Ethics Opinon 1976-10
REQUEST FOR OPINION REGARDING REPRESENTATION OF POTENTIALLY
for a firm represents Client A and files civil complaint
alleging several causes of action, including fraud against
several defendants including Individual B. Extensive discovery
takes place including interrogatories, propounded and answered.
The first suit ends prematurely by direction of Client A.
Attorney and firm substitute into an ongoing lawsuit as
attorney of record for Individual B. The second case alleges
similar conduct by Client B. Is there an ethical conflict?
facts as cited above but now attorney for Client B seeks
discovery from another Client C, one they represent in other
unrelated areas on a regular basis. If Individual B prevails
in his defense it will have serious economic consequences
to Client C. Is there an ethical conflict?
As to the question presented in Paragraph IA above, yes,
if the acceptance of the subsequent employment would inherently
tempt the attorney to reveal or improperly jeopardize the
confidences of the former client. As to the question presented
in Paragraph IB above, yes, if the client representation
in unrelated areas on a regular basis would interfere with
the undivided loyalty owed to the new client in the lawsuit.
STATUTES AND RULES OF PROFESSIONAL CONDUCT
Business and Professions Code Section 6068(e) provides that
it is the duty of an attorney to maintain inviolate the
confidence, and at every peril to himself to preserve the
secrets, of his client. Rule 4-101 of the Rules of Professional
Conduct of the State Bar of California ("Rules")
provides that a member of the State Bar shall not accept
employment adverse to a client or former client, without
the informed and written 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.
5-102 provides as follow:
A member of the State Bar shall not accept professional
employment without first disclosing his relation, if any,
with the adverse party, and his interest, if any, in the
subject matter of the employment. A member of the State
Bar who accepts employment under this rule shall first obtain
the client's written consent to such employment.
A member of the State Bar shall not represent conflicting
interests, except with the written consent of all parties
ABA CANONS AND DISCIPLINARY RULES
January 1, 1970, the American Bar Association adopted the
new Code of Professional Responsibility. The new Code contains
nine canons and a series of disciplinary rules and ethical
considerations relating thereto. Canon 4 provides, "A
lawyer should preserve the confidences and secrets of a
client". Disciplinary Rule DR 4-101 defines "confidence"
as information protected by the attorney-client privilege
under applicable law, and "secret" as other information
gained in the professional relationship that the client
has requested be held inviolate or the disclosure of which
would be embarrassing or would be likely to be detrimental
to the client. DR 4-101(B) provides that except when permitted
under DR 4-101(C), 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 other third person unless the client consents
after full disclosure.
provides for certain exceptions to the preservation of confidences
and secrets of a client:
lawyer may reveal: (1) confidences or secrets with the consent
of the client or clients affected, but only after a full
disclosure to them; (2) confidences or secrets when permitted
under Disciplinary Rules or required by law or court order;
(3) the intention of his client to commit a crime if the
information is necessary to prevent the crime; (4) confidences
or secrets necessary to establish or collect his fee or
to defend himself or his employees or associates against
an accusation of wrongful conduct."
consideration EC 4-5, adopted by the ABA in connection with
the adoption of the new Canons of Professional Ethics provides
that a lawyer should not use information acquired in the
course of the representation of a client to the disadvantage
of the client.
5 provides that a lawyer should exercise independent professional
judgment on behalf of a client. DR 5-105 addresses itself
to the subject of refusing to accept or continue employment
if the interests of another client may impair the independent
professional judgment of a lawyer.
A lawyer shall decline proferred 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).
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).
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."
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."
provides, in part:
a lawyer is requested to undertake or to continue representaton
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. A lawyer should never
represent in litigation multiple clients with differing
interests, and there are few situations in which he would
be justified in representing in litigation multiple clients
with potentially differing interests."
