Can a lawyer who once represented a corporation later sue its former president for stock-sale fraud on behalf of a stockholder?

Plain-English summary

A lawyer who had previously represented a corporation asked whether he could represent a stockholder suing the corporation's former president, individually, over the president's alleged fraud in selling the corporation's stock to the stockholder. The committee concluded the proposed representation would run afoul of both Canon 4 (preserving client confidences and secrets) and Canon 9 (avoiding even the appearance of impropriety).

The committee's confidentiality concern was concrete. In representing the stockholder, the lawyer might well be called on to use or disclose confidences or secrets reposed in him while he was the corporation's lawyer, in violation of DR 4-101(B), and that obligation outlasts the employment (EC 4-6). The nature of the prior representation suggested a strong possibility the lawyer had, or had access to, confidential information relevant to the truth or falsity of representations about the corporation's stock. A lawyer should also not accept employment that might require disclosing one client's confidences to another (EC 4-5). Permitting the representation would undermine Canon 4's purpose of fostering open discussion between lawyers and clients, since corporate officers who feared their disclosures could later be used against them might be inhibited from seeking legal help for the corporation.

On the appearance issue, the committee reasoned that even though the former president was never personally the lawyer's client and the lawyer's loyalty to the corporation did not necessarily extend to the president, suing the former president on matters substantially related to the prior corporate work would at least create an appearance of impropriety. The appearance could arise that the stockholders chose this lawyer for his special knowledge of the former client's affairs, and public confidence in the profession could be undermined if a lawyer appeared to have gained useful information about a suit's subject matter while representing a former client (Canon 9; EC 9-2). The committee allowed one path through: the representation would be permissible only if it would require no disclosure of the former client's confidential information.

Currency note

This opinion was issued in 1975, before New York replaced the Code of Professional Responsibility with the Rules of Professional Conduct in 2009; duties to former clients are now in Rule 1.9 and the confidentiality duty in Rule 1.6. 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: Can a former corporate lawyer take a case against the company's ex-president?

A: Under this opinion, only if the matter would require no use or disclosure of the corporation's confidences or secrets. Where the prior work bears on the new suit, the representation is barred under Canon 4 and Canon 9.

Q: Does it matter that the president was never personally the lawyer's client?

A: Per the opinion, no. The committee said that even though loyalty to the corporation did not necessarily extend to the president, suing him on substantially related matters would still create an appearance of impropriety.

Q: What is the underlying worry about confidences?

A: The committee reasoned that the lawyer likely had or could access confidential corporate information relevant to the stock representations, and that using or disclosing it would violate DR 4-101(B), a duty that outlasts the representation.

Background and rules framework

The opinion applied Canon 4 and DR 4-101(B) and (C) (preservation and limited disclosure of confidences and secrets), EC 4-5 and 4-6, DR 5-105(A) and (B) (declining employment that adversely affects judgment), and Canon 9 with EC 9-2 of the then-current New York Code. The current analogues are Rule 1.9 (duties to former clients, including the substantial-relationship test) and Rule 1.6 (confidentiality of information).

Citations and references

Rules of Professional Conduct:

• MR 1.9 (duties to former clients)
• MR 1.6 (confidentiality of information)
• NY Canon 4; Canon 9; DR 4-101(B), (C); DR 5-105(A), (B); EC 4-5, EC 4-6, EC 9-2

See also

• NY State Bar Op. 410: Partnership conflict from a former client on the same accident
• NY State Bar Op. 415: Firm disqualification and a legislator's statutory exception
• NY State Bar Op. 422: Hiring a secretary from an adversary firm

Source

• Landing page: https://nysba.org/opinion-395/