If a lawyer drew up loan documents for sellers as a courtesy while representing the bank, can the lawyer later sue those sellers for the bank on their guarantee?
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This page answers the general question as of 1997. Ezel answers yours: whether it's allowed on your facts, under the current Massachusetts Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer regularly represented a bank. In a single real-estate transaction, the bank lent most of the purchase price to buyers (the owners' children), the owners guaranteed that loan, and the owners also financed part of the price themselves. The lawyer handled the bank's side, the title search, title insurance, and closing, and, at the owners' request, also prepared the deed and the note and second mortgage running from the buyers to the owners. After the bank foreclosed, it asked the lawyer to pursue the owners for the deficiency on their guarantee.
The committee analyzed this as a former-client problem under the "substantial relationship" test, which it had long applied and which the SJC's rules committee had adopted in recommended Rule 1.9 (the SJC itself, in Masiello v. Perini Corp., having said it had not yet decided whether to follow the test). The test bars a new representation substantially related to a prior one, presuming the lawyer holds relevant confidences and resting on the loyalty owed to a former client.
The committee declined to segment what was essentially one transaction into parts to avoid the test. Although the lawyer's work for the owners was secondary and done as a courtesy to expedite the deal, he still owed them a duty of loyalty as to that transaction, and his representation of the bank had been adverse to the owners, who were giving the bank a guarantee. The committee concluded the owner representation was close enough to the bank representation that the lawyer ought not litigate against the owners without their informed consent.
Currency note
This opinion was issued in 1997, before Massachusetts's adoption of the 2015 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.
Common questions
Q: Could the lawyer pursue the owners for the bank on their guarantee?
A: The committee concluded he ought not, without the owners' informed consent, because his earlier preparation of their loan documents was substantially related to the bank's deficiency claim against them.
Q: Did it matter that the work for the owners was minor and done as a courtesy?
A: No. The committee said the lawyer still owed the owners a duty of loyalty as to that transaction, and the substantial-relationship test does not require parsing one transaction into components to avoid a conflict.
Background and rules framework
The opinion applied the duties owed to a former client under the substantial-relationship test, corresponding to Model Rule 1.9. The committee analyzed it under recommended Massachusetts Rule of Professional Conduct 1.9(a), drawn from the SJC rules committee's May 13, 1996 report, since the current Massachusetts rules had not yet taken effect.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.9 / recommended Mass. R. Prof. C. 1.9(a) (duties to former clients; substantial-relationship test)
Cases:
- Masiello v. Perini Corp., 394 Mass. 842 (1985) (SJC had not yet decided whether to adopt the substantial-relationship test)
See also
- MA Bar Ethics Op. 97-7: Conflicts after the handling lawyer leaves the firm
- MA Bar Ethics Op. 03-4: Taking a matter against a former client
Source
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