Can one firm represent parents on their own injury claims and also the injured child whose claim shares the same settlement fund?

Plain-English summary

An infant, Y, was profoundly brain-damaged at birth and will require lifelong care. His parents qualified as his guardians ad litem and hired law firm A both to pursue their own claim for negligent infliction of emotional distress against the obstetrician and, as guardians ad litem, to pursue Y's medical-malpractice claim. The obstetrician's insurer wished to settle, and the inquiry asked how firm A should handle four different settlement scenarios.

The opinion concluded that, on the facts presented, the firm's clients held conflicting interests that could not be reconciled, citing Rules 5.1(a), 5.1(b), and 5.7. In each scenario, every dollar made available to one client would diminish the funds available to satisfy the other client's claim. The opinion reasoned that the parents had a conflict between their personal claims and the claims of the child for whom they were fiduciaries, that an attorney may not ethically assist clients in placing themselves where their personal claims conflict with their fiduciary responsibilities, and that the attorney could neither ethically represent both claimants nor divide up a joint offer. It concluded that firm A had to withdraw from representing both clients, because it could not continue representing either unless the other client intelligently consented, which was impossible on these facts. The opinion gave the same answer to each of the four settlement scenarios.

Currency note

This opinion was issued in 1992, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. The conflict-of-interest provisions it applies (Rules 5.1 and 5.7) have since been renumbered and revised, and the opinion notes that RPC 251 provides additional guidance. 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 Treat this page as historical context, not current guidance.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: Can one firm represent both the parents and the injured child here?

A: No. The opinion concluded that the parents' personal claims and the child's claim were in irreconcilable conflict because they competed for the same settlement fund, so the firm could not represent both.

Q: Could the firm just present the claims separately or let a court divide the fund?

A: No. The opinion gave the same answer across all four scenarios, including separate presentation and a court-ordered distribution; none cured the conflict.

Q: What was the firm required to do?

A: The opinion concluded that the firm had to withdraw from representing both clients, because continued representation of either required the other's intelligent consent, which was impossible on these facts.

Background and rules framework

The opinion applied North Carolina Rules 5.1(a) and 5.1(b) (conflicts of interest, corresponding to Model Rule 1.7) and Rule 5.7, framing the parents' role as guardians ad litem as a fiduciary duty that conflicted with their personal claims on the same fund. Because the conflict could not be cured by consent, the opinion treated withdrawal from both representations (the withdrawal principle of Model Rule 1.16) as required.

Citations and references

Rules of Professional Conduct:

• North Carolina Rule 5.1(a), (b) (conflicts of interest)
• North Carolina Rule 5.7 (conflicting interests of multiple clients)
• MR 1.7 (conflict of interest, current clients); MR 1.16 (declining or terminating representation)

Other opinions cited:

• North Carolina RPC 251 (representation of multiple claimants; additional guidance)

See also

• NC Ethics Op. RPC 123: representation of parents and child
• NC Ethics Op. RPC 251: representation of multiple claimants

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-109/

Original opinion text

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

Editor's Note: This opinion was originally published as RPC 109 (Revised). See RPC 251 for additional guidance.

Inquiry #1:

Y, the infant son of Mr. and Ms. X, received serious injuries during the course of his birth. Y was profoundly brain damaged as a result of those injuries and will always require around-the-clock institutional care. Mr. and Ms. X have qualified and have been duly appointed as guardians ad litem for Y. They have employed law firm A to represent them in regard to their claim against the obstetrician for negligent infliction of emotional distress. As guardians ad litem, they have also employed law firm A to represent Y's interest in prosecuting a claim for damages relating to alleged medical malpractice. It is apparent that the obstetrician's insurance company would like to settle the case.

Assuming the above facts, what are the ethical considerations for attorneys in law firm A under the following four different settlement scenarios?

Insurance company agrees to settle for a lump sum and tells law firm A to disburse the funds between the parents and the child as the attorneys see fit.

Opinion #1:

Under the facts presented in the inquiry, the attorneys in law firm A represent conflicting interests which cannot be reconciled. Rules 5.1(a), 5.1(b) and 5.7. It is clear that in this scenario, every dollar made available to one of the firm's clients will diminish the amount of the settlement offer funds available to satisfy the claim of the other client.

The parents have a conflict of interest between their personal claims and the claims of the child for whom they are fiduciaries. An attorney may not ethically assist clients in putting themselves in a position where there is a conflict of interest between their personal claims and their fiduciary responsibilities. When, as here presented, the claims are in a conflict situation, the attorney may not ethically represent both claimants and may not divide up a joint offer.

Under the circumstances, law firm A must withdraw from representing both clients. The attorneys may not continue representing either of their clients unless their continuing participation is intelligently consented to by the other client, and this is impossible under the facts stated.

Inquiry #2:

Parents insist that law firm A present child's claim and parents' claim separately, but equal in value, to the insurance company. The attorneys know that parents' claim is traditionally not worth as much as the child's claim, but that the insurance company will be willing to negotiate a settlement as long as the aggregate of both claims does not exceed the insurance company's previous lump sum offer.

Opinion #2:

See the opinion in response to inquiry one.

Inquiry #3:

Insurance company offers one million dollars on the child's claim and one hundred thousand dollars for the parents' claim and will only settle if both claims are discharged. The parents decline on the grounds that the offer to them is inadequate. The attorneys feel that the offer on the child's claim is a superior offer and that the parents' conflict of interest is preventing them from acting in the best interests of the child.

Opinion #3:

See the opinion in response to inquiry one.

Inquiry #4:

Insurance company insists that any offers of settlement shall be a lump sum for both claims. Parents cannot agree how the money should be divided. The attorneys petition the court to hear evidence of the separate claims of parents and child and make a distribution of the funds.

Opinion #4:

See the opinion in response to inquiry one.