Can a lawyer who handled a developer's loan closings later represent the bank foreclosing on those mortgages against the developer?

Plain-English summary

A member was the local attorney for an approved FHA mortgage company that required him to handle all closings on its loans. He closed about thirty loans for a certain subdivision, received and disbursed the funds, paid off encumbrances, and distributed the balance. The subdivision later borrowed construction-loan money through local national banks, which required the FHA mortgage company's attorney to issue title insurance; with the subdivision's approval, he drew the construction mortgages, examined the titles, and delivered the required papers to the bank, with the subdivision paying his fees and the bank's charges. The construction mortgages were now in default, the banks were proceeding to foreclosure, and they asked him to handle the foreclosure suits.

The member asked whether he could handle the foreclosures of the mortgages he had originally placed of record without a conflict of interest. He stated that he had not recently represented the subdivision, that the former officers and directors with whom he dealt were no longer with the company, that he did not know the present principals or their locations, and that he had no information or knowledge advantageous to the defense. With the understanding that he no longer represented the subdivision, the committee did not believe the prior representation barred him from representing the banks in the foreclosures, but said that if his representation were recent or continuing, its opinion would be to the contrary. Under the circumstances, the committee found no objection to his representing the banks.

Currency note

This opinion was issued in 1961, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canon 6 of the Canons of Professional Ethics; duties to former clients and conflicts of interest are now addressed by Rules 4-1.9 (duties to former clients) and 4-1.7 (conflict of interest, current clients) of the Rules Regulating The Florida Bar (Model Rules 1.9 and 1.7). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could the lawyer foreclose the mortgages he had originally drafted?

A: Yes, on these facts. The committee found no objection where the lawyer no longer represented the subdivision and held no information useful to the defense of the foreclosure suits.

Q: What facts would have changed the answer?

A: A recent or continuing representation of the subdivision. The committee said that if the lawyer's representation of the subdivision were of a recent or continuing nature, its opinion would be to the contrary.

Background and rules framework

The opinion applied former Canon 6 of the Canons of Professional Ethics, on conflicting interests. The duty to former clients is now addressed by Rule 4-1.9, and current-client conflicts by Rule 4-1.7, of the Rules Regulating The Florida Bar (Model Rules 1.9 and 1.7). The committee's analysis turned on whether the prior representation was concluded and whether the lawyer held information useful against the former client.

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; see current Rules 4-1.9, 4-1.7]

See also

• FL Bar Ethics Op. 62-9: Representing a New Client After a Former Client's Case

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-61-23/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-61-23-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 61-23
November 8, 1961
Advisory ethics opinions are not binding.
It is not improper for an attorney, who has been retained by a subdivision enterprise to handle transactions in connection with acquiring loans and mortgages, to represent the bank in foreclosure suits thereon against the subdividing enterprise when the lawyer has not represented the subdivision for some time and gained no knowledge from the representation which would be advantageous to the defense of such suits.
Canon: 6
Chairman Holcomb stated the opinion of the committee:
The Committee on Professional Ethics of The Florida Bar, upon request, has considered the matter presented to us by a member of The Florida Bar wherein he states that he is the local attorney for an approved FHA mortgage company which requires that he personally handle all closings on their loans, and that he closed about thirty of these loans in connection with a certain subdivision, which required the payment by such subdivision of all closing costs. He received the funds resulting from the loans and disbursed them, paying off various encumbrances and distributing the balance. The subdivision borrowed several large amounts of money on construction loans on the lands on which these FHA commitments were issued, which loans were made through local national banks, which required that the attorney for the FHA mortgage company issue title insurance; and with the approval of the subdivision he drew the construction mortgages, examined the titles and delivered to the bank the papers required. The subdivision paid his fees and the bank's charges and all expenses. The construction mortgages to the banks are now in default, and the banks are proceeding to foreclosure and are requesting that he handle the foreclosure suits for them.
The member desires our opinion as to whether he may handle the foreclosures of the mortgages which he originally placed on record without running into a conflict of interests. He states that he has not recently represented the subdivision and that the former officers and directors of the corporation with whom he dealt have informed him that they are no longer with the company and that he does not know any of the principals of the company or their present locations, and that he does not have any information or knowledge that would be advantageous to the defense of the suits to foreclose the construction mortgages.
With the understanding that he no longer represents the subdivision, we do not believe that this prior representation of the subdivision would bar or prohibit him from representing the banks in the foreclosure of the mortgages. However, if his representation were of a recent or of a continuing nature, our opinion would be to the contrary. Under the circumstances, we find no objection to his representing the banks in the foreclosure of the mortgages.