A lawyer already owns land that is the subject of an annexation dispute between two towns. Can the lawyer represent one of the towns in the litigation over that land?

Plain-English summary

A lawyer owned an interest in land in Town A and petitioned to annex part of it into neighboring Town B. The A Town Board opposed annexation; the B Town Board favored it. The lawyer asked whether it was permissible to represent Town B pro bono in the litigation between the two towns. The committee analyzes the inquiry under three rules: DR 5-101 (personal-interest conflicts), DR 5-103(A) (acquiring an interest in the subject matter of litigation), and DR 5-102 (the lawyer as witness).

On the personal-interest conflict, DR 5-101 bars accepting employment where the lawyer's own financial, business, property, or personal interests will or reasonably may affect professional judgment, unless a disinterested lawyer would believe the representation will not be adversely affected and the client consents after full disclosure. Because the lawyer's interest in annexing the land to Town B is aligned with Town B's position, the committee concludes a disinterested lawyer would likely find the representation not adversely affected, so Town B could validly consent. The committee qualifies this as fact-dependent, directing the lawyer to consider whether the interests might diverge later (EC 5-3) and whether the town can validly consent under the standards of N.Y. State 629.

On DR 5-103(A), which prohibits a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation, the committee holds the rule does not apply, because it bars only the acquisition of such an interest, not the preexisting ownership of one. The committee aligns with other authorities reading DR 5-103(A) and the parallel Model Rule 1.8(i) the same way, and notes the rule's roots in the doctrines of maintenance and champerty. Even so, a preexisting interest will often raise a conflict under DR 5-101, which on these facts is generally waivable.

On the lawyer-as-witness rules, DR 5-102(A) bars acting as advocate where the lawyer ought to be called as a witness on a significant issue for the client (subject to exceptions), and DR 5-102(B) bars accepting employment where the lawyer might be called as a witness against the client and the testimony would or might prejudice the client. The committee therefore conditions the representation on the lawyer not being a likely witness on a significant issue.

In practice

Under the New York Code as it stood at the time, the opinion holds that owning property before a dispute arises is treated differently from acquiring an interest during litigation: DR 5-103(A) reaches only acquisition, so a preexisting owner is not barred by that rule. The remaining gate is the personal-interest conflict under DR 5-101, which the committee says is generally consentable where the lawyer's and client's interests are aligned, with full disclosure and attention to whether they could diverge later. The committee adds a separate condition: the representation fails if the lawyer ought to be, or might adversely be, a witness on a significant issue under DR 5-102.

Common questions

Q: Does DR 5-103(A) stop a lawyer from representing a client in a dispute over property the lawyer already owns?

A: No. The committee reads DR 5-103(A) to bar only acquiring a proprietary interest in the subject matter of litigation, not holding one that predates the litigation.

Q: Is there still a conflict to address?

A: Yes, under DR 5-101. A preexisting interest generally creates a personal-interest conflict, but the committee says it is usually waivable where a disinterested lawyer would conclude the representation will not be adversely affected and the client consents after full disclosure.

Q: What if the lawyer's and the client's interests might split apart later?

A: The committee, citing EC 5-3, directs the lawyer to consider reasonably foreseeable divergence and to disclose it; if interference can be foreseen, the lawyer should explain the situation and decline or withdraw absent informed consent.

Q: Can the lawyer represent the town if the lawyer will be a witness?

A: Not if the lawyer ought to be called as a witness on a significant issue for the client (DR 5-102(A), subject to exceptions) or might be called as a witness against the client where the testimony would or might prejudice the client (DR 5-102(B)).

Background and rules framework

The opinion applies New York's former Code of Professional Responsibility. DR 5-101 governs personal-interest conflicts and their consent mechanism (a facet of Model Rule 1.7). DR 5-103(A) prohibits acquiring a proprietary interest in the cause of action or subject matter of litigation, with carve-outs for liens and contingent fees (analogous to Model Rule 1.8(i)); the committee ties the rule to the common-law doctrines of maintenance and champerty. DR 5-102(A) and (B) restrict a lawyer from serving as advocate when likely to be a necessary witness (analogous to Model Rule 3.7). EC 5-3 and EC 5-7 supply the cautionary gloss on foreseeable conflicts and financial interest in the outcome.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (personal-interest conflicts); NY DR 5-101
• MR 1.8(i) (proprietary interest in litigation); NY DR 5-103(A)
• MR 3.7 (lawyer as witness); NY DR 5-102(A), (B)

Cases:

• In re Capobianco v. Halebass Realty, Inc., 72 A.D.2d 804 (2d Dep't 1979), a mortgage-foreclosure assignment is not champertous where the attorney had a legitimate business interest
• Peggy Walz, Inc. v. Liz Wain, Inc., 1996 WL 88556 (S.D.N.Y. 1996), disqualification under DR 5-103(A) where the lawyer formed the plaintiff corporation with a client after the dispute arose
• Zylstra v. Safeway Stores, Inc., 578 F.2d 102 (5th Cir. 1978), ordinarily no objection to an attorney representing his wife in litigation
• Bachman v. Pertschuk, 437 F. Supp. 973 (D.D.C. 1977), federal employee could not represent a class of employees against the employer-agency

Other opinions cited:

• ABA Formal Op. 00-416: Model Rule 1.8(i) is rooted in maintenance and champerty
• ABA Informal Op. 899 (1965): a lawyer appearing pro se and for others should generally not act as attorney where he may become a witness
• Maine Op. 92 (1988); Alabama Ops. 85-23 and 84-159: preexisting interest does not bar representing aligned clients
• N.Y. State 629 (1992): standards for valid client consent to a conflict

See also

• NY State Bar Op. 808: Security interest in litigation proceeds for fees
• NY State Bar Op. 1140: Representing a testifying expert witness
• NY State Bar Op. 1045: In-house counsel as a witness in an agency investigation

Source

• Landing page: https://nysba.org/ethics-opinion-777/