Can a lawyer take on a defendant from a pending case as a new client in unrelated matters if both clients consent?

Plain-English summary

The opinion addressed a lawyer representing the plaintiff in a negligence action against the driver and the owner of a motorboat, where the owner was also the plaintiff's roommate. While that case was in litigation, the boat owner asked the lawyer to represent the owner as a plaintiff in an unrelated negligence claim and in a property-transfer business transaction. The current and prospective clients had a friendly relationship and both agreed to the dual representation.

The Committee applied MRPC 1.7, noting the comments define its scope broadly: a lawyer may not represent someone whose interests are adverse to an existing client even in wholly separate matters, because the vigor of representation may be diminished and clients are likely to doubt the lawyer's loyalty. Under prior opinions (RI-25, RI-37, RI-47), the threshold question is whether a disinterested lawyer would reasonably believe the new representation would not adversely affect the relationship with the current client; only if that is answered affirmatively may the lawyer seek consent. Relevant factors include the nature of the litigation, the information the lawyer would access, and the clients' ability to protect themselves (citing Unified Sewerage Agency v. Jelco Inc).

The Committee concluded the potential for adverse effect was clear. If the lawyer zealously pursued the plaintiff's claim and won a judgment exceeding any insurance, the lawyer would have to advise the plaintiff about proceeding against the owner individually and the owner's collectability, while simultaneously holding confidential information about the owner's finances and advising the owner on the unrelated matters in light of the same judgment. That would force the lawyer to sacrifice one client's interests for the other's, which MRPC 1.7(a) and (b) do not permit. The Committee added that the roommates' shared lawyer raised a risk of the appearance of collusion, critical to avoid under MRPC 8.4(c). Because a disinterested lawyer could not reasonably conclude the representations would not be adversely affected, the Committee did not reach consent, though it noted that valid consent under MRPC 1.7 requires affirmative disclosure of all facts and implications (citing Financial Bankshares v. Metzger). The lawyer therefore could not represent the owner even in unrelated matters.

Currency note

This opinion was issued in 1990 and interprets the Michigan Rules of Professional Conduct as they then stood. The MRPC have since been amended, including the conflict-of-interest provisions of MRPC 1.7, and 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: Can a lawyer represent a current opponent in an unrelated matter if everyone consents?

A: Per the opinion, not where adverse effect is possible. The Committee concluded that consent is reached only after a disinterested lawyer could reasonably believe the existing client would not be adversely affected, which was not the case here.

Q: Why was representing the boat owner a problem when the new matters were unrelated?

A: The opinion reasoned that winning a judgment for the plaintiff could force the lawyer to advise the plaintiff about collecting from the owner while holding the owner's confidential financial information, sacrificing one client for the other under MRPC 1.7(a) and (b).

Q: Did the clients' close relationship matter?

A: Yes. The opinion noted that the two clients being roommates raised a risk of the appearance of collusion, which MRPC 8.4(c) makes critical to avoid, and that sharing one lawyer is the kind of action that can suggest collusion.

Background and rules framework

The opinion interprets MRPC 1.7 / Model Rule 1.7 (conflicts of interest with current clients, including directly adverse representation and material-limitation conflicts) and MRPC 8.4(c) / Model Rule 8.4 (conduct involving dishonesty or that prejudices the administration of justice, here the appearance of collusion). It applies the disinterested-lawyer test from prior Michigan opinions and federal conflict cases.

Citations and references

Rules of Professional Conduct:

• MRPC 1.7(a), (b) / Model Rule 1.7 (conflicts of interest, current clients)
• MRPC 8.4(c) / Model Rule 8.4 (appearance of collusion)

Cases:

• Unified Sewerage Agency v. Jelco Inc, 649 F2d 1339 (CA9 1981), factors in assessing adequacy of dual representation
• Financial Bankshares v. Metzger, 523 F Supp 744 (DDC 1981), disclosure required for valid conflict consent

Other opinions cited:

• RI-25, RI-37, RI-44, RI-47, RI-53 (disinterested-lawyer test; current-client conflicts)

See also

• ABA Formal Op. 95-390: Conflicts in the Corporate Family Context
• ABA Formal Op. 91-361: Representation of a Partnership

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=936&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RI-66

December 21, 1990

SYLLABUS

Informed client consent notwithstanding, a lawyer may not undertake representation of a client, even in unrelated matters, where the prospective client is also a defendant in a pending lawsuit where the lawyer represents the plaintiff, and where there is the possibility that such representation may adversely affect the interest of the existing client.

