Can I sue a subsidiary of a corporation I already represent, in an unrelated matter, without my client's consent?

Plain-English summary

A lawyer represented a large, publicly held parent corporation and had never represented its wholly owned subsidiary. A prospective new client asked the lawyer to sue the subsidiary on a matter unrelated to the parent representation; a successful action could financially affect the subsidiary and indirectly the parent, but the parent would not be a party. The question was whether the lawyer could take the representation adverse to the subsidiary without the parent's consent.

The opinion concluded that a corporate affiliation, including sole ownership of a subsidiary, does not by itself make the affiliate an additional client of the parent's lawyer. It read Rule 1.13(a) (a lawyer for an organization represents the organization acting through its constituents) and Illinois case law (Bobbitt v. Victorian House) as confirming that the duty of loyalty runs to the entity, not to its constituents or affiliates, consistent with its own Opinion No. 95-1 and with ABA Formal Opinion No. 95-390 and California Opinion No. 1989-113. Because the subsidiary was not the lawyer's client, the opinion concluded that a representation adverse to it was not directly adverse to "another client" under Rule 1.7(a).

The opinion also concluded that an indirect or derivative economic impact on the parent does not make the representation "directly adverse" under Rule 1.7(a), reasoning that the modifier "directly" should exclude speculative impacts, and drawing on Opinion No. 88-5 (concurrent representation of competitors in unrelated matters). It identified circumstances that would require treating the affiliate as a client, such as the lawyer receiving the subsidiary's confidential information, shared management, or an alter-ego relationship, in which case consent after disclosure is required. Finally, it concluded that even where Rule 1.7(a) is satisfied, the lawyer must consider whether either representation would be materially limited under Rule 1.7(b), and that Rule 1.4(b) requires advising the prospective client of the existing client relationship and its consequences, including a possible disqualification attempt.

Currency note

This opinion was issued in 1996, 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 (referring to Rules 1.4, 1.6, 1.7, and 1.13), 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: Is a subsidiary of my corporate client automatically my client too?

A: No. The opinion concluded that a corporate affiliation, including sole ownership of a subsidiary, does not by itself make the affiliate the lawyer's client.

Q: Is suing the subsidiary "directly adverse" to the parent client?

A: Generally no. The opinion concluded that an indirect or derivative economic impact on the parent is not "directly adverse" under Rule 1.7(a), reading "directly" to exclude speculative impacts.

Q: When is the parent's consent required?

A: The opinion concluded consent after disclosure is required where particular circumstances make the affiliate effectively a client (for example, shared management, the lawyer's receipt of the subsidiary's confidential information, or an alter-ego relationship), or where the representation would be materially limited under Rule 1.7(b).

Q: What must the lawyer tell the new client?

A: The opinion concluded that Rule 1.4(b) requires advising the prospective client of the existing client relationship and explaining its consequences, including the possibility that the subsidiary will seek to disqualify the lawyer.

Background and rules framework

The opinion interpreted Rule 1.7 (conflict of interest; direct adversity and material limitation; Model Rule 1.7), Rule 1.13 (organization as client; Model Rule 1.13), Rule 1.6 (confidentiality; Model Rule 1.6), and Rule 1.4 (communication; Model Rule 1.4), and aligned its analysis with ABA Formal Opinion No. 95-390 and California Opinion No. 1989-113.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (conflict of interest: current clients) / Illinois Rule 1.7
• Model Rule 1.13 (organization as client) / Illinois Rule 1.13
• Model Rule 1.4 (communication) / Illinois Rule 1.4; Model Rule 1.6 (confidentiality) / Illinois Rule 1.6

Cases:

• Bobbitt v. Victorian House, Inc., 545 F.Supp. 1124 (N.D. Ill. 1982), entity lawyer's loyalty runs to the entity
• ABC Trans National Transport, Inc. v. Aeronautics Forwarders, Inc., 90 Ill.App.3d 817, 413 N.E.2d 1299 (1st Dist. 1980)

Other opinions cited:

• ABA Formal Opinion No. 95-390 (1995); California State Bar Formal Opinion No. 1989-113 (1990)
• ISBA Advisory Opinions Nos. 95-1 (1995) and 88-5 (1989)

See also

• ISBA Ethics Op. 17-05: In-House Counsel Representing Multiple Subsidiaries
• ISBA Ethics Op. 09-01: Communications With Current and Former Corporate Constituents
• ISBA Ethics Op. 13-02: Representing Business Partners Adverse to a Former Client

Source

• Landing page: https://www.isba.org/ethics/opinions/9515