I represent a two-partner real estate partnership, and also one partner individually. The partners are now feuding and giving me opposite instructions through their separate lawyers. Can I keep doing partnership work at one partner's direction, and what do I do with the partnership files?

Plain-English summary

The inquiring attorney (Lawyer Two) represents a partnership of two general partners, Mr. A and Mr. B, whose business is developing and selling lots in a subdivision; he also represents Mr. A individually in unrelated matters, but not Mr. B. Differences arose between the partners, Mr. B threatened to sue Mr. A, and each retained his own independent counsel (Lawyers Three and Four). Title to the developed real estate is in Mr. A's name. Through his lawyer, Mr. B instructed the inquiring attorney to do no conveyancing work and to perform only services necessary to preserve the status quo, while through his lawyer, Mr. A instructed the inquiring attorney to continue conveying lots and to move forward on other partnership business. The inquiring attorney was performing services only when both partners' lawyers so instructed.

The panel noted that Rhode Island has adopted the Uniform Partnership Act and that, as at common law, a partnership is not recognized as an entity apart from its members. It reasoned that when the two partners give contrary instructions, the situation must be resolved by the rules governing conflicts between two present clients, and quoted Rule 1.7(a): a lawyer shall not represent a client if the representation will be directly adverse to another client unless the lawyer reasonably believes the representation will not adversely affect the relationship with the other client and each client consents after consultation. Because Mr. A and Mr. B explicitly declined to agree on the legal work to be performed, Rule 1.7(a) could not be satisfied. The panel therefore took the position that the inquiring attorney may neither prepare, nor assist another attorney in preparing, real estate closing documents pertaining to the partnership business, consistent with a Kansas ethics opinion.

Applying the same reasoning to pending matters, the panel held that if the partners do not agree that the attorney should perform any legal services in connection with the partnership business, Rule 1.7(a) prevents him from performing any such services, whether to maintain the status quo or to advance the business. Because a Rhode Island partnership does not exist, for most purposes, apart from its members, the panel concluded that the attorney has no independent obligations to the partnership as an entity. On the files, the panel held that because both Mr. A and Mr. B were at one time properly his clients, both are entitled to the file: any arrangement under which one keeps the original and the other a facsimile satisfies the rules, and if no arrangement can be agreed upon, the attorney may turn complete copies over to each partner and advise their lawyers that he will retain the originals in escrow until the partners notify him of the agreed recipient.

Currency note

This opinion was issued in September 1990, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which amended the conflict-of-interest rules addressed here, and Rhode Island partnership law may have since changed. Treat this page as historical context, not current guidance. Verify against current rules and statutes before relying on anything mentioned here.

Common questions

Q: Can a lawyer for a partnership follow one partner's instructions when the other partner objects?

A: Under this opinion, no. The panel held that where two partner-clients explicitly refuse to agree on the legal work, Rule 1.7(a) cannot be satisfied, so the lawyer may not perform, or assist another lawyer in performing, that work.

Q: Does the answer change if the work is only to preserve the status quo rather than advance the business?

A: No. The panel held that if the partners do not agree that the attorney should perform any services, Rule 1.7(a) prevents him from performing any legal services, whether to maintain the status quo or to advance the business.

Q: Does the lawyer owe a duty to the partnership itself, separate from the partners?

A: The panel held no. Because a Rhode Island partnership does not exist apart from its members for most purposes, the attorney has no independent obligation to the partnership as an entity.

Q: Who is entitled to the partnership file?

A: Both partners. The panel held that if they cannot agree on custody, the attorney may give complete copies to each and hold the originals in escrow until they notify him of the agreed recipient.

Background and rules framework

The opinion applies Rule 1.7 (conflict of interest: current clients), and specifically Rule 1.7(a), of the Rhode Island Rules of Professional Conduct, adopted effective November 15, 1988, to a lawyer who jointly represents two feuding general partners. It draws on the Rhode Island Uniform Partnership Act (§ 7-12-1 et seq.) and treatise authority for the proposition that a partnership is not an entity apart from its members.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (conflict of interest: current clients)
• RI RPC 1.7, 1.7(a), as adopted November 15, 1988

Statutes:

• R.I. Gen. Laws § 7-12-1 et seq. (1956, 1985 Reenactment), Uniform Partnership Act

Cases:

• None cited.

