May an attorney serve as counsel to a municipal sewerage authority while his law partner represents a non-profit housing corporation that is suing that authority, and may the attorney stay in the civic club that sponsors the housing corporation?

Plain-English summary

Attorneys A and B had been associated since 1981. Before the association, B represented, as his own individual client, a non-profit senior-citizens housing corporation sponsored by a local Rotary Club, and the partners agreed B would keep that client and its fees separately from the partnership. A, but not B, was a member of the Rotary Club, whose internal rule barred any member from profiting from the housing project. One of B's matters for the housing corporation was litigation against the local sewerage authority over connection fees. A was later appointed attorney to the sewerage authority, having disclosed his partner's representation of the housing corporation before the appointment. After the inquiry, B resigned from the pending litigation against the sewerage authority while A continued as the authority's general counsel.

The Committee framed the governing principle, drawn from Opinion 415, 103 N.J.L.J. 38 (1979), that counsel who represent public agencies must conduct themselves so as to avoid the appearance of impropriety, and noted (citing Opinions 189 and 516) the recurring volume of inquiries arising from one firm's representation of a public agency. On the first question, whether B could continue to represent the housing corporation while A represented the sewerage authority, the Committee concluded that even though B's resignation from the pending litigation might remove the inherent potential for conflict, the appearance of impropriety still existed: both lawyers knew of the housing-corporation representation when they formed their relationship and when one took the public position, and they had to decide to which client they wished to owe allegiance. The Committee expressly declined to decide the situation that would exist once the litigation concluded, leaving that to the facts then existing.

On the second question, the Committee concluded that A could not continue his Rotary Club membership. Although B retained all fees from the housing corporation and the Club's internal rule barred member profit, the appearance of impropriety was such that A could not remain a member, because lay members of the Club might not understand why one associate could be a member while the other could not. The Committee added that it took no position on the hypothetical situation that would exist if no such internal Club rule existed.

Currency note

This opinion was issued in 1984, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct. The 2004 revisions (the Pollock Commission) abolished the freestanding "appearance of impropriety" standard on which this opinion turns. 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: Could a lawyer keep representing a client suing a public agency after his partner became the agency's counsel?

A: No. The opinion concluded that even after the lawyer resigned from the pending litigation, the appearance of impropriety remained, and the two partners had to choose which client to keep.

Q: Did it matter that the partners had walled off the client and its fees from the partnership?

A: No. The opinion held the appearance of impropriety governed despite the fee arrangement, because both lawyers knew of the representation when they associated and when one took the public position.

Q: Could the public-agency attorney stay in the civic club that sponsored the opposing party?

A: No. The opinion concluded the appearance of impropriety required the sewerage authority's attorney to give up his Rotary Club membership, since lay members might not understand why one partner could belong and the other could not.

Background and rules framework

The opinion was decided under the appearance-of-impropriety standard that then governed public-agency counsel, drawing on Opinion 415 and the Committee's long line of municipal-conflict opinions (Opinions 189, 300, 516). In current terms the questions map onto RPC 1.7 (concurrent conflicts of interest) and RPC 1.10 (imputation of conflicts within a firm), but the freestanding appearance-of-impropriety doctrine that drove the result was abolished in New Jersey's 2004 RPC revisions.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7 (concurrent conflicts of interest)
• MR 1.10 / NJ RPC 1.10 (imputation of conflicts within a firm)

Other opinions cited:

• NJ ACPE Opinion 415 (appearance of impropriety governs counsel for public agencies)
• NJ ACPE Opinions 189 and 516 (recurring volume of public-agency representation inquiries)

See also

• NJ ACPE Op. 545: Attorney Representing Different School Districts
• NJ ACPE Op. 552: Municipal Counsel Representing the Municipality and Its Officials
• NJ ACPE Op. 560: County Counsel Representing a Municipal Housing Authority
• NJ ACPE Op. 571: Bond Counsel Representing Private Clients Before the Same Municipality

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp547-1.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.

