When may a lawyer represent both a corporation and its officers or employees in a government investigation?

Plain-English summary

The opinion addresses when a lawyer for a corporation may also represent one or more of the corporation's officers, directors, employees, or other constituents in the context of a governmental investigation, a situation the Committee notes had little prior guidance. It concludes there is no per se bar, but the Code imposes three restrictions before the joint representation is permissible.

First, the lawyer must be able to conclude that a disinterested lawyer would, on the facts at hand, regard the multiple representation as in the interest of both the corporate client and the constituent client, applying the standard of DR 5-105(C). The opinion stresses that the lawyer must have sufficient information to apply this disinterested-lawyer test, and must obtain that information without prejudicing the interests of the existing client, the corporation. Second, the lawyer must obtain each client's informed consent after full disclosure of the advantages and risks of joint representation. Third, the lawyer must remain alert to changes in circumstances over the course of the representation so the disinterested-lawyer test continues to be satisfied at all times.

The opinion also advises that the lawyer should consider structuring the relationships to minimize harm if a conflict later develops. The measures it identifies include prospective waivers permitting the lawyer to continue representing the corporation if the lawyer must withdraw from representing the constituent, contractual limits on the scope of the representation, explicit agreements about the scope of the attorney-client privilege and the use of privileged information, and the use of co-counsel or shadow counsel to assist in representing the constituent. The opinion notes that under the New York Code "differing interests" is defined broadly and does not require actual detriment, so the prophylactic conflict rules can apply even absent a present, concrete conflict.

In practice

Under the New York Code as it stood at the time, the opinion holds that corporate counsel may take on a constituent as a joint client in a government investigation only after satisfying the disinterested-lawyer test of DR 5-105(C), obtaining informed consent from both clients after full disclosure, and committing to ongoing monitoring as the matter develops. The opinion treats prospective waivers, scope limitations, privilege agreements, and co-counsel or shadow counsel as structuring tools the lawyer should consider, not as cures that dispense with the consent and disinterested-lawyer requirements.

This opinion applies the former New York Code (DR/EC numbering). New York replaced the Code with the Rules of Professional Conduct effective April 1, 2009; the concurrent-conflict provisions of DR 5-105 now correspond to Rule 1.7, the entity-client provision of DR 5-109 to Rule 1.13, the former-client provision of DR 5-108 to Rule 1.9, and withdrawal under DR 2-110 to Rule 1.16. Verify the current rule text before relying on any specific requirement.

Common questions

Q: Is it ever proper to represent both a company and its employee in a government investigation?

A: Yes. The opinion concludes there is no per se bar, but the joint representation is permissible only when the Code's disinterested-lawyer test, informed-consent, and ongoing-monitoring requirements are met.

Q: What is the disinterested-lawyer test here?

A: Under DR 5-105(C), the lawyer must be able to conclude that a disinterested lawyer would regard the joint representation, on the facts presented, as in the interest of both the corporation and the constituent.

Q: What consent is required?

A: The opinion concludes both the corporate client and the constituent client must give informed consent after full disclosure of the advantages and risks of the joint representation.

Q: Can a prospective waiver let the lawyer keep representing the company if a conflict arises?

A: The opinion identifies a prospective waiver permitting continued representation of the corporation, along with scope limits, privilege agreements, and co-counsel or shadow counsel, as structuring measures the lawyer should consider to minimize harm if a conflict later develops.

Q: Must the lawyer keep reassessing the joint representation?

A: Yes. The opinion concludes the lawyer must remain alert to changes in circumstances so the disinterested-lawyer test continues to be satisfied throughout the representation, not only at the outset.

Background and rules framework

The opinion interprets the former New York Code's concurrent-conflict rule DR 5-105 (including the DR 5-105(C) exception; the analog of Model Rule 1.7), together with the entity-representation rule DR 5-109 (Model Rule 1.13), the former-client rule DR 5-108 (Model Rule 1.9), the confidentiality rule DR 4-101 (Model Rule 1.6), the third-party-payment rule DR 5-107, the no-contact rule DR 7-104, and the withdrawal rule DR 2-110 (Model Rule 1.16). It applies the Code's broad definition of "differing interests," which the opinion notes does not require actual detriment.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (concurrent conflicts of interest) / NY DR 5-105, DR 5-105(C)
• MR 1.13 (organization as client) / NY DR 5-109
• MR 1.9 (duties to former clients) / NY DR 5-108
• MR 1.6 (confidentiality) / NY DR 4-101
• MR 1.16 (declining or terminating representation) / NY DR 2-110

Cases:

• Tekni-Plex, Inc. v. Meyner & Landis, 89 N.Y.2d 123 (1996), prophylactic conflict standard and the integrity of the bar

Other opinions cited:

• NYSBA Comm. on Prof'l Ethics Op. 674: meaning of "differing interests"

See also

• NYC Bar Ethics Op. 2004-03: Government Lawyer Conflicts: Representing an Agency and Its Constituents
• NYC Bar Ethics Op. 2008-02: Corporate Legal Departments and Conflicts
• NYC Bar Ethics Op. 2003-03: Checking for Conflicts of Interest

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-2004-02-representing-corporations-and-their-constituents-in-the-context-of-governmental-investigations/