Can I represent a client in a deal with a company that is an affiliate of my former firm's client, when my prior work for that client was unrelated to the current deal?

Plain-English summary

The inquiring attorney had represented individuals in forming a real estate investment company (Company A). Company A located a deal in which it would be a minority investor in Company B, which is developing a parcel in Massachusetts (the Development). The attorney proposed to represent Company A in that investment. Company B is an affiliate of Company C, a real estate developer that was a client of the attorney's former law firm. While an associate at that firm, the attorney had worked with other lawyers on several of Company C's developments; the attorney stated that any confidential information acquired was likely stale and that the services provided to Company C were unrelated to the Development.

The panel concluded the attorney may undertake the representation without Company C's consent. It analyzed the inquiry under Rule 1.9 ("Duties to Former Client"), finding that paragraphs (b) and (c) apply because the attorney presumably acquired confidential information about Company C while at the former firm, regardless of present recall. On whether representation adverse to an affiliate of a former corporate client is barred, the panel noted this depends on the extent to which the affiliated entities share operations and interests (citing the ABA Annotated Model Rules of Professional Conduct), and that the inquiry contained no facts about the degree of commonality between Company B and Company C.

The panel resolved the inquiry without needing to decide the affiliate question. Even assuming a substantial sharing of operations and interests between Company B and Company C, it reasoned that the Development is not the same as, or substantially related to, the developments or other matters in which the attorney had represented Company C. Because the same-or-substantially-related requirement of Rule 1.9 is not met, there is no conflict of interest on these facts. The panel therefore concluded the attorney may represent Company A in the transaction without Company C's consent, subject to the continuing obligations of Rule 1.9(c) regarding information relating to the former representation.

In practice

Under this opinion, a lawyer may represent a client in a matter adverse to a company that is an affiliate of a former firm client, without the former client's consent, where the new matter is not the same as or substantially related to the matters the lawyer previously handled for the former client. The panel held that Rule 1.9 turns on the same-or-substantially-related test, so it did not need to resolve how closely the affiliate and the former client are linked; even assuming a substantial overlap, the absence of a substantial relationship between the matters defeated the conflict. The panel noted the lawyer remains bound by Rule 1.9(c) as to information relating to the former representation.

Common questions

Q: Can I take a matter adverse to an affiliate of my former client if my prior work was unrelated?

A: The panel said yes. Because the new transaction was not the same as or substantially related to the matters the lawyer handled for the former client, there is no Rule 1.9 conflict, even assuming the affiliate and the former client share substantial operations and interests.

Q: Is the former client's consent required?

A: No. The panel concluded that without a substantial relationship between the matters, no conflict arises under Rule 1.9, so the lawyer may proceed without Company C's consent.

Q: Does the affiliate relationship between the companies matter?

A: The panel said whether representation adverse to an affiliate of a former corporate client is barred depends on how much the affiliated entities share operations and interests, but it did not need to decide that here because the matters were not substantially related.

Q: What obligation continues after concluding there is no conflict?

A: The panel held the lawyer must abide by Rule 1.9(c), which restricts using or revealing information relating to the former representation.

Background and rules framework

The opinion applies Rule 1.9 (Model Rule 1.9, duties to former clients). Rule 1.9(a) bars representing another person in the same or a substantially related matter materially adverse to a former client without informed consent; Rule 1.9(b) addresses matters handled by a firm with which the lawyer was formerly associated, where the lawyer acquired protected information material to the matter; and Rule 1.9(c) restricts using or revealing information relating to the former representation. The panel treated the same-or-substantially-related requirement as dispositive.

Citations and references

Rules of Professional Conduct:

• MR 1.9 (duties to former clients; same-or-substantially-related test; 1.9(b) and 1.9(c))
• RI RPC 1.9

Statutes:

• None cited.

Cases:

• None cited.

Secondary authority:

• ABA Annotated Model Rules of Professional Conduct, at 179 (8th ed. 2015) (whether a lawyer may be adverse to an affiliate of a former corporate client depends on the extent to which the affiliated entities share operations and interests)

See also

• RI EAP Op. 2025-05: May Oppose Former Firm's Client Where Lawyer Acquired No Material Information
• RI EAP Op. 90-09: Purchasing an Interest in a Real Estate Trust Unrelated to a Former Client
• RI EAP Op. 89-06: Representing an Adverse Party in a Boundary Dispute Against a Former Client

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2017-05.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Rhode Island Supreme Court
Ethics Advisory Panel Op. 2017-05 Request #1054
Issued November 9, 2017

FACTS

The inquiring attorney represented individuals in the formation of a real estate investment company (hereinafter, Company A). Company A has located a potential real estate deal in which it would be a minority investor in Company B. Company B is developing a parcel of property located in Massachusetts (hereinafter, the Development). The inquiring attorney proposes to represent Company A who would be investing with others in the Development.

Company B is an affiliate of real estate developer Company C. Company C is a client of the inquiring attorney's former law firm. While he/she was an associate at the law firm, the inquiring attorney worked with other lawyers in the firm on several of Company C's real estate developments. The inquiring attorney states that given the lapse of time, any confidential information he/she may have acquired in the representation of Company C is likely stale. The legal services that the inquiring attorney provided to Company C were unrelated to the Development.

ISSUE PRESENTED

The inquiring attorney asks whether he/she has a conflict of interest in the representation of Company A in a transaction with Company B which is an affiliate of a former client, Company C, and whether consent is required.

OPINION

The inquiring attorney may undertake the representation of Company A in a real estate investment transaction with Company B, an affiliate of his/her former client Company C, without the consent of Company C. The inquiring attorney must abide by Rule 1.9(c) regarding information relating to the former representation.

REASONING

The Rule of Professional Conduct that informs this inquiry is Rule 1.9 entitled "Duties to Former Client". The rule states as follows:

Rule 1.9. Rule 1.9. Duties to former client.
(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.
(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client:
(1) whose interests are materially adverse to that person; and
(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent, confirmed in writing.
(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or
(2) reveal information relating to the representation except as these Rules would permit or require with respect to a client

The inquiring attorney seeks to represent Company A in a real estate investment transaction with an affiliate of a client of the inquiring attorney's former law firm. While he/she was an associate of the former law firm, the inquiring attorney provided legal services to Company C. In doing so, he/she presumably acquired confidential information about Company C regardless of his/her ability to recall any of it now. Paragraphs (b) and (c) of Rule 1.9 apply.

Company B is an affiliate of Company C. Whether an attorney may undertake a representation that is adverse to an affiliate of a former corporate client depends upon the extent to which the affiliated entities share operations and interests. See ABA Annotated Model Rules of Professional Conduct, at 179 (8th ed. 2015). The instant inquiry contains no facts relating to the degree of commonality between Company B and Company C.

Even assuming a substantial sharing of operations and interests between Company B and Company C, the Panel notes that the Development is not the same development, or substantially related to the developments or other matters in which the inquiring attorney represented Company C. Therefore, there is no conflict of interest under the facts of this inquiry.

The Panel concludes that the inquiring attorney may undertake the representation of Company A in a real estate investment transaction with Company B, which is an affiliate of his/her former client Company C, without the consent of Company C. The inquiring attorney must abide by Rule 1.9(c) regarding information relating to the former representation.