114 N.J.L.J. 609, December 13, 1984

OPINION 547

Conflict of Interest - Attorney to Municipal Sewer Authority Whose Partner Represents Non-Profit Housing Corporation Which is a Litigant in a Suit with the Sewerage Authority; further, Whether Counsel or his Partner may be a Member of a Rotary Club which is the Sponsor of the Non-Profit Housing Corporation

As early as 1970, (Opinion 189, 93 N.J.L.J. 789 (1970)) and as late as 1983 (Opinion 516, 111 N.J.L.J. 481 (1983)), this Committee referred to the great number of inquiries that it receives which arise out of representation by one or more members of a law firm of a municipal or other public agency. We noted in both opinions that, if the inquirer in many or most of those cases considered the standard relating to the avoidance of an appearance of wrongdoing, most of these inquiries could be resolved without the necessary intervention of this Committee. In spite of those suggestions, inquiries still arrive in large proportion to the number of inquiries received by the Committee. This inquiry involves within it the same issues.

The facts as originally set forth here are that A and B are attorneys in New Jersey who have been associated since February 1981. Prior to their association, B was a sole practitioner who represented a Rotary senior citizens housing corporation sponsored by a local Rotary Club. The housing corporation is a non-profit corporation established in accordance with the statutes of the State of New Jersey. It is a distinct legal entity which exists separate and apart from the sponsoring Rotary Club, although the directors of the housing corporation are elected by members in good standing of the sponsor. A became a member of the Rotary Club sometime in 1980, and through that membership, met and became friends with B. It is asserted in this inquiry that B and A agreed that B would continue to represent the housing corporation as his own individual client, separate and apart from the partnership, and that all fees received were to be solely his. An internal rule of the local Rotary Club is that no member of the Rotary Club may receive any fees, commissions, contracts or any other profit from the housing project which it sponsors. B, therefore, was never a member of the Rotary Club. A is a member of the Rotary Club, and, therefore, does not represent the housing corporation nor may he benefit from the fees paid by the housing corporation.

One of the matters in which B is involved as attorney for the housing corporation is a dispute with the local sewerage authority over the proper amount of connection fees to be charged by the authority to the corporation. That matter is in litigation between the parties. A has been appointed attorney to the sewerage authority, but it is told to us that, prior to his appointment, he advised the sewer authority of the fact that his partner or associate represented the housing corporation.

The initial inquiry asked whether, under the circumstances, B should disqualify himself from further representation of the non-profit housing corporation. Subsequent to the initial inquiry, a supplement was filed with the Committee in which A and B set out that, since the initial inquiry, B resigned as attorney for the housing corporation with respect to its pending litigation against the sewerage authority. Apparently, it is intended that A continue as counsel generally for the sewerage authority in matters other than the litigation between the sewerage authority and the housing corporation.

The first question addressed to this Committee is whether B may continue to represent the housing corporation if A continues to represent the sewerage authority. B has obviously attempted to insulate himself from the litigation between his client and his partner or associate's client.

In Opinion 415, 103 N.J.L.J. 38 (1979), it was said by this Committee that the governing principle applied to inquiries in the area of conflicts relating to counsel who represent public agencies is that such counsel must conduct themselves and their practices so as to avoid the appearance of impropriety. It was also said by this Committee in the same opinion that, while in that inquiry it was not clear that the function of the conflicting positions necessarily involved an inherent potential for conflict, the question had to be resolved by applying the rule that the appearance of impropriety must be avoided. That is the same principle by which this Committee must be guided with relation to the issue here addressed. Both attorneys here were aware of the fact of the representation of the housing corporation by one of them at the time of the formation of their relationship. They were equally aware of that relationship at the time that one of them accepted a position with the sewerage authority. They must now determine to which client they desire to owe their allegiance. While it may be that there is not necessarily an inherent potential for conflict because of the resignation by B as to the pending litigation, the appearance of impropriety exists. This Committee does not decide what the situation would be once the litigation is concluded. The facts existing at the time will determine its resolution.

The second issue presented is whether A may continue his membership in the Rotary Club which is the sponsor of the housing corporation. These parties may profit from the internal rule imposed by the Rotary Club itself which prohibits any member from acting for profit with relation to the housing corporation. While it is understood by this Committee that B retains all fees and profits from his representation of the company, it is clear that the appearance of impropriety is such that A may not continue to be a member of the Rotary Club. Lay members of that Club may not understand that one associate may not be a member of the Club because he represents the housing corporation, but another member of that affiliation may be a member. If such an internal rule in the Club did not exist, perhaps another determination would be made by this Committee. However, this Committee takes no position on a hypothetical situation not addressed to it.