Can a lawyer advise or represent a client about work the lawyer or the lawyer's firm did earlier for that client, such as a contract they drafted, and when does the lawyer's own interest create a conflict?

Plain-English summary

The committee analyzed three hypotheticals in which a lawyer or the lawyer's firm negotiated and drafted a contract for a client and the client later returns to the same lawyer about that contract. In the first, the client asks the lawyer to explain the parties' duties under the contract. In the second, the lawyer represents the client as plaintiff suing for breach, and the defendant's answer asserts the contract permits the conduct, putting the lawyer's prior work in issue. In the third, the client also accuses the lawyer of having negligently advised the client about the contract.

The committee identified that, under Anderson v. Eaton and Rule 1.7(b), a conflict exists when there is a significant risk that the lawyer's representation of the client will be materially limited by the lawyer's responsibilities to or relationships with a third person, or by the lawyer's own interests. For Hypothetical #1, the committee concluded nothing suggested any interference with the lawyer's duties; the lawyer's prior involvement might make the lawyer particularly able to assist the client and to do so efficiently.

For Hypothetical #2, the committee identified that the adversarial posture and the defendant's challenge to the prior work change the analysis. The lawyer must be alert to whether the prior advice or drafting was below the standard of care. If the lawyer concludes the prior work was correct, there is likely no significant risk under Rule 1.7(b). If the lawyer concludes a prior error is reasonably possible, the lawyer (or the firm's lawyers) must fully and fairly disclose the facts to the client, because that possibility can be a "significant development" within Business and Professions Code section 6068(m) and Rule 1.4(a)(3). The committee identified, citing Beal Bank v. Arter & Hadden, that the fiduciary duty of disclosure extends to disclosing acts of malpractice, and that under Rule 1.2 and Blanton v. Womancare the lawyer cannot usurp the client's authority to decide matters affecting substantial rights. The committee identified that the lawyer must perform the Rule 1.7(b) analysis (whether self-interest in avoiding malpractice liability creates a substantial risk of materially limiting the representation), and if so, must obtain the client's informed written consent under Rule 1.7(d)(1), which the lawyer may seek only if the lawyer reasonably believes competent and diligent representation can be provided; the lawyer must terminate under Rule 1.16 if consent cannot be sought or is declined. The committee identified the importance of the client's continued trust and confidence (McDonald v. Swope; General Dynamics v. Superior Court).

For Hypothetical #3, the committee identified that the analysis tracks Hypothetical #2 except that the client's accusation of professional negligence heightens the concern about maintaining trust and confidence and performing all duties. It identified that the accusation starts but does not conclude the analysis (comparing Gerber v. Riordan, ABA Formal Opinion 94-384, Michigan Informal Opinion RI 84, and Whiting v. Lacara), concluding the lawyer may continue if the lawyer reasonably believes competent and diligent representation can be provided and, where required by Rule 1.7(b), first obtains informed written consent. The accusation makes it more likely the lawyer could proceed only with that consent, depending on the facts, such as whether the client withdraws the accusation, is independently represented, and the foreseeable materiality of the possible error.

In practice

Under this opinion, advising a client about a contract the lawyer's firm drafted, with nothing more (Hypothetical #1), is permitted and may be efficient. Where the prior work is challenged in litigation or the client alleges negligence (Hypotheticals #2 and #3), the opinion holds that a reasonably possible prior error is a significant development the lawyer must disclose to the client under Rule 1.4 and section 6068(m), that the lawyer must assess under Rule 1.7(b) whether self-interest in avoiding malpractice liability creates a significant risk of materially limiting the representation, and that, if so, the lawyer must obtain the client's informed written consent under Rule 1.7(d)(1) or terminate the representation under Rule 1.16.

Common questions

Q: Can a lawyer advise a client about a contract the lawyer's own firm drafted?

A: Per the opinion, generally yes. The committee concluded that simply explaining the parties' duties (Hypothetical #1) raises no conflict and the firm's prior involvement may make the lawyer particularly able to assist.

Q: What happens when the prior work is challenged in litigation?

A: Per the opinion, the lawyer must assess whether a prior error is reasonably possible. If so, the lawyer must disclose that to the client under Rule 1.4 and section 6068(m) and analyze under Rule 1.7(b) whether the lawyer's self-interest creates a significant risk of materially limiting the representation.

Q: When must the lawyer get the client's informed written consent or withdraw?

A: Per the opinion, when Rule 1.7(b)'s "significant risk" and "materially limited" standards are met, the lawyer must obtain informed written consent under Rule 1.7(d)(1), which the lawyer may seek only if reasonably believing competent and diligent representation can be provided; otherwise, and if consent is declined, the lawyer must terminate under Rule 1.16.

Q: If a client accuses the lawyer of malpractice, must the lawyer automatically withdraw?

A: Per the opinion, no; the accusation starts but does not conclude the analysis. The lawyer may continue if reasonably believing competent and diligent representation can be provided and, where required, first obtaining informed written consent, depending on facts such as whether the accusation is withdrawn and whether the client is independently represented.

Background and rules framework

The opinion interprets the current California Rules of Professional Conduct (effective November 1, 2018), principally Rule 1.7(b) and (d)(1) (conflicts based on the lawyer's own interests and relationships, corresponding to ABA Model Rule 1.7), Rule 1.4 (communication, corresponding to Model Rule 1.4), Rule 1.2 (scope and allocation of authority, corresponding to Model Rule 1.2), and Rule 1.16 (terminating representation, corresponding to Model Rule 1.16), together with Business and Professions Code section 6068(m). It grounds the conflict standard in Anderson v. Eaton and Restatement (Third) of the Law Governing Lawyers section 121.

Citations and references

Rules of Professional Conduct:

• California Rule 1.7 (current-client conflicts)
• California Rule 1.4 (communication)
• California Rule 1.2 (scope of representation)
• California Rule 1.16 (declining or terminating representation)

Statutes:

• California Business and Professions Code section 6068(m)
• California Code of Civil Procedure section 128.5

Cases:

• Anderson v. Eaton, 211 Cal. 113 (1930)
• Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal.4th 503 (2007), duty to disclose acts of malpractice
• Blanton v. Womancare, Inc., 38 Cal.3d 396 (1985)
• General Dynamics Corp. v. Superior Court, 7 Cal.4th 1164 (1994)
• McDonald v. Swope, 79 F.Supp. 30 (9th Cir. 1948)

Other opinions cited:

• ABA Model Rule 1.7; ABA Formal Ethics Opinion 94-384 (1994)
• Colorado Ethics Opinion 113; Connecticut Informal Opinion 2014-05; Minnesota Ethics Opinion 21; North Carolina Ethics Opinion 2015-4; Michigan Informal Opinion RI 84

See also

• LACBA Ethics Op. 489: Retainer Provisions Limiting Malpractice Liability
• LACBA Ethics Op. 501: Conflicts of Interest in Changing Law Firms
• LACBA Ethics Op. 521: Fee Dispute During Representation and Conflict of Interest

Source

• Landing page: https://lacba.org/?pg=ethics-opinions
• Original PDF: https://lacba.org/docDownload/2681249