Ethics Opinon 1975-19
November 14, 1975
SUBJECT: CONFLICT OF INTEREST
A law firm represents doctors and lawyers who have been sued for professional malpractice. The insurance carrier for Dr. A retains the law firm to represent Dr. A in a medical malpractice action being brought against Dr. A. The plaintiff in the case against Dr. A is represented by Attorney B. Subsequently, Attorney B is sued in an entirely unrelated action for professional malpractice. The insurance carrier for Attorney B retains the law firm to represent Attorney B. Is it a "conflict of interest" for the law firm to represent Dr. A and also Attorney B?
It is not a "conflict of interest" for the law firm to represent both Dr. A and Attorney B. However, it is the Committee's opinion that it would be improper for the law firm to represent both Dr. A and Attorney B because to do so would be a breach of the law firm's duty to its clients to maintain independence of professional judgment. To represent both Dr. A and Attorney B. would result in the law firm's assuming of a position which might reasonably result in a tendency to compromise the interests of or loyalties to the clients.
STATUTES AND CANONS
Before setting out the relevant parts of the American Bar Association Code of Professional Responsibility it is important to note that the Code of Professional Responsibility consists of three separate but interrelated parts: Canons, Ethical Considerations and Disciplinary Rules.
"The Canons are statements of axiomatic norms, expressing in general terms the standards of professional conduct expected of lawyers in their relationships with the public, with the legal system, and with the legal profession. They embody the general concepts from which the Ethical Consideration and the Disciplinary Rules are derived.
The Ethical Considerations are aspirational in character and represent the objectives toward which every member of the profession should strive. They constitute a body of principles upon which the lawyer can rely for guidance in many specific situations.
The Disciplinary Rules, unlike the Ethical Considerations, are mandatory in character. The Disciplinary Rules state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action." (at "Preliminary Statement" to the American Bar Association Code of Professional Responsibility)
The portions of the Code of Professional Responsibility which apply directly to the question presented are set out as follows:
"A LAWYER SHOULD EXERCISE
JUDGMENT ON BEHALF OF A CLIENT"
"EC 5-1 The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client.
EC 5-2 . . . After accepting employment, a lawyer carefully should refrain from acquiring a property right or assuming a position that would tend to make his judgment less protective of the interests of his client.
* * *
EC 5-14 Maintaining the independence of professional judgment required of a lawyer precludes his acceptance or continuation of employment that will adversely affect his judgment on behalf of or dilute his loyalty to a client. This problem arises whenever a lawyer is asked to represent two or more clients who may have differing interests, whether such interests be conflicting, inconsistent, diverse, or otherwise discordant.
EC 5-15 If a lawyer is requested to undertake or to continue representation of multiple clients having potentially differing interests, he must weigh carefully the possibility that his judgment may be impaired or his loyalty divided if he accepts or continues the employment. He should resolve all doubts against the propriety of the representation."
DR 5-105 Refusing to Accept or Continue Employment if the Interests of Another Client May Impair the Independent Professional Judgment of the Lawyer.
(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).
(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105(C).
(C) In the situations covered by DR 5-105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."
"A LAWYER SHOULD REPRESENT A
CLIENT ZEALOUSLY WITHIN THE
BOUNDS OF THE LAW"
"A LAWYER SHOULD AVOID
EVEN THE APPEARANCE OF
"EC 9-1 Continuation of the American concept that we are to be governed by rules of law requires that the people have faith that justice can be obtained through our legal system. A lawyer should promote public confidence in our system and in the legal profession.
EC 9-2 Public confidence in law and lawyers may be eroded by irresponsible or improper conduct of a lawyer. On occasion, ethical conduct of a lawyer may appear to laymen to be unethical. . . . When explicit ethical guidance does not exist, a lawyer should determine his conduct by acting in a manner that promotes public confidence in the integrity and efficiency of the legal system and the legal profession."
"As used in the Disciplinary Rules of the Code of Professional
(1) "Differing interests" include every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent diverse, or other interest."
The question presented herein is novel on its facts and research has not disclosed any formal or informal American, State, County or City Bar Association opinion directly on point. Of relevant importance however, are two Opinions of the Committee on Professional Ethics of the Association of the Bar of the City of New York - Opinion No. 307, April 4, 1934 and Opinion No. 502, April 19, 1939.
The Opinions involved the typical situation where Attorneys A and B are opposing each other in one particular litigation and during the pendency of that action, Attorney B employs Attorney A to handle totally unrelated legal business for Attorney B. The holdings of the two cases are in direct conflict. The holding of Opinion No. 307, the earlier Opinion, is that, "Upon the facts set forth in the foregoing submission, the Committee sees no objection to the establishment of professional relations between the two attorneys upon new matters that have no connection whatsoever with litigation in which such attorneys have represented clients with conflicting interests, provided the fact is disclosed to the client, and no objection thereto is raised."
