After New Jersey abolished the appearance-of-impropriety rule, can a municipal attorney (or the firm) still represent a developer who owns property in that municipality on matters in other towns?

Plain-English summary

Opinion 702 addresses whether the New Jersey Supreme Court's elimination of the appearance-of-impropriety provision abolished the long-standing "developer rule." The inquirer asks whether RPC 1.7 or 1.8 is violated when a municipal attorney represents a developer who owns property in the same municipality, where the firm limits its work for the developer to matters outside, and not adverse to, the municipality.

The Committee traces the developer rule to In re A & B, 44 N.J. 331 (1965), where the Court stated that because land development so often involves municipal action, a member of the bar should not represent a developer operating in a municipality where the lawyer is the municipal attorney, and that such dual representation is forbidden even without advising either side on matters concerning the other. In practice this was read to bar a municipal attorney (and the firm) from representing a developer-client operating in the lawyer's town, both in that town and in other municipalities, regardless of any actual conflict.

The Committee explains that the Court did not articulate the precise basis for A & B, which may have rested on common law or in part on the appearance-of-impropriety doctrine. Because the decision was not expressly grounded in the prior canons and may be common law, the Committee does not view itself as empowered to declare the developer rule extinct. It will, however, analyze how the situation fares under the current Rules: RPC 1.7 proscribes dual representation only where there is an actual conflict (direct adversity or a significant risk of material limitation), and RPC 1.7(b)(1) bars a public entity from consenting to such a conflict.

Applying that framework, the Committee concludes that an analysis under the present RPCs does not support a per se bar along the lines of the A & B developer rule. It cautions that the particular facts control: situations will arise where an actual conflict requires disqualifying the municipal attorney under RPC 1.7 and the whole firm under RPC 1.10 (for example, a planning-board attorney evaluating a master-plan change affecting a client's property in an adjoining town, or competing demands for scarce water and sewer capacity). The Committee notes that affected parties may petition the Supreme Court for review under R. 1:19-8.

In practice

The opinion holds that, under the New Jersey Rules as they stood at the time, there is no per se "developer rule" disqualification of a municipal attorney (or the firm) who represents a developer on matters in other municipalities; the question turns on whether an actual RPC 1.7 conflict exists in the specific facts. Per the opinion, where such a conflict exists it disqualifies the municipal attorney under RPC 1.7 and the firm under RPC 1.10, and a public entity cannot consent to it under RPC 1.7(b)(1). The Committee expressly declines to declare the In re A & B developer rule abolished, because that rule may be common law that only the Supreme Court can change, and it notes the route of petitioning the Court under R. 1:19-8. Because this opinion predates the most recent five years, verify the current Rules of Professional Conduct before relying on the specific rule text it describes.

Common questions

Q: Did abolishing the appearance-of-impropriety rule kill the developer rule?

A: Not automatically. The opinion concludes that current RPC analysis does not support a per se developer-rule bar, but it declines to declare the rule dead because In re A & B may rest on common law that only the Supreme Court can change.

Q: Can a municipal attorney's firm represent a developer who owns land in that town, on projects elsewhere?

A: Per the opinion, there is no per se bar under the current Rules, but an actual RPC 1.7 conflict in the particular facts will disqualify the municipal attorney and, through RPC 1.10, the firm.

Q: What kinds of facts create an actual conflict?

A: The opinion gives examples such as a planning-board attorney reviewing a master-plan change that affects a client's property in an adjoining municipality, or competing local demands for scarce water and sewer capacity.

Q: Is there a way to get a definitive answer on the developer rule?

A: The opinion notes that the inquirer or other affected parties may petition the Supreme Court to review the opinion and question under R. 1:19-8.

Background and rules framework

The opinion interprets RPC 1.7(a)(1) (direct adversity), RPC 1.7(a)(2) (significant risk of material limitation), RPC 1.7(b)(1) (a public entity cannot consent to a conflict), RPC 1.8(k) (lawyer employed by a public entity), and RPC 1.10 (imputation of conflicts to the firm), the New Jersey analogs to Model Rules 1.7, 1.8, and 1.10. It reads them against the common-law "developer rule" announced in In re A & B and the now-abolished appearance-of-impropriety doctrine.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7(a)(1), 1.7(a)(2), 1.7(b)(1) (concurrent conflicts; no public-entity consent)
• MR 1.8 / NJ RPC 1.8(k) (lawyer employed by a public entity)
• MR 1.10 / NJ RPC 1.10 (imputation of conflicts to the firm)

Court Rules:

• R. 1:19-8 (petition to the Supreme Court for review of an ACPE opinion)

Cases:

• In re A & B, 44 N.J. 331 (1965) (the developer rule)

See also

• NJ ACPE Op. 706: County Counsel and Town Council
• NJ ACPE Op. 707: Board of Ed and Town Attorney
• CA Formal Op. 2001-156: City Attorney Conflicts Among Constituents

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2006/acp702-1.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. A trailing page-number artifact has been removed; the linked official source controls.

