Can a city law department attorney represent both the city and its city-subsidized municipal medical center in the same premium dispute with an insurer?

Plain-English summary

An attorney employed by a city law department asked whether he could represent a municipal hospital, managed by a board of managers appointed by the mayor under N.J.S.A. 30:9-14, in a dispute with an insurance carrier over premiums. The city had purchased the professional-liability insurance covering the independent medical center and its staff; the named insureds were the medical center and its physicians and nurses, not the city or its employees. After a premium dispute, the insurer sued the city, the medical center, and the city's insurance broker, and crossclaims were filed between the city and the medical center on one side and the broker on the other. It was suggested that independent counsel for the medical center might file a crossclaim against the city.

The Committee acknowledged its general rule that an attorney should not represent two boards or agencies where there is or may be a conflict of interest. But it analogized to Opinion 300, where a planning board attorney could also serve the board of health absent inherent conflict, and to Opinion 333, where one insurer's attorney could represent two defendants when there was only one real party in interest. The key fact was that the city subsidized the medical center and made up any deficit in its annual operating expenses.

On that footing, the Committee reasoned that the interests of the city and the medical center were in fact identical, the only live issue being the amount of premium owed, and that the desire to avoid paying two sets of legal fees from one potential fund justified the dual representation. It noted that DR 5-105 does not forbid all employment involving conflicts and permits it under DR 5-105(C) where the attorney believes he can adequately represent each party and each consents after full disclosure. While ordinarily an attorney may not represent conflicting interests in matters involving the public interest even with consent, the Committee concluded that here the public interest did not prohibit, but favored, the dual representation.

Currency note

This opinion was issued in 1978, 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. It applied DR 5-105 and its consent exception DR 5-105(C); in current New Jersey terms concurrent-conflict questions correspond to RPC 1.7. 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 government lawyer represent two public bodies in the same suit?

A: Under this opinion, yes where their interests are in fact identical. The Committee allowed a city lawyer to represent both the city and its subsidized medical center because the city covered the center's deficits, leaving only the premium amount at issue.

Q: What rule allowed the dual representation?

A: DR 5-105(C), which permitted representation of multiple parties where the attorney believes he can adequately represent each and each consents after full disclosure. The Committee found the interests identical and the consent exception available.

Q: Doesn't the public-interest limit usually bar consent in government matters?

A: Ordinarily yes; the Committee acknowledged that where the public interest is involved an attorney generally may not represent conflicting interests even with consent. It found that limit inapplicable here because the public interest favored the single, cost-saving representation.

Background and rules framework

The opinion applied DR 5-105 (declining or withdrawing from employment that may involve adverse interests) and its exception DR 5-105(C) (consent after full disclosure where the attorney can adequately represent each client). It read those rules alongside the Committee's line of public-body dual-representation opinions (Opinions 199, 164, 300, 333, 357, 353). In current New Jersey terms, concurrent-conflict questions are governed by RPC 1.7.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7 (conflict of interest; concurrent conflicts); DR 5-105 and DR 5-105(C) (as in effect 1978)

Statutes:

• N.J.S.A. 30:9-14 (municipal hospital board of managers)

Other opinions cited:

• NJ ACPE Opinion 199, 94 N.J.L.J. 225 (1971); Opinion 164, 92 N.J.L.J. 831 (1969); Opinion 300, 98 N.J.L.J. 126 (1975); Opinion 333, 99 N.J.L.J. 496 (1976); Opinion 357, 99 N.J.L.J. 1074 (1976); Opinion 353, 99 N.J.L.J. 862 (1976)

See also

• NJ ACPE Op. 412: Municipal Counsel or Special Counsel Defending a Township Against a Former Mayor
• NJ ACPE Op. 561: One Attorney for a Township and Its Zoning Board
• NJ ACPE Op. 415: Office Association of Municipal and County Counsel

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp386-1.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.

101 N.J.L.J. 54, January 19, 1978

OPINION 386

Conflict of Interest
Representing City and Its Medical Center

An attorney employed by a city law department inquires whether he may represent a municipal hospital managed by a board of managers appointed by the mayor of the city pursuant to N.J.S.A. 30:9-14 in a dispute with an insurance carrier over premiums. He indicates that the city has been purchasing the professional liability insurance covering the independent medical center and its professional staff. Although the policy is purchased through the city's department of finance, the named insureds under the policy are the medical center and its staff physicians and nurses, and neither the city nor its employees are named insureds. The policies are purchased by the city through an insurance broker which places the insurance with an insurer willing to undertake the risk. A dispute has arisen with the insurer over the amount of the premium and the insurer has filed a suit against the city, the medical center and the city's insurance broker.

Crossclaims have been filed between the city and the medical center on the one hand, and the insurance broker on the other. It is suggested that if the medical center were represented by independent counsel, it is possible that a crossclaim would be filed by the medical center against the city.

We have ordinarily held that an attorney should not undertake to represent two boards or agencies if there is or may be a conflict of interest in a particular situation. Opinion 199, 94 N.J.L.J. 225 (1971), Opinion 164, 92 N.J.L.J. 831 (1969). However, in Opinion 300, 98 N.J.L.J. 126 (1975), we held that an attorney for the planning board could serve as attorney to the board of health in the same municipality since the board of health matters did not appear to be inherently in conflict with the planning board matters and the attorney could function in both capacities except where a particular situation presents a conflict of interest.

In the subject inquiry, we find the circumstances analogous to the dual representation deemed permissible in Opinion 333, 99 N.J.L.J. 496 (1976), where the attorney for one insurance company was permitted to represent two defendants if, in fact, there was only one real party in interest. In his statement of facts, the inquirer advises that although the medical center is an independent agency, the city subsidizes the agency and makes up any deficit in its annual operating expenses. Accordingly, we think it is permissible that the attorney continue the dual representation. DR 5-105 does not forbid all employment involving conflicts and, in fact, permits it when it comes within the purview of DR 5-105(C). That applies where the attorney believes he can adequately represent the interest of each party and "each consents to the representation after full disclosure of the facts and of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each." Opinion 357, 99 N.J.L.J. 1074 (1976) (suit by one attorney representing plaintiff for his personal injuries and his insurance carrier in subrogation for his medical expenses). In that case we said that dual representation with informed consent was permissible because it was based upon "a desire to avoid payment of two sets of legal fees from one potential fund under circumstances, where on the merits of the issues in suit, the interests of both parties are identical."

If we accept the statement that the city will make up any deficit in the budget of the medical center, then the interests of both parties are in fact identical and the only issue is the amount of premium to be paid to the insurer, and the desire to avoid payment of two sets of legal fees from one potential fund should justify the dual representation proposed. Ordinarily, where the public interest is involved, an attorney may not represent conflicting interests even with the consent of all concerned, Opinion 353, 99 N.J.L.J. 862 (1976). Here we do not believe the public interest prohibits the dual representation; on the contrary, it militates in its favor.