Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.


Potential and Actual Conflicts: Be Aware of the New Rules

It is no secret that on November 1, 2018, California lawyers will be subject to multiple new Rules of Professional Conduct, which, in most cases will be based on the ABA Model Rules of Professional Conduct.  A conversion table between the new and old California Rules of Professional Conduct can be found on the State Bar website at:  http://www.calbar.ca.gov/Portals/0/documents/rules/Cross-Reference-Chart-Rules-of-Professional-Conduct.pdf

California attorneys in various practice areas have regularly represented joint clients in numerous matters including real estate transactions, formation of legal entities, estate planning and litigation.  Until November 1, California attorneys have been regulated by California Rule of Professional Responsibility, 3-310(C) providing an attorney “shall not, without the informed written consent of each client:  (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or (3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.” (CRPC, Rule 3-310(C) [emphasis added].) 

But, when does the “representation of more than one client” result in “the interests of the clients potentially conflict[ing]” or “actually conflict[ing]”?  The inquiry is significant because it is directly tied to what constitutes “informed written consent” given that “(1) ‘Disclosure’ means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client; [¶] (2) ‘Informed written consent’ means the client's or former client's written agreement to the representation following written disclosure[.]” (CRPC, Rule 3-310(A(1-2) [emphasis added].)  Whether the client “is ‘informed’ is obviously a fact-specific inquiry.”  (STATE BAR OF CALIFORNIA STANDING COMMITTEE ON PROFESSIONAL RESPONSIBILITY AND CONDUCT FORMAL OPINION 1989-115 )

In November, there will at least be more definitional guidance on what circumstances require “informed written consent,” and what needs to be disclosed for a client to have informed written consent.  Consistent with ABA Model Rule 1.7, California’s Rule 1.7 will prohibit attorneys “without informed written consent” to represent a client:

a.         “if the representation is directly adverse to another client in the same or a separate matter” or

b.         “if there is a significant risk the lawyer’s representation of the client will be materially limited by the lawyer’s responsibilities to or relationships with another client, a former client or a third person, or by the lawyer’s own interests.”

(Rule 1.7 (Approved by the Supreme Court, Effective November 1, 2018) [emphasis added].)

Under subdivision (c), “Even when a significant risk requiring a lawyer to comply with paragraph (b) is not present,” attorneys will be required to provide written disclosure of the relationship to the client where “(1) the lawyer has, or knows that another lawyer in the lawyer’s firm has, a legal, business, financial, professional, or personal relationship with or responsibility to a party or witness in the same matter; or (2) the lawyer knows or reasonably should know that another party’s lawyer is a spouse, parent, child, or sibling of the lawyer, lives with the lawyer, is a client of the lawyer or another lawyer in the lawyer’s firm, or has an intimate personal relationship with the lawyer.”

Finally, to close the loop, each of the above requires compliance with subdivision (d)(1) it confirms:  “Representation is permitted under this rule only if the lawyer complies with paragraphs (a), (b), and (c), and:  (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; and (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal.”

Will there be disputes and appellate court interpretation of where representation is “directly adverse” or if there is a “significant risk” the attorneys’ representation will be “materially limited”?  Yes.  Does Rule 1.7 provide guidance as to the subject matters requiring disclosure and potentially “informed written consent”?  Yes.

Every practitioner representing joint clients is well served by thoroughly thinking about each requirement of Rule 1.7 and ensuring each is met.

Andrew Servais a partner with Wingert Grebing Brubaker & Juskie LLP. 

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**