Ezel / Ethics Opinions / NYSBA
NYSBA July 15, 2016

Can a lawyer represent a company against a competitor that is a former client, when the former client benefits if the new client loses?

Short answer: Yes, if the new matter is not the same as or substantially related to the former representation. The opinion concludes that purely economic competition does not make a former client's interests 'materially adverse' under Rule 1.9(a).

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This page answers the general question as of 2016. Ezel answers yours: whether it's allowed on your facts, under the current New York Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2016
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
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About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Corporations A and B are competitors in the same industry, area, and customer base. The lawyer previously represented A in a concluded matter (Matter 1). He now proposes to represent B in litigation against a third party, Corporation X (Matter 2), which is not factually related to Matter 1; if B loses, it might have to cease operations, benefiting A. Separately, A has threatened to sue B in another unrelated matter (Matter 3).

The opinion treats A as a former client and applies Rule 1.9(a), which bars representing a new client in the "same or a substantially related matter" where the new client's interests are "materially adverse" to the former client's, absent informed written consent. Both prongs must be met (¶ 7). Because the inquirer represented that Matter 1 is not substantially related to Matter 2 or Matter 3, the first prong fails, so Rule 1.9(a) does not bar either representation (¶ 13, ¶ 16). The committee added that the second prong also fails: just as competing economic interests do not create "differing interests" under Rule 1.7(a), they do not create "materially adverse" interests under Rule 1.9(a), even though A profits if B is eliminated; reading "materially adverse" to reach that would stretch it too far (¶ 12, ¶ 14). Quoting Comment [6] to Rule 1.7, the committee noted that even simultaneous representation of economic competitors in unrelated matters does not ordinarily create a conflict (¶ 12).

Two limits remain. The lawyer is still bound by Rule 1.9(c) not to use or reveal A's confidential information (¶ 15). And if Matter 3 were substantially related to Matter 1, Rule 1.9(a) would bar defending B without A's consent, because the "materially adverse" prong is always met when a former client is on the opposite side of the same or a substantially related matter (¶ 17).

In practice

Under Rule 1.9, the gating question is the first prong: whether the new matter is the same as or substantially related to the former representation. The opinion holds that where the matters are unrelated, the lawyer may take a position adverse to a former client, and that the former client's status as an economic competitor of the new client, even one that gains from the new client's failure, does not by itself make the interests materially adverse. The duty not to use or disclose the former client's confidential information under Rule 1.9(c) continues regardless.

Common questions

Q: Can a lawyer take a case against a former client in an unrelated matter?

A: Yes. If the new matter is not the same as or substantially related to the former representation, Rule 1.9(a)'s first prong is not met and the rule does not bar the representation (¶ 13).

Q: Does the former client being a competitor of the new client create a conflict?

A: No. The opinion concludes economic competition does not make interests "materially adverse" under Rule 1.9(a), even if the former client benefits when the new client loses (¶ 12, ¶ 14).

Q: What duty to the former client survives?

A: Confidentiality. Under Rule 1.9(c) the lawyer may not use or reveal the former client's confidential information protected by Rule 1.6 (¶ 15).

Q: When would a related matter change the answer?

A: If the new matter were substantially related to the prior one, Rule 1.9(a) would apply, because the "materially adverse" prong is always met when a former client is on the other side of the same or a substantially related matter (¶ 17).

Background and rules framework

The opinion interprets New York Rules 1.9 (duties to former clients; ABA Model Rule 1.9) and 1.7 (current-client conflicts; ABA Model Rule 1.7), with Rule 1.0(l) defining "matter." Rule 1.9(a)'s two-prong test (same or substantially related, and materially adverse) and Comments [2] and [3] on the meaning of "matter," "materially adverse," and "substantially related" frame the analysis.

Citations and references

Rules of Professional Conduct:

  • MR 1.9 / NY RPC 1.9(a), 1.9(c) (duties to former clients)
  • MR 1.7 / NY RPC 1.7(a) (current-client conflicts); NY RPC 1.0(l) (definition of "matter")

Other opinions cited:

  • N.Y. State 1029 (2014): legal-issue overlap does not make matters substantially related
  • N.Y. State 1008 (2014): current vs. former client analysis
  • N.Y. State 638 (1992), N.Y. State 628 (1992): duty of loyalty ends with the representation

See also

Source

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