Could a lawyer who formerly represented an LLC represent members in dissolving it and defending related claims?

Plain-English summary

A lawyer had helped form and represented an LLC. Two members wanted to dissolve it, leave out a third member, and form a new venture; the third might oppose dissolution and assert claims.

The opinion found that prior representation of the LLC created a Rule 4-1.9 conflict. The lawyer could not represent A in dissolution or defend A or B against claims tied to it. The lawyer could still represent the LLC as an entity, and could represent A and B in a new business if that work did not involve advising or representing them on dissolution.

Currency note

This opinion was issued in 2000, before Missouri’s 2007 revisions to the Rules of Professional Conduct. Later amendments or opinions may have changed the analysis. Treat this page as historical context and verify current rules before relying on it. The official Rule 4-1.9 and 4-1.10 reference notes identify July 1, 2007 amendments.

Common questions

Q: Could the lawyer defend members against dissolution claims?

A: No. The opinion barred defense of A or B against claims related to dissolution.

Q: Could the lawyer work on the new venture?

A: Only if that representation did not involve advising or representing A and B on dissolving the LLC.

Background and rules framework

The answer expressly identified a former-client conflict under Rule 4-1.9.

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-1.9

See also

• Missouri Informal Op. 20010035: Joined Firm Conflict

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/20000061/

• Rule revision reference: Missouri Informal Opinion 20030007

Original opinion text

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

QUESTION: Attorney assisted in forming a LLC, at the request of A. In addition to A, the members of the LLC are B & C. Attorney drafted the Articles of Incorporation and filed them with the Secretary of State and also drafted the Operating Agreement, which sets forth the specifics of the business relationship between A, B & C. Attorney represented the LLC in negotiating an agreement with another company wherein the LLC agreed to act as a representative in Missouri and other surrounding states. Attorney has also represented the LLC in other miscellaneous matters. A & B have decided that they wish to dissolve the LLC and restructure their arrangement with the other company. A & B do not intend to include C in any new business ventures. The Operating Agreement provides that a majority of the members can dissolve the LLC. Attorney would like to be able to represent A in dissolving the LLC and establishing a new business venture with B. It is anticipated that C opposes dissolution and may assert claims against A & B and may assert claims in the nature of the oppression of a minority interest holder. Does Attorney have a conflict of interest in representing A since Attorney previously represented the LLC? Can Attorney continue to prepare legal documentation related to the LLC? Can Attorney defend A and possibly B against claims C might make against them in connection with dissolution of the LLC and the start up of a new business?

ANSWER: Attorney´s past representation of the LLC creates a conflict of interest under Rule 4–1.9. That conflict prohibits Attorney from representing A in dissolving the LLC and from defending A or B against claims C might make related to the dissolution. Attorney may continue to represent the LLC, as an entity. If it is possible to represent A and B in starting the new business without being involved in advising or representing them regarding the dissolution of the LLC, Attorney may represent them in starting the new business.