ISBA 1992

Can a lawyer serve as both general counsel and a board member of the same corporation when shareholders perceive a conflict?

Short answer: The opinion concluded that a lawyer may serve as both general counsel and board member of a corporation, without violating Rule 1.7(b) or 1.8, where the lawyer fully discloses possible conflicts, the client consents, and the lawyer avoids business transactions with the client; a mere shareholder perception of conflict, or an appearance of impropriety, is not a violation absent an actual conflict.

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This page answers the general question as of 1992. Ezel answers yours: whether it's allowed on your facts, under the current Illinois Rules of Professional Conduct, with citations.

Disclaimer: Advisory only. Not binding precedent.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Attorney A served as general counsel to a not-for-profit corporation and on its board, involved in day-to-day decisions. A fellow board member, Attorney B, was engaged in a business relationship with the corporation and was employed by a company wholly owned by Attorney A's law partner. The interrelationship was fully disclosed to the corporation; Attorney A disavowed any interest in Attorney B's venture or the partner's company and recused himself from any board vote that might benefit Attorney B or his company. Despite this, various shareholders perceived a conflict, and Attorney A asked whether he violated Rule 1.7 or 1.8 and whether he should resign as counsel or from the board.

The opinion concluded there was no violation of Rule 1.7(b) (a lawyer shall not represent a client if the representation may be materially limited by the lawyer's own business interests, absent reasonable belief it will not be adversely affected and client consent after disclosure), because Attorney A appeared to have no business interests involving the corporate client, the relationship was fully disclosed, the corporation consented, and he recused himself from relevant decisions. The opinion observed that disclosure comparable to Illinois Rule 1.4(b) had occurred, and added that advising the client to obtain independent counsel on any questionable transaction would remove any doubt about disclosure and consent.

The opinion concluded Rule 1.8 was not violated because Attorney A had not entered into a business transaction with the client and refrained from activities that might be regarded as such. Addressing his concern about an appearance of impropriety, the opinion concluded that the Illinois Rules, like the ABA Model Rules, no longer contain the "appearance of impropriety" standard of former Canon 9, so a conflict violates the Rules only if it is an actual conflict; apparent conflicts do not (citing Opinion 783, where opposing counsel being the lawyer's uncle was not a per se disqualification). The comments to ABA Model Rule 1.7 also caution the lawyer to weigh continually the dual roles of board member and counsel.

Currency note

This opinion was issued in 1992, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in May 2010 as generally consistent with the 2010 Rules (pointing to Rules 1.4(b), 1.7, and 1.8(a)), while noting 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 be both general counsel and a board member of the same corporation?

A: The opinion concluded a lawyer may, without violating Rule 1.7(b) or 1.8, where the lawyer fully discloses possible conflicts, the client consents, and the lawyer avoids business transactions with the client.

Q: Does a shareholder's perception of a conflict create a violation?

A: No. The opinion concluded that for a conflict to violate the Rules it must be an actual conflict; a perception of conflict or an appearance of impropriety is not enough.

Q: What about the appearance-of-impropriety standard?

A: The opinion concluded the Illinois Rules, like the ABA Model Rules, no longer contain the appearance-of-impropriety standard of former Canon 9, so only an actual conflict matters.

Q: How can the lawyer make the disclosure and consent airtight?

A: The opinion concluded that advising the client to obtain independent counsel on any questionable aspect of a transaction would remove any doubt about adequate disclosure and consent.

Background and rules framework

The opinion interpreted Rule 1.7(b) (representation materially limited by the lawyer's own business interests, curable by reasonable belief and consent after disclosure) and Rule 1.8(a) (business transactions with a client), read with Rule 1.4(b) (disclosure adequate to permit informed decisions), and noted the abandonment of the appearance-of-impropriety standard (Model Rules 1.7, 1.8, 1.4).

Citations and references

Rules of Professional Conduct:

Model Rule 1.7 (conflict of interest; lawyer's own interests) / Illinois Rule 1.7(b)
Model Rule 1.8 (business transactions with a client) / Illinois Rule 1.8(a)
Model Rule 1.4 (communication) / Illinois Rule 1.4(b)

Other opinions cited:

ISBA Opinion No. 783 (relationship to opposing counsel not a per se disqualification)

Source

Landing page: https://www.isba.org/ethics/opinions/9204

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