When a conflict is thrust upon a firm mid-representation (for example by a client's acquisition) and one client won't consent, must the firm drop both clients?

Plain-English summary

The opinion addresses "thrust upon" conflicts: conflicts between two existing clients that did not exist when either representation began, were not reasonably foreseeable, arose through no fault of the lawyer, and are of a type that could be waived under DR 5-105(C), except that one client refuses to consent. A typical trigger is a corporate acquisition that suddenly puts two unrelated clients on opposite sides. The committee, applying the former New York Code, asks whether the lawyer must always withdraw from both, or may continue representing one.

Under DR 5-105(B), a lawyer may not continue a concurrent representation that adversely affects independent judgment or involves differing interests unless the conflict is consented to under DR 5-105(C). The Code does not expressly say which representation to drop when consent is refused. The committee concludes that in a true thrust-upon situation the lawyer is not automatically required to withdraw from both. The lawyer may continue with one client, guided by a balancing test whose overarching factor is which client would suffer the most prejudice from withdrawal, also weighing the origin of the conflict (including any opportunistic maneuvering by a client), and the effect of withdrawal on the vigor of the remaining representation.

The committee sets boundaries. The conflict must truly be unforeseeable and not the product of an inadequate conflicts check or other negligence; the clients must be genuinely concurrent (a fact-specific inquiry into whether a dormant client is still current); and continued representation of the retained client must still satisfy DR 5-108's former-client rules, so no lawyer may continue an adverse representation, without court approval, where material confidences or secrets of either client would be placed at risk. The balancing must be done in good faith; a withdrawal decision that looks merely fee-driven may be viewed skeptically, though a good-faith decision should not draw discipline even if later judged wrong. The committee also notes prophylactic measures, including carefully drafted advance waivers and engagement letters that clarify the scope of the representation and which entities are clients.

In practice

The opinion was issued in 2005 under the former New York Code, which the New York Rules of Professional Conduct replaced effective April 1, 2009; the concurrent-conflict, former-client, and withdrawal provisions map onto current Rules 1.7, 1.9, and 1.16. Under the framework as it stood at the time, the opinion holds that a firm facing a genuinely thrust-upon conflict should first confirm the conflict was unforeseeable and not its own fault, confirm both clients are still current, and verify no material confidences are at risk; if so, it may keep one client by balancing prejudice and the other factors the opinion lists, performed in good faith. It treats advance waivers and scope-limiting engagement letters as ways to reduce exposure to such conflicts.

Common questions

Q: If a client's acquisition suddenly conflicts two of a firm's clients, must the firm drop both?

A: No. The opinion concludes that for a genuinely thrust-upon conflict, the firm is not invariably required to withdraw from both and may continue representing one.

Q: How does the firm choose which client to keep?

A: By a good-faith balancing test whose overarching factor is which client would suffer the most prejudice from withdrawal, also considering the conflict's origin and the effect on the remaining representation.

Q: Does the "thrust upon" allowance apply if the conflict came from a sloppy conflicts check?

A: No. The opinion limits the rule to conflicts that were unforeseeable and arose through no fault of the lawyer; a conflict traceable to an inadequate conflicts check is excluded.

Q: Can the firm keep the client even if it learned the dropped client's confidences?

A: No. The opinion holds the retained representation must satisfy DR 5-108, so a lawyer may not continue, without court approval, where material confidences or secrets of either client would be at risk.

Background and rules framework

The opinion interprets the former New York Code's conflict and withdrawal provisions, DR 5-105 (declining and discontinuing conflicted representation and the DR 5-105(C) consent exception), DR 5-108 (former-client conflicts), and DR 2-110(B)(2) (mandatory withdrawal). These correspond to Model Rules 1.7 (concurrent conflicts), 1.9 (former clients), and 1.16 (declining or terminating representation). The committee draws the balancing approach and the good-faith standard from the Restatement and earlier ABCNY and ABA guidance on conflicts and advance waivers.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NY DR 5-105 (concurrent conflicts; declining and discontinuing representation)
• MR 1.9 / NY DR 5-108 (duties to former clients)
• MR 1.16 / NY DR 2-110(B)(2) (mandatory withdrawal)

Cases:

• International Business Machines Corp. v. Levin, 579 F.2d 271 (3d Cir. 1978), pattern of retainers makes a dormant client current
• Oxford Systems, Inc. v. CellPro, Inc., 45 F. Supp. 2d 1055 (W.D. Wash. 1999), intermittent client still current for conflicts

Other opinions cited:

• N.Y. City Eth. Op. 2003-03 (conflicts-checking systems); N.Y. City Eth. Op. 2004-02 (advance waivers)
• N.Y. County Eth. Op. 724 (1998); ABA Formal Op. 93-372 (1993); D.C. Bar Op. 292 (1999)

See also

• NYC Bar Ethics Op. 2008-02: Conflicts Between Represented Corporate Affiliates
• NYC Bar Ethics Op. 2006-1: Multiple Representations and Advance Waiver of Conflict
• NY State Bar Op. 1018: Good-Faith Referral After Withdrawing for a Conflict

Source

• Landing page: https://www.nycbar.org/reports/formal-opinion-2005-05-unforeseeable-concurrent-client-conflicts/