtain client’s consent before engaging in substantive discussions with firm, or else withdraw from client's representation; law firm that is interested in hiring that attorney must obtain consent from its own client before substantive employment discussions begin).
▸Kentucky Ethics Op. E-399 (1998) (lawyer may not negotiate for employment with another firm where firms represent adverse parties and lawyer is involved in client’s matter or has actual knowledge of protected client information, unless client consents to negotiation).
▸New York City Ethics Op. 1991-1 (1991) (lawyer considering offer of employment from person or entity with interests adverse to those of existing clients must disclose conflicting employment interest to clients and obtain their informed consent to continuing their representation, because his judgment reasonably may be impaired by his future employment interests).
▸Pennsylvania Formal Ethics Op. 2007-300, 23 Law. Man. Prof. Conduct 384 (2007) (lawyer must notify her firm before negotiating move to firm on other side of client matter that lawyer is working on).
“There is no ‘bright line' test for determining the point during the employment process when a personal interest conflict arises, and that point may vary,” the committee stated.
Under District of Columbia Rule of Professional Conduct 1.7(b)(4), the committee said, the focus is whether the lawyer's professional judgment on behalf of the client will be, or reasonably may be, adversely affected.
The committee said the lawyer must apply both a subjective test—which asks questions such as whether the lawyer would be tempted to curry favor with the prospective employer—and an objective test—which considers whether a disinterested observer would have reason to doubt the lawyer's ability to provide the client with wholehearted and zealous representation.
The opinion identifies two criteria to consider in determining whether a personal interest conflict exists.
One is whether the lawyer has a material and active role in representing the client, either by having contact with the client regarding the matter, having contact with the adversary or adversary's lawyer in the course of working on the client's matter or doing work on the substance of the matter.
The committee concluded, contrary to ABA Formal Ethics Op. 96-400 (1996), that a lawyer's involvement in a pending but currently dormant matter may give rise to a personal interest conflict.
The second criterion is the extent to which the lawyer's interest in the adversary or the adversary's lawyer is “targeted, communicated and/or reciprocated.”
A personal interest conflict is clearly present, the committee said, by the time the lawyer is considering a job offer. But depending on the circumstances, it said, a conflict can arise at an earlier point, such as when a lawyer sends a targeted résumé directly to the client's adversary or opposing counsel.
In some cases, the committee said, a lawyer's would-be employer may be affiliated with or related to—but separate and distinct from—the client's adversary.
For example, it said, a corporate opponent's affiliate may not be wholly owned by the corporation, and the two entities may have separate legal departments. Similarly, a government agency may have separate bureaus, offices or components, and the two entities may have separate hiring processes.
If the lawyer's potential employer is separate and distinct from the client's adversary, the lawyer likely would not have a personal conflict of interest, the committee advised.
The committee noted that D.C. Rule 1.6(k) addresses the identity of a government lawyer's client. It also mentioned federal statutory and regulatory provisions as potential sources of guidance in determining whether a lawyer has a personal interest conflict when seeking employment with the federal government.
The committee suggested three possible courses of action to resolve a personal interest conflict arising from a lawyer's search for employment with a client's adversary or law firm representing the adversary.
• First, the lawyer can ask for the client's informed consent to representation after full disclosure of the existence and nature of the conflict and the possible adverse consequences, provided that the lawyer can provide competent and diligent representation to the client notwithstanding the personal conflict.
The client's consent to the representation may be sought retroactively if the lawyer has already been operating under a personal interest conflict, the committee said.
• Second, the conflict may be resolved in some circumstances by withdrawing from the representation under Rule 1.16(a)(1) (withdrawal required if representation will result in rule violation) or Rule 1.16(b) (withdrawal permitted if it can be accomplished without harming client's interests).
• Third, the lawyer may discontinue the job search with the client's opponent or counsel until all pending matters relating to the client have been completed.
The committee pointed out that under Rule 1.10(a)(1), the personal interest conflict of an individual lawyer in a law firm, nonprofit or corporate legal department is not imputed to the lawyer's colleagues there, so long as the conflict does not present a significant risk of adversely affecting the other lawyers' representation of the client.
Under Rule 5.2(b), the committee said, a subordinate lawyer will not be professionally responsible for a personal conflict of interest relating to an employment search if she discusses the potential conflict with her supervisory lawyer, acts in accordance with that lawyer's reasonable determination of whether a conflict exists and follows the supervisor's recommended course of action.
In a footnote, the committee suggested that a rule amendment may be needed to provide a “safe harbor” for subordinate lawyers who have to disclose potential conflicts to their current employer.
The committee also said that under Rule 5.1, a supervisory lawyer must take appropriate action upon learning that a subordinate lawyer has a personal interest conflict due to potential employment with a client's adversary or opposing counsel.
Depending on the circumstances, the supervisory lawyer might choose to take the subordinate lawyer off the client's matter or seek the client's consent to the subordinate lawyer's continued participation in the client's matter, the panel suggested.
To contact the reporter on this story: Joan C. Rogers in Washington at email@example.com
To contact the editor responsible for this story: Kirk Swanson at firstname.lastname@example.org
Full text at http://www.dcbar.org/bar-resources/legal-ethics/opinions/Ethics-Opinion-367.cfm.
The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.
Copyright 2014, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
To view additional stories from ABA/BNA Lawyers' Manual on Professional Conduct™ register for a free trial now