Ethics Opinon 1978-10
A junior partner of a law corporation allegedly failed to properly represent a client in his business transactions. Thereafter, the attorney left the corporation which continued to handle the majority of the client's work. Subsequently, the corporation dissolved and two of the former partners formed a general partnership which today continues to represent said client. Presently, the client is contemplating a malpractice case against the former attorney and the law corporation. It is important to note the following facts:
a) The dissolved law corporation and the ongoing partnership have different insurance carriers;
b) The partnership will not be representing any of the parties in the malpractice suit nor does it expect to be called as a witness.
A. Since the members of the general partnership were among the partners in the dissolved law corporation, does a conflict of interest exist if the partnership continues to represent the above client on civil matters unrelated to the client's malpractice suit?
B. Would the signing of a waiver of conflict agreement by the client effectively waive the potential conflict?
A. Rules of professional conduct and relevant case law do not prohibit the acceptance or continuation of employment where the matters being handled by the present law firm bear no relationship to confidential information acquired by the law firm in its former status as law corporation in relation to their client's malpractice suit.
B. A knowledgeable and informed waiver should effectively waive any potential conflict arising from the former relationship as long as the partnership is uninvolved with the malpractice suit against the corporation.
QUESTION A: Since the members of the general partnership were among the partners in the dissolved law corporation, does a conflict of interest exist if the partnership continues to represent the above client on civil matters unrelated to the client's malpractice?
Neither the A.B.A. Code of Professional Responsibility nor the Rules of Professional Conduct of the State Bar of California have expressly dealt with the instant issue. However, an analysis of the A.B.A. Code, California Rules and surrounding case law provides sufficient authority to discover the existence of a conflict of interest in the present fact situation.
California Rule 4-101 states 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." California Rule 5-102(A) states in part that, (a) member of the State Bar shall not accept professional employment without first disclosing his relation, if any, with the adverse party, . . ."
In Goldstein v. Lees (1975) 46 Cal.App.3d 614, 619, the court stated that the primary purpose of the rule of professional conduct relating to an attorney accepting employment adverse to a client or former client is, "to protect the confidential relationship which exists between the attorney and the client. Thus, nothing in the rule prohibits the attorney from accepting employment adverse to a former client if the matter has no relationship to confidential information acquired by reason of or in the course of his employment by the former client."
Similarly, an attorney should not be prohibited from accepting and confirming employment which is unrelated to his client's present and possibly adverse cause of action where there is no risk of the disclosure of confidential information. See: Ward v. Superior Court of State Bar for Los Angeles County (1977) 70 Cal. App. 3rd 23.
Furthermore, the client's malpractice suit will basically involve the insurance carrier of the former law corporation and the former junior partner. The members of the general partnership are named only to assure the presence of their former insurance carrier and they do not appear to have any personal stake in the outcome.
In addition, the members of the partnership are not representing any of the parties in the malpractice suit nor do they anticipate being called as a witness. Finally, the client appears to be well aware of the relationship between the former junior partner of the law corporation and the members of the general partnership. Since there are no adverse confidential relationships existing between the general partnership's former and present status and the client's malpractice suit, there is no apparent conflict of interest.
QUESTION B: Would the signing of a waiver of conflict agreement by the client effectively waive the potential conflict?
As described above, there is no apparent conflict of interest. However, it is advisable to have the client sign a knowing and intelligent waiver. This would insure the partnership's good faith and further cover itself against any unforeseen contingencies.
As implied in the language of the A.B.A. Codes Ethical Considerations 5-14 through 5-17 and expressly stated in California Rule 5-102(B), "(a) member of the State Bar shall not represent conflicting interests, except with the written consent of all parties concerned."
Thus, the partnership could draft an effective waiver document, fully inform the client of its basis and reason, and ask him to sign it.
This opinion is advisory only. It is not binding upon the State Bar, the Board of Governors, its agents or employees.
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.