References: MRPC 1.7(a) and (b), 8.4(c); RI-25, RI-37, RI-44, RI-47, RI-53; Unified Sewerage Agency v. Jelco Inc, 649 F2d 1339 (CA9 1981); Financial Bankshares v. Metzger, 523 F Supp 744 (DDC 1981).

TEXT

A lawyer represents the plaintiff in a negligence action against both the driver of a motorboat and the motorboat's owner, who also happens to be the plaintiff's roommate. The case is currently in litigation. The lawyer has been asked by the motorboat owner to represent the owner as a plaintiff in an unrelated negligence claim of the owner's own, and in a business transaction involving the transfer of property. The current client and prospective client enjoy a friendly relationship despite the ongoing litigation and both agree to the lawyer's proposed representation of the motorboat owner. The lawyer requests guidance from the Committee as to whether lawyer can ethically represent both parties.

MRPC 1.7, the general rule regarding conflicts of interest, states in pertinent part:

"(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

"(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

"(2) each client consents after consultation.

"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:

"(1) the lawyer reasonably believes the representation will not be adversely affected; and

"(2) the client consents after consultation . . . ."

The comments following MRPC 1.7 define the scope as broad, indicating that a lawyer may not represent an individual whose interests are adverse to an existing client even when the matters are wholly separate and distinct. The rationale for the prohibition revolves around the concern that the vigor of the lawyer's representation of one client may be diminished by the lawyer's representation of the other in an effort to avoid antagonizing the other. Moreover, clients are likely to doubt the loyalty of the lawyer who represents both. Loyalty is characterized as an indispensable element of a lawyer's relationship with a client, ABA i1495.

In previous opinions we have stated that MRPC 1.7 requires a lawyer to first determine whether a disinterested lawyer would reasonably believe the representation of the prospective client will not adversely affect the relationship with the current client, RI-25, RI-37, RI-47. Until and unless this question is answered affirmatively, the lawyer should not seek consent from the clients to the representation. Several factors should be considered in determining whether two clients can be adequately represented, including the nature of the litigation; the type of information to which the lawyer has access; whether the client is in a position to protect the client's interests or to recognize the client's vulnerability; the questions in dispute; and whether a government body is involved. Unified Sewerage Agency v. Jelco Inc, 649 F2d 1339 (CA9 1981).

In this instance, while the interests of the current client may not be adversely affected at this time by the lawyer's representation of the motorboat owner, the potential for adverse effect clearly exists and that potential is sufficient to require the lawyer to decline representation of the motorboat owner.

Clearly, while the owner is not suggesting that the lawyer represent the owner in the ongoing litigation, in which the parties' interests are obviously adverse, even representing the owner in the unrelated matters described could compromise the representation of the plaintiff in the initial lawsuit. The most obvious adverse effect appears when one considers what happens when the lawyer zealously, as the lawyer is required to do, represents the plaintiff in the lawsuit against the owner and succeeds in securing a judgment against the owner. Even if there is insurance coverage, it is possible that the verdict will exceed the available coverage and the lawyer will be placed in the position of making recommendations to the plaintiff as to the advisability of proceeding against the owner individually, and possibly as to the owner's collectability. If the lawyer had undertaken representation of the owner, the lawyer would be in possession of vital and confidential information about the owner and the owner's financial circumstances, and would be in the position of making recommendations to the owner about how to proceed with the unrelated matters, taking into consideration the existence of the outstanding judgment. See RI-46, RI-53. Under those circumstances, the lawyer would be placed in the position of sacrificing the interests of one client in favor of those of the other. Such a conflict is not permitted under MRPC 1.7(a) and (b).

There is also the possibility of the appearance of collusion between the parties. The current client and prospective client are roommates, and although disputes between individuals who enjoy such close associations are not unusual, the need to avoid collusion and/or the appearance of collusion under such circumstances is absolutely critical to the administration of justice, MRPC 8.4(c). While parties to lawsuits cannot avoid their ongoing close associations (or at least cannot do so easily), they can exercise discretion in other actions which might lead to the conclusion that they are conspiring. One of those actions would be the retention of the same lawyer, albeit in unrelated matters. It is the lawyer's responsibility to advise the client which the lawyer presently represents of that necessity.

Having concluded that a disinterested lawyer cannot reasonably conclude that the representations would not be adversely affected, we need not consider whether the clients have knowingly consented. We note, however, that in obtaining the clients' consent under MRPC 1.7 a lawyer must affirmatively disclose all the facts, legal implications, possible effects, and other circumstances relating to the proposed representation, Financial Bankshares v. Metzger, 523 F Supp 744 (DDC 1981).

Therefore, the lawyer may not ethically represent the owner, even in unrelated matters, while the lawyer is representing the current client in a lawsuit against the owner.