When a firm must withdraw from representing multiple parties because their interests have become adverse, may it still seek fees for the work it did before the conflict arose?

Plain-English summary

A law firm had represented a decedent during his life in workers' compensation and matrimonial matters, and after his death represented his mother and sister as executors while also prosecuting workers' compensation and wrongful-death claims on behalf of the decedent's wife and children as statutory dependents, along with claims for funeral, hospital, and medical expenses. All parties had authorized the firm to bring the actions, but it became evident that actual controversies existed between the wife and children on one side and the mother and sister on the other over entitlement to any recovery, with each group relying on the firm to protect its interests against the other.

The Committee concluded there was a clear conflict under DR 5-105(B), which required the firm to withdraw forthwith from representing all parties. Because the firm itself recognized it could not adequately represent both groups, it could not obtain informed consent under DR 5-105(C), so further discussion of consent was unnecessary.

On the fee question, the Committee found no impropriety in the firm seeking compensation for the reasonable value of services rendered up to that point. The firm could apply to the Division of Workmen's Compensation to share equitably in fees awarded for pre-withdrawal services and could bill for the reasonable value of its pre-withdrawal services in the wrongful-death action, because the firm had been acting for both groups in good faith and in the interest of all, and the stage at which the conflict became critical, deciding which group shares in any award and on what basis, had not yet been reached.

Currency note

This opinion was issued in 1975, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, and predates the 1984 replacement of the Disciplinary Rules by the RPCs. The multiple-client conflict and consent provisions then in DR 5-105(B) and (C) are now in RPC 1.7, withdrawal in RPC 1.16, and fees in RPC 1.5. 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 Treat this page as historical context, not current guidance.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: Did the firm have to withdraw from all the parties?

A: Yes. The Committee held there was a clear conflict under DR 5-105(B) requiring the firm to withdraw forthwith from representing all parties.

Q: Could the conflict be cured by client consent?

A: No. Because the firm recognized it could not adequately represent both groups, it could not obtain informed consent under DR 5-105(C), so the consent route was unavailable.

Q: Can the firm still get paid for the work it did before withdrawing?

A: Yes. The Committee found no impropriety in seeking the reasonable value of services rendered before withdrawal, including applying to share equitably in any workers' compensation fee award.

Q: Why was a fee for pre-withdrawal work allowed despite the conflict?

A: Because the firm had acted in good faith for all parties, and the point at which the conflict became critical, dividing any recovery among the groups, had not yet been reached when the services were performed.

Background and rules framework

The opinion applied DR 5-105(B) (declining or withdrawing where representing differing interests will adversely affect a client's independent judgment) and DR 5-105(C) (consent only where the lawyer can adequately represent each client). In current New Jersey terms, concurrent conflicts are governed by RPC 1.7, withdrawal by RPC 1.16, and the reasonableness of fees by RPC 1.5.

Citations and references

Rules of Professional Conduct:

• DR 5-105(B) and DR 5-105(C) (conflicting multiple representation; client consent), as in effect 1975; now MR 1.7 / NJ RPC 1.7
• Withdrawal now under MR 1.16 / NJ RPC 1.16; fees under MR 1.5 / NJ RPC 1.5

See also

• NJ ACPE Op. 313: A Lawyer Switching Sides in the Same Case
• NJ ACPE Op. 556: Representing Both the Maker and the Individual Guarantors of a Note
• NJ ACPE Op. 421: An Attorney Likely to Be a Witness; Timing of Withdrawal

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp304-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

98 N.J.L.J. 449, May 22, 1975

OPINION 304

Conflict of Interest Multiple Parties Fees Upon Withdrawal

A law firm represented a decedent during his lifetime in a variety of matters including most pertinently a workmen's compensation proceeding arising out of an accident occurring on April 15, 1969 and various matrimonial matters against decedent's wife including proceedings relating to the children's custody. Decedent's wife and children had prior to his death been living separately from him since May or June 1969, but no divorce had been sought. Decedent did, however, with the firm's help execute a will disinheriting his wife and children in favor of his mother and sister.

Decedent died in January 1972 as a result of an epileptic seizure which the firm contends was causally related to the original accident of April 15, 1969 as well as to the alleged negligence of the hospital at which he died and of his physician or physicians. Since the death of the decedent the law firm has done the following (a) It has represented and still represents the mother and sister as executors of decedent's will. (b) It has continued, with the consent of the mother and sister and authority of the wife and children, to prosecute the prior workmen's compensation proceedings on behalf of the wife and children as statutory dependents. (c) It instituted a new workmen's compensation proceeding relating to the death, again on behalf of the wife and children as statutory dependents but including a claim for funeral expenses on behalf of the mother, and hospital and medical services on behalf of the estate. (d) At the independent request of both the wife and children on the one hand and the mother and sister on the other, it investigated the facts to ascertain whether or not a wrongful death action would lie. Shortly before the running of the statute of limitations, it received expert advice that there was a basis to claim negligence and thereupon instituted suit for wrongful death in the name of the estate on behalf of all as their interests might appear.

In both the workmen's compensation and wrongful death actions, it has become evident to the firm that actual controversies exist between the wife and children on the one hand and the mother and sister on the other relating to entitlement to the proceeds of any recovery. It has also become clear that - although all parties authorized the firm to prosecute the particular action - each group is relying upon the firm to protect its interests against the other group's interests in respect to such proceeds. The firm has even advised the mother and sister to retain separate counsel on account of this controversy in the workmen's compensation proceedings and has also advised both groups in the wrongful death action to retain separate counsel.

From all the facts set forth in the inquiry and memorandum, it is concluded that all actions were continued and initiated in all good faith by the firm.

Three of the questions propounded by the inquirer concern the aspects of improper conflict of interest. Clearly there is a conflict under Disciplinary Rules of the Code of Professional Responsibility, DR 5-105(B) which requires the firm forthwith to withdraw from representation of all parties in any matter. The firm recognizes in its inquiry and memorandum its inability adequately to represent the interests of both groups. It, therefore, cannot obtain informed consent under Disciplinary Rules of the Code of Professional Responsibility, DR 5-105(C). Further discussion of that question would, therefore, appear superfluous.

The remaining questions relate to whether the firm may seek legal fees for services rendered prior to withdrawal. We believe that the firm may make application to the Division of Workmen's Compensation to share on an equitable basis in any fees awarded for services rendered prior to withdrawal and may submit its bill for the reasonable value of its services rendered prior to withdrawal in the wrongful death action. It would appear from the facts presented that the firm has been acting for both groups with the knowledge and in the interests of all in prosecuting the matters to the present point. The stage of the proceedings, wherein the conflict becomes important, i.e., a determination as to which group is to share in any award or recovery and on what basis, has not yet been reached.

It is our opinion that there is no impropriety in seeking compensation for the reasonable value of services rendered to this point.