July 8, 1974
Ethics Opinon 1974-12
SUBJECT: CONFLICT OF INTEREST, REPRESENTATION ADVERSE TO FORMER CLIENT
A law firm represents Mr. and Mrs. A in the purchase of a business and advised them regarding business matters over a several year period following the purchase. With Mr. A's consent, the law firm then represented Mrs. A during the couple's dissolution proceeding. B, a creditor of Mr. and Mrs. A, then retains the law firm to represent him in collection on an overdue note given by Mr. and Mrs. A for business purposes during the period preceding the dissolution. Can the law firm ethically represent Creditor B in the collection matter?
No. The law firm may not represent the interests of a party against a former client whenever the present representation will involve the use of confidences, secrets or other information gained during the representation of the former client, unless full disclosure to the former client has been made and consent to the representation has been given by the former client.
STATUTES AND CANONS
Rule 5 of the Rules of Professional Conduct of the State Bar of California provides that a member of the State Bar of California shall not accept employment adverse to a client or former client, without the consent of the client or former client, relating to a matter in reference to which he has obtained confidential information by reason of or in the course of his employment by such client or former client.
Disciplinary Rule DR 4-101 under Canon 4 of the Code of Professional Responsibility of the American Bar Association adopted in August, 1969 provides in part that a lawyer shall not knowingly:
(1) reveal a confidence or secret of his client;
(2) use a confidence or secret of his client to the disadvantage of the client;
(3) use a confidence or secret of his client for the advantage of himself or of a third person unless the client consents after full disclosure.
In addition, Ethical Consideration EC 4-5 under Canon 4 provides that a lawyer should not use confidential cliental information to the disadvantage of the client, nor without the fully informed consent of the client, to his own advantage. He should be diligent to prevent its disclosure by his associates and employees and to prevent the disclosure of confidential cliental information about one client to another. A lawyer must not accept employment which requires such disclosure.
Under Canon 6 of the Canons of Professional Ethics followed by the American Bar Association prior to 1969, it is unprofessional to represent conflicting interests, except by express consent of all concerned given after full disclosure of the facts. Within the meaning of this Canon, a lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose.
The obligation to represent the client with undivided fidelity and not to divulge his secrets or confidences forbids also the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of the client with respect to which confidence has been reposed.
The Committee on Professional Ethics and Grievances of the American Bar Association has considered questions involving representation of parties adverse to former clients on numerous occasions.
In Formal Opinion No. 33, the Committee held that an attorney may not accept litigation against a past client if such requires that the attorney contest the same issue for which he previously was an advocate in the prior litigation. Nor may a partner of such attorney accept such litigation even though he was not a partner at the time of the prior litigation.
In Formal Opinion No. 167, the Committee held that an attorney who has represented an administratrix of an estate cannot accept employment in an action against such administratrix in connection with her duties as such; nor may his associates accept such representation.
In Formal Opinion No. 177, the Committee held that an attorney who represented the licensees of a patent in a suit brought by the licensor may not subsequently represent a third party defendant in an infringement suit brought by the licensor.
The Committee on Professional Ethics and Grievances of the American Bar Association has also rendered the following informal opinions concerning the representation of parties adverse to former clients.
In Informal Opinion No. 753, the Committee held that it would be improper for an attorney who has represented X, a client charged with the criminal offense of hit-and-run driving, to later represent the involved pedestrian in a personal injury action against X.
In Informal Opinion No. 885, the Committee held that an attorney should not accept litigation against a former client under any circumstances if such would result in a conflict of interests or disclosure of confidences of the former client, and in such a situation a court is justified in enjoining a lawyer from proceeding with the litigation against the former client. Moreover, the attorney should avoid representation of a party in a suit against a former client where there may be the appearance of a conflict of interest or a possible violation of confidences, even though such may not in fact exist.
In Informal Opinion No. 891, the Committee held that while an attorney may accept a case where there is the possibility of liability ultimately falling on a past client, all parties must be completely satisfied with the representation and consent thereto after complete disclosure by the attorney of "all circumstances of his relations to the parties, and any interest in or connection with the controversy."
Under Informal Opinion Nos. 885 and 1016, the Committee held that the impropriety of taking a case against a former client is not based solely on necessity for disclosure of confidential communications. If the former client has any reason to feel aggrieved, the necessity of maintaining proper public relations for the bar and avoiding the appearance of wrongdoing should cause the attorney to refuse to accept employment in a capacity adverse to the interests of a former client.
From each of the Rules of Professional Conduct of the State Bar of California, the Code of Professional Responsibility of the American Bar Association, and Canons of Professional Ethics of the American Bar Association followed prior to 1969, it is clear that it is unethical to represent a party in any matter adversely affecting the interest of a former client with respect to whom a confidence or secret has been gained. In this matter, the law firm represented the former client in the purchase and conduct of the business, presumably including the issuance of the note which subsequently has fallen into default. It is incomprehendable that confidences, secrets and information gained during the period of advising the business should not disadvantage the former clients at the time the law firm pursues collection of the note. The continuing relationship of the law firm to the former client for matters of procuring their dissolution only adds to the gravity of the situation in this case.
If there is the slightest doubt as to whether or not the acceptance of professional employment will involve a conflict of interest between a client and a former client or may require the use of information obtained through the services of a former client, the employment should be refused.
This opinion is advisory only. It is not binding upon the State Bar, the Board of Governors, its agents or employees.
EDITOR'S NOTE: This Opinion was reviewed August 6, 1976 and found to be valid with the following modification: Rule 5 has been superseded by Rule 4-101 which adds the requirement that consent be both informed and written.
Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.