May a lawyer serve on the board of directors of a corporation while also acting as its legal counsel, and what conflict and privilege problems does the dual role create?

Plain-English summary

The committee addressed whether a lawyer may serve on the board of directors of a corporation that she or her firm represents as counsel. It concluded that the Model Rules contain no prohibition, only a cautionary Comment to Rule 1.7 directing the lawyer to weigh whether the two roles may conflict and to decline to serve as a director "[i]f there is material risk that the dual role will compromise the lawyer's independence of professional judgment while acting as counsel."

The opinion identified three broad areas of concern. First, the lawyer should advise the corporation when the dual role begins, reasonably assuring that management and the board understand the differing responsibilities of counsel and director, that the lawyer as counsel represents only the corporate entity and not individual officers or directors, and that conflicts may require recusal or separate counsel. Second, the lawyer must exercise reasonable care to protect the corporation's confidences and the attorney-client privilege; because a lawyer-director also gives business advice, communications may be exposed to disclosure that would have been privileged had the lawyer acted only as counsel, so the lawyer should make clear when a meeting is for legal advice and consider having another firm lawyer provide it. Third, the lawyer must confront and resolve conflicts that arise during the dual role, such as being asked to represent the corporation in an undertaking she opposed as a director, opining on board actions in which she participated, acting on corporate decisions affecting her firm, or representing the corporation in litigation in which she or her firm is also a defendant.

The committee explained that where the lawyer-director's own interest or her opposition to a corporate decision creates a disqualifying conflict under Rule 1.7(b), that conflict is imputed to her firm under Rule 1.10(a). It closed with a set of practice guidelines: among them, recusing as a director when the corporation's relationship with the lawyer or her firm is under consideration, maintaining independent professional judgment, and declining a representation when the lawyer's interest as a director would materially and adversely affect it.

Currency note

This opinion was issued in 1998, before the American Bar Association's adoption of the 2002 (Ethics 2000) revisions to the Model Rules of Professional Conduct, which renumbered and rewrote portions of Rules 1.7, 1.10, and 1.13. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Is it unethical for a lawyer to sit on the board of a corporate client?

A: No. The committee concluded that the Model Rules do not prohibit the dual role of director and counsel, and that it is not unethical, though the lawyer should decline to serve if there is a material risk the role will compromise her independent professional judgment as counsel.

Q: Can board discussions with a lawyer-director lose the attorney-client privilege?

A: The opinion said yes in some circumstances. Because the lawyer-director also provides business advice, courts may find communications unprivileged or treat them as waived, so the lawyer should make clear when a meeting is solely for legal advice and consider having another firm lawyer present to give it.

Q: What happens to the firm if the lawyer-director has a disqualifying conflict?

A: The committee held that when the lawyer-director is personally disqualified under Rule 1.7(b), the conflict is imputed to the rest of her firm under Rule 1.10(a), disqualifying the firm from the representation.

Q: Should the lawyer-director vote on matters involving her own firm?

A: The opinion said the prudent lawyer-director should at a minimum abstain from voting as a director on issues directly involving the corporation's relationship with her law firm, such as engagement, performance, payment, or discharge.

Background and rules framework

The opinion interpreted Model Rule 1.7 (conflict of interest), in particular the material-limitation standard of Rule 1.7(b) and the Comment addressing lawyers who serve on client boards, together with Rule 1.10 (imputation of conflicts), Rule 1.6 (confidentiality), Rule 1.13 (organization as client), and Rule 3.7 (lawyer as witness). It noted that law beyond the Model Rules, including corporate-governance principles, SEC rules, and fiduciary law, also governs a lawyer's service as a director. Because the ABA interprets the Model Rules directly, there is no state-rule analogue.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (conflict of interest: general rule; material limitation)
• MR 1.10 (imputation of conflicts of interest)
• MR 1.6 (confidentiality of information)
• MR 1.13 (organization as client)
• MR 3.7 (lawyer as witness)

Cases:

• United States v. Vehicular Parking, Ltd., 52 F. Supp. 751 (D. Del. 1943), no attorney-client privilege where the lawyer-director's communication was business advice
• Deutsch v. Cogan, 580 A.2d 100 (Del. Ch. 1990), firm owed fiduciary duty to minority shareholders because of a firm lawyer's directorship

Other opinions cited:

• N.Y. State Bar Op. 589 (1988): a lawyer-director must disclose to the client the risk of losing the attorney-client privilege
• N.Y.C. Bar Op. 1988-5 (1988): limits on a lawyer-director procuring employment for the lawyer or the firm

See also

• ABA Formal Op. 91-361: Representation of a partnership as an entity client
• ABA Formal Op. 94-380: Duties when counseling a fiduciary
• ABA Formal Op. 514: Advising an organization on a constituent's legal risk

Source

• Landing page: ABA Formal Ethics Opinions index
• Original PDF: 98-410.pdf