Canon 9 provides, "A lawyer should avoid even the appearance
of professional impropriety."
questions presented do not set forth any underlying facts
concerning the reason for the premature termination of the
first suit at the instruction of Client A. It may be assumed,
since no facts to the contrary are specified, that Client
A has no further interest in the activities or affairs of
new Client B. If such is the case, there is no breach of
ethics in the attorney for Client A representing Client
seem, however, that one of the reasons for Client B's employment
of the attorneys for Client "A" would be to utilize
that firm's knowledge gained in the representation of Client
A to defend the new client in the second case alleging similar
conduct. The question therefore becomes whether in representing
Client B the former attorney for Client A would be required
in his representation to reveal or otherwise jeopardize
the confidences of the former client.
case of Goldstein v. Lees, 46 Cal.App.3d 614 (1975) exemplifies
the seriousness of this consideration. In that case, a former
attorney for a corporation rendered legal services on behalf
of a minority shareholder and director in a proxy fight
designed to gain control of the same corporation under circumstances
where the former counsel held corporate confidences and
secrets which were relevant to the proxy fight. The attorneys
had sued the minority shareholder and director for money
due for the reasonable value of their legal services. The
Court held that such representation was improper and that
a contract to provide such services was void for reasons
of public policy.
plaintiffs contended that the proxy fight itself was not
adverse to the interests of the corporation. With this,
the Court of Appeals agreed. However, the Court stated:
question is whether or not the employment of [the attorney]
was adverse to the interests of the former client. Clearly,
it was." 46 Cal.App.3d at 619.
and Professions Code section 6068, subdivision (e), states:
'It is the duty of an attorney: . . . [t]o maintain inviolate
the confidence, and at every peril to himself to preserve
the secrets, of his client.' In this instance, Kirshman
attempted employment which surely at best must have tempted
him to reveal or to improperly monopolize the confidences
and secrets of his former client. As the Supreme Court recognized
in Anderson v. Eaton, supra, (at p. 117), 'Conscience and
good morals dictate that an attorney should not so conduct
himself as to be open to the temptation of violating his
obligation of fidelity and confidence.' Clearly, the acceptance
of employment which threatens the revelation or improper
monopolization of a former client's confidences is adverse
to the interests of the former client. To be sure, rule
5 implies that an attorney may accept employment on a matter
in reference to which he has before obtained confidential
information, but nothing in rule 5 sanctions the acceptance
of such employment when the representation of the interests
of the new client inherently tempts the attorney to reveal
or improperly monopolize the confidences of the old. Such
a reading of rule 5 would conflict with the policies underlying
section 6068, subdivision (e), of the Business and Professions
Code; it would needlessly permit attorneys to create the
appearance of impropriety. Nor would such an interpretation
offer assistance to the new client. Clients are entitled
to vigorous and determined representation by counsel. It
is difficult to believe that a counsel who scrupulously
attempts to avoid the revelation of former client confidences--i.e.,
who makes every effort to steer clear of the danger zone--can
offer the kind of undivided loyalty that our legal system
demands. Rule 5 operates to preclude any impediment to the
fulfillment of an attorney's professional obligation to
his client by proscribing any conflict of interest in his
representation of past and present clients. 'It is better
to remain on safe and secure professional ground, to the
end that the ancient and honored profession of the law and
its representatives may not be brought into dispute. Courts
have consistently held the members of the profession to
the strictest account in matters affecting the relation
of attorney and client.' (Tomblin v. Hill, 206 Cal. 689,
694 [275 P. 941], quoting Addison v. Cope, 210 Mo.App. 569
[243 S.W. 212, 215].)" 46 Cal.App.3d at 619, 620.
seem that the attorneys in this case would be at best treading
the same thin line that was condemned in the Goldstein case.
While the appropriate consents might be obtained following
the requirements of Business and Professions Code Section
6068(e), Rule 4-101 and Rule 5-102 of the Rules of Professional
Conduct, such does not appear from the facts given in this
second question, adding the complicated factor of the representation
of Client C on a regular basis in other unrelated areas
raises the problem of whether the attorney can offer the
kind of undivided loyalty to Client B that is required.
It would seem that the representation of both Clients B
and C at the same time would involve the kind of steering
between the Scylla and Charybdis that should best be avoided.
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.