If a lawyer must withdraw from a case because of a conflict of interest, can the lawyer still share in the fee earned after the conflict arose?

Plain-English summary

A lawyer took a personal-injury client injured in a three-car collision. One of the other drivers was insured by a company the lawyer's firm represented on many claims in the county. After learning of that insurer's involvement, the lawyer told the client of the firm's representation of the insurer, pursued settlement with both insurers, and warned the insurer that the matter would be referred out if settlement failed. Three days before the limitations period ran, the lawyer filed suit, told the client the matter was being referred to another lawyer because of the firm's connection to the insurer, and proposed to share in the fee based on costs advanced and past and future work. The inquiry asked whether the lawyer could continue representing the client before suit and whether the lawyer could share in the resulting fee.

The committee concluded a lawyer should decline representation when a conflict would exist. Under Rule 1.7(b), a lawyer may not represent a client where the representation may be materially limited by responsibilities to another client absent the client's consent after disclosure and the lawyer's reasonable belief that representation will not be adversely affected; the firm's continuing representation of the opposing driver's insurer created a clear conflict. Once the lawyer learned the insurer's identity, the lawyer should have communicated promptly with the client under Rule 1.4(b) and withdrawn under Rule 1.16(a)(2), which requires withdrawal where continued employment will violate the Rules. Rule 1.3 ties this to the duty of diligence, including identifying conflicts at the outset and monitoring for them as the matter proceeds.

On the fee, the committee pointed to Rule 1.5(f)'s requirements for dividing a fee with a lawyer outside the firm. Where the representation would not be permitted because of a conflict, the lawyer should decline, and if referring the matter should not take any fee arising from it. Continuing to represent a client despite a conflict puts the lawyer at risk as to any services rendered after the point the lawyer knew or should have known of the conflict.

Currency note

This opinion was issued in 1991, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (Rules 1.3, 1.5, 1.7, 1.8, and 1.16(a)(2)), while cautioning that the specific standards referenced may differ from the 2010 Rules. 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 or requirement mentioned here.

Common questions

Q: Can a lawyer who withdraws for a conflict still collect a referral or shared fee from the matter?

A: No. The opinion concluded that where representation is barred by a conflict, the lawyer should decline and, if referring the matter out, should not take any fee arising from it.

Q: What happens to fees on a non-contingent matter after the conflict surfaces?

A: The opinion concluded the lawyer is not entitled to any fee following the date the conflict was determined or reasonably should have been determined to exist.

Q: What should the lawyer do as soon as a conflict appears?

A: The opinion concluded the lawyer should promptly inform the client under Rule 1.4(b) and withdraw under Rule 1.16(a)(2), and that diligence under Rule 1.3 includes identifying conflicts at the outset and monitoring for them.

Background and rules framework

The opinion applied Rule 1.7(b) (conflicts that may materially limit a representation) and Rule 1.16(a)(2) (mandatory withdrawal where continued employment violates the Rules), tied to the diligence duty of Rule 1.3, and Rule 1.5(f) (dividing fees with a lawyer outside the firm) to the fee question (Model Rules 1.3, 1.5, 1.7, 1.16).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (conflicts of interest) / Illinois Rule 1.7(b)
• Model Rule 1.16 (declining or terminating representation) / Illinois Rule 1.16(a)(2)
• Model Rule 1.5 (fees; fee division) / Illinois Rule 1.5(f)
• Model Rule 1.3 (diligence) / Illinois Rule 1.3

Other opinions cited:

• ISBA Opinion 87-03 (referenced in the Board's affirmation note).

See also

• ISBA Ethics Op. 90-25: Lawyer Surety and Judge Appointment
• ISBA Ethics Op. 92-02: Insurer-Retained Counsel for the Insured
• ISBA Ethics Op. 90-31: Representing Buyer and Lender

Source

• Landing page: https://www.isba.org/ethics/opinions/9026