The later Opinion No. 502 holds to the contrary without mentioning or overruling Opinion No. 307. The Committee was guided in its Opinion by the language of old Canon 6 of the Canons of Professional Ethics of the American Bar Association which read as follows:
"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's rationale for its decision is set out as follows:
"It may well be that none of the matters in which A acts for B adversely affect any interest of the clients of A's firm or of A, yet we think that so long as B is actively engaged in any litigation as an opposing counsel to A, A should not accept retainers from B, because to do so might make it difficult for A to represent the client with undivided fidelity. Although A and B may intend to act in the utmost good faith, the natural human impulse of A would be to avoid offending B. Under these circumstances, we think that during any period while A and B are actively engaged in litigation on opposite sides, it would be improper for A to accept retainers from B and for B to offer retainers to A."
(For the full text of these Opinions, see pages 163, 164, and 275 of Opinions on Professional Ethics, Opinions of the Committee on Professional Ethics of the Association of the Bar of the City of New York and The New York County Lawyer's Association, in the San Diego County Law Library.)
It is important to note for purposes of the Analysis below that the above two Opinions dealt with situations where opposing counsel requested the establishment of a professional relationship with Attorney B wherein Attorney B would handle unrelated legal business of opposing counsel such as arguing motions, preparing briefs, conducting supplementary proceedings, etc. In neither case was the business the personal legal business of opposing counsel such as is the case in the question presented to this Committee.
At the outset, it should be noted that the professional malpractice insurance company's retaining of the law firm to represent one of its insureds is of no consequence in the analysis of this ethical question. The law firm owes the same ethical duties to the insured client as it does to an uninsured client.
"When counsel, although paid by the casualty company, undertakes to represent the policyholder and files his notice of appearance, he owes to his client, the assured, an undeviating and single allegiance. He fealty embraces the requirement to produce in court all witnesses, fact and expert, who are available and necessary for the proper protection of the rights of his client. . . .
. . . The Canons of Professional Ethics make it pellucid that there are not two standards, one applying to counsel privately retained by a client, and the other to counsel paid by an insurance carrier." (See footnote 23, Canon 5, A.B.A. Code of Professional Responsibility)
This Committee has been asked whether the law firm's representation of both Dr. A and Attorney B would present a "conflict of interests" problem? Footnote 18 of Canon 5 of the Code of Professional Responsibility defines "conflict of interests" as follows:
"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."
Guided by this definition, it is clear that the totally unrelated cases of Dr. A and Attorney B would not result in the law firm representing conflicting interests.
The more important and more pertinent question is however, "Is it reasonably possible that the law firm's representation of Attorney B would adversely affect the law firm's ability to exercise independent professional judgment on behalf of Dr. A?" If the answer to that question is yes, then the ethical guidelines of Canon 5 of the American Bar Association Code of Professional Responsibility direct that the law firm shall decline the proffered employment.
In analyzing the question of the law firm's representing Attorney B, we are persuaded by the rationale expressed by the New York City Committee in Opinion No. 502. In that case, the Committee felt that the creation of a professional relationship between opposing counsel to on-going litigation might tend to diminish the attorney's fidelity to his client in the litigation. Further, the Committee also felt that the new relationship between opposing counsel might tend to diminish the zealousness with which the attorney represented his client, because, " . . . the natural human impulse of A would be to avoid offending B." (See generally Canon 9, American Bar Association Code of Professional Responsibility and EC 9-1 and EC 9-2.)
The application of the above rationale is even more compelling in the question before this Committee. The question presented to this Committee involves the creation of more than a professional relationship between opposing counsel whereby one counsel refers nonpersonal legal business to opposing counsel. It involves the very intimate and personal relationship of attorney-client. And moreover, that attorney-client relationship involves the very sensitive, confidential and professionally crucial issue of the professional competency of Attorney B. For the law firm to adequately represent Attorney B for professional malpractice, they will naturally be required to develop a close personal relationship with Attorney B. The intimate familiarity with Attorney B, his practice, his professional capacities and inabilities, creates a reasonable belief that the law firm's ability to exercise independent professional judgment on behalf of Dr. A in an action prosecuted by Attorney B might be diminished. It is quite possible that the law firm's familiarity with Attorney B might cause it to compromise its duty to zealously defend against the action prosecuted by Attorney B. Conversely, it is also quite possible that through the establishment of the attorney-client relationship, the law firm might gain familiarity with Attorney B's professional inadequacies, which knowledge might be used against Attorney B in his prosecution of the medical malpractice action.
This Committee could speculate ad infinitum as to the possible prejudices which might arise out of the employment of the law firm by opposing counsel. The fact remains however, that under Disciplinary Rule 5-105, if there is a reasonable probability that the employment will adversely affect the loyalty, advice, or services to either client, Dr. A or Attorney B, the employment must be rejected. It is not the fact of an adverse effect which precludes the employment--it is the reasonable possibility of such adverse effect occurring. It is our feeling that the close confidence and familiarity which would naturally arise out of the attorney-client relationship between the law firm and Attorney B are adequate bases for the reasonable belief that an adverse effect could occur in this situation. It is therefore our recommendation that the law firm not represent both Dr. A and Attorney B.
This opinion is advisory only. It is not binding upon the State Bar, the Board of Governors, its agents or employees.
EDITOR'S NOTE: Also see Rules of Professional Conduct of the State Bar of California 4-101, 5-101 and 5-102.
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.