184 N.J.L.J. 172

April 10, 2006

15 N.J.L. 896

April 24, 2006

Advisory Committee on Professional Ethics

Appointed by the Supreme Court of New Jersey

Opinion 702

Advisory Committee on Professional Ethics

Developer Rule; Conflict of Interest: Concurrent Representation of Municipality and Developer of Projects Elsewhere Not Adverse to the Municipality

The inquirer asks whether the long-standing developer rule has effectively been abolished by virtue of the New Jersey Supreme Court's elimination of the appearance of impropriety provision in the Rules of Professional Conduct. More specifically, the inquirer questions whether RPC 1.7 or 1.8 are violated if a municipal attorney represents a developer owning property in the same municipality, assuming the firm limits its representation of the developer to matters outside and not adverse to the municipality.

What has become known as the developer rule was first enunciated in In re A & B, 44 N.J. 331 (1965). There, municipal attorneys were charged in a county ethics committee proceeding with representing developers whose projects were located in the same municipality. The Court was unable to conclude that the attorneys directly represented developers in their dealings with the municipality, which would have been a direct violation of then Canon 6. Nonetheless, in a per curiam opinion the Court went on to state:

. . . the subject of land development is one in which the likelihood of transactions with a municipality and the room for public misunderstanding are so great that a member of the bar should not represent a developer operating in a municipality in which the member of the bar is the municipal attorney or the holder of any other municipal office of apparent influence. We all know from practical experience that the very nature of the work of the developer involves a probability of some municipal action, such as zoning applications, land subdivisions, building permits, compliance with the building code, etc.

It is accordingly our view that such dual representation is forbidden even though the attorney does not advise either the municipality or the private client with respect to matters concerning them. The fact of such dual representation itself is contrary to the public interest.

In re A & B, supra, 44 N.J. at 334-335.

In practice, this language has been interpreted to bar a municipal attorney with a developer client operating in his or her town from contemporaneously representing that developer not only in that town but also in other municipality, irrespective of whether there is an actual conflict. This prohibition would also apply to the municipal attorney's firm.

The Court's precise basis for this conclusion was not expressly articulated. It may have been premised in common law, but it is also possible that it was based, at least in part, upon the appearance of impropriety doctrine. The present inquirer suggests that with the abrogation of the appearance doctrine, the developer's rule is no longer viable. Because the Court's decision was not expressly grounded in the prior canons, and may have been based in common law, this committee does not view itself as empowered to draw such a conclusion. It can, however, offer its analysis as to how the developer rule situation would fare under the current Rules of Professional Conduct.

RPC 1.7 states in part:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer.

Further, RPC 1.8(k) states:

A lawyer employed by a public entity, either as a lawyer or in some other role, shall not undertake the representation of another client if the representation presents a substantial risk that the lawyer's responsibilities to the public entity would limit the lawyer's ability to provide independent advice or diligent and competent representation to either the public entity or the client.

RPC 1.7 proscribes dual representation where there is an actual conflict of interest - where the representation of one client is directly adverse to another client, or where there is a significant risk that the representation of one client will be materially limited by the lawyer's responsibilities to another client. Furthermore, RPC 1.7(b)(1) precludes consent by a public entity where such a conflict exists.

Arguably, this constitutes a more just result from the client's standpoint, as the client is not deprived of what may be a firm's longstanding representation simply because one of its attorneys begins representing a municipality where the developer operates or owns property. Such a result also probably reflects the reality that any perceived advantage to the client resulting from his attorney's municipal solicitorship in a given municipality has little if any practical influence over decision makers in other municipalities. At bottom, the concerns expressed by the Court in A & B grow out of a realization of the more intimate relationship which can exist among attorneys and elected or appointed officials within a single municipality. By contrast, an analysis under RPC 1.7 does not support a per se bar where a firm represents a municipality as well as a private client developing property in another town.

In each case, the particular facts will determine the outcome. Situations will arise in which an actual conflict exists requiring disqualification, not only of the municipal attorney under RPC 1.7, but of all attorneys in the firm under RPC 1.10. For example, a municipal solicitor or a planning board attorney involved in a master plan review mandated by the Municipal Land Use Law may well be called upon to evaluate changes in the master plan which might have a beneficial or detrimental impact upon a client owning property in an adjoining municipality. Under those circumstances, the attorney cannot escape the conclusion that his actions may have an impact not only upon land owned by his client in the adjoining municipality, but also in the municipality where the attorney serves as municipal or planning board solicitor. Similar disqualifying circumstances can arise in the face of competing local demands for scarce water and sewer capacity resources, where decisions made by the municipality with the advice of counsel will have an impact upon the solicitor's clients who are also clients of the firm.

In summary, an analysis pursuant to the present Rules of Professional Conduct, subsequent to the deletion of the appearance of impropriety doctrine, does not support a per se bar along the lines of the A & B developer rule. Nonetheless, because In re A & B can be interpreted as announcing a common law rule, this committee does not view itself as possessing the authority to declare a decision of the Supreme Court to be without further applicability. The inquirer or other affected parties may petition the Court for review of this opinion and question pursuant to R. 1:19-8. If the developer rule were found to no longer have vitality as a matter of common law, current ethics rules dictate that while an actual RPC 1.7 conflict will continue to disqualify both the municipal attorney and his firm from representing a private developer in other municipalities, RPC 1.7 will not automatically preclude the municipal attorney and his firm from such representation under a per se developer rule.