Can a lawyer for a joint venture sue one of its partners on behalf of a new client in an unrelated matter?

Plain-English summary

A lawyer had long represented Company A, which entered a joint venture with Company B to build a single project. The joint venture retained the lawyer in disputes and litigation with subcontractors and others. A subcontractor, Company C, then asked the lawyer to advise it on a claim against Company B arising from a different, unrelated project. The lawyer stated she held no confidential information about Company B relevant to C's claim, and asked whether she could represent C against B.

The committee first frames the threshold question of who the lawyer's client is. A joint venture is a partnership, and in Massachusetts the prevailing view is that a partnership's attorney represents the entity rather than the individual partners (Cacciola v. Nellhaus; Rule 1.13(a)). But Cacciola leaves open that the attorney may also represent or owe a fiduciary duty to individual partners in some cases, and the committee lists the California factors cited there (the partnership's size; the nature and scope of the engagement; the extent of contacts with individual partners; access to a partner's financial information; and whether the circumstances imply an agreement not to take adverse representations). If the lawyer represents B individually or owes B a fiduciary duty, she may not sue B for C without the consent of both B and C.

The committee then identifies the further questions the lawyer must consider even if B is not her individual client: whether suing B might impair her ability to represent the joint venture by undermining B's cooperation; whether pursuing C's claim might require attachment of B's interest in the venture and thus misuse the venture's confidential information (Rule 1.8(b)); and whether C's suit might so affect the financial interests of the venture or of A that her representation of C would be materially limited. If any of these possibilities seems likely, the committee concludes the lawyer cannot undertake C's representation without satisfying the consent and reasonableness requirements of Rule 1.7(b)(1) and (2).

In practice

Under this opinion, conduct in which a joint venture's lawyer sues a venture member for a different client is permitted only after the lawyer resolves the threshold question of whether she represents or owes a fiduciary duty to that member, and the further questions of impairment, confidential-information misuse, and material limitation. Per the opinion, where any identified risk is likely, the representation requires the consent and reasonableness conditions of Rule 1.7(b). The committee leaves the fact-specific judgments to the lawyer.

Common questions

Q: Is a joint venture's lawyer also the lawyer for its individual members?

A: Not automatically. The committee explains that a partnership's attorney generally represents the entity, but may also represent or owe a fiduciary duty to individual partners depending on factors such as the engagement's scope and the lawyer's contacts with and financial information about the partner.

Q: If the lawyer does not represent the partner individually, is she free to sue him?

A: Not necessarily. The committee identifies additional concerns, including impairing the venture representation, misusing the venture's confidential information, and a material limitation on representing the new client, any of which can trigger Rule 1.7(b).

Q: What does Rule 1.7(b) require here?

A: Where a material-limitation risk is present, the lawyer needs a reasonable belief that the representation will not be adversely affected and the client's consent after consultation.

Background and rules framework

The opinion interprets Mass. R. Prof. C. 1.7 (concurrent conflicts), 1.8(b) (use of confidential information to a client's disadvantage), and 1.13(a) (organization as client), corresponding to the Model Rules of the same numbers, and applies Massachusetts partnership-representation case law.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 / Mass. R. Prof. C. 1.7 (concurrent conflicts of interest)
• Model Rule 1.8 / Mass. R. Prof. C. 1.8(b) (use of confidential information)
• Model Rule 1.13 / Mass. R. Prof. C. 1.13(a) (organization as client)

Cases:

• Cacciola v. Nellhaus, 49 Mass. App. Ct. 746 (2000) (partnership's attorney represents the entity, but may also represent individual partners)
• Schaeffer v. Cohen, Rosenthal, Price, Mirkin, Jennings & Berg, P.C., 405 Mass. 506 (1989)
• Johnson v. Superior Court, 28 Cal. App. 4th 463 (1995) (factors for individual-partner representation)

Other opinions cited:

• MBA Opinion 92-2 (representation of a sole-beneficiary executor treated as individual representation for conflict purposes)

See also

• MA Bar Ethics Op. 03-4: Representing a new client against a former client
• MA Bar Ethics Op. 06-01: Lawyer as executor and counsel (Rule 1.7)

Source

• Landing page: https://www.massbar.org/publications/ethics-opinions/ethics-opinion-article/ethics-opinions-2004-opinion-2004-2/opinion-2004-2