Other opinions cited:

• Professional Ethics Committee of the Kansas Bar Association, Opinion 61-2, reported at ABA/BNA Manual of Professional Conduct 601:4305

See also

• RI EAP Op. 2000-6: Custody of a Joint-Client File
• RI EAP Op. 90-32: No Former-Client Conflict Where Adverseness Never Developed

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%2090-38.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

DIGEST OF ETHICS ADVISORY PANEL
Opinion #90-38, Request #117
Issued September 18, 1990

An attorney seeks Panel advice as to the proper course of conduct under the circumstances he describes.

The attorney advises the Panel that two individuals ("Mr. A" and "Mr. B") are general partners pursuant to a written partnership agreement. The business of the partnership is developing and selling lots in a certain subdivision. All past legal work was done by Lawyer One. The partners subsequently discharged Lawyer One and retained the inquiring attorney, Lawyer Two. The inquiring attorney advises the Panel that he has represented Mr. A in the past in matters unconnected with the partnership and continues to do so. The inquiring attorney does not represent Mr. B in any matter other than the partnership.

The inquiring attorney states that he is presently handling several items of partnership business which require varying degrees of attention. The inquiring attorney advises the Panel that differences have arisen between Mr. A and Mr. B and that Mr. B has threatened to sue Mr. A. Mr. A and Mr. B have each retained independent counsel, Lawyers Three and Four respectively.

Title to the real estate developed by the partnership is in the name of Mr. A. Mr. B, through his attorney, Lawyer Four, has informed the inquiring attorney that the inquiring attorney is not to perform any legal work relative to the conveyance of any of the lots. The inquiring attorney has also been instructed to perform no services for the partnership except those necessary to preserve the status quo.

Mr. A, through his attorney, Lawyer Three, has informed the inquiring attorney that since he, Mr. A, holds title to the property in his name he expects the inquiring attorney to perform the necessary legal work to continue conveying lots. Mr. A also instructed the inquiring attorney, through his attorney to move forward on certain other partnership business.

The inquiring attorney indicates that he believes that unless certain items of partnership business are advanced, advantages and momentum will be lost and the partnership business will be damaged. The inquiring attorney states that neither Mr. A nor Mr. B want him to "drop the ball," but that he finds it almost impossible to work under contrary instructions. At present he is performing services only when specifically instructed to do so by both Lawyer Three and Lawyer Four.

The inquiring attorney first asks whether he may prepare real estate closing documents that are part of the continuing partnership business when instructed to do so by Mr. A. If not, can he properly assist or advise Mr. A's attorney, Lawyer Three, in the preparation of the documents?

The Rhode Island state legislature has adopted the Uniform Partnership Act with minor changes and additions not pertinent here. See G.L. 1956 (1985 Reenactment) § 7-12-1, et seq. Under the Partnership Act, as at Common Law "a partnership is not recognized as an entity apart from its members," Henn and Alexander, Laws of Corporations § 49 at 63 (1983).

When the inquiring attorney is given contrary instructions by the two business partners, then the situation must be resolved by reference to the Rules governing conflicts of interest between two present clients.

Rule 1.7(a), titled "Conflict of Interest: General Rule," provides:

A lawyer shall not represent a client if the representation of that client will be directly adverse to another client unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

In the situation the inquiring attorney has described, Mr. A and Mr. B have explicitly declined to agree as to the legal work he is to perform for the business. The provisions of Rule 1.7(a) thus cannot be satisfied and the Panel takes the position that the inquiring attorney may neither prepare nor assist another attorney in the preparation of real estate closing documents pertaining to the partnership business. Accord: Professional Ethics Committee of the Kansas Bar Association, Opinion 61-2 reported at ABA/BNA Manual of Professional Conduct 601:4305.

The inquiring attorney's second question involves what he is to do with regard to pending matters when Mr. B instructs him to maintain the status quo and Mr. A asks him to advance partnership business. If Messrs. A and B do not agree that he ought to perform any legal services in connection with the partnership business, then the provisions of Rule 1.7(a) prevent the inquiring attorney from performing any legal services, whether they are to maintain the status quo or to advance the business.

The inquiring attorney's third question is whether he has an obligation to the partnership which is different from his obligation to the two partners. Since a partnership formed under the laws of Rhode Island does not exist, for most purposes, apart from its members, the Panel takes the position that the inquiring attorney has no independent obligations to the partnership as an entity.

The inquiring attorney's final question involves what he ought to do with the original partnership files and documents if, as the Panel has concluded, the inquiring attorney may not properly represent either of the partners under the circumstances described. Both Mr. A and Mr. B were, at one time, properly the inquiring attorney's clients, thus both are entitled to the file prepared for them as clients. Any arrangement to which Messrs. A & B will agree under which one retains the original partnership file and the other a facsimile thereof thus satisfies the Rules. It is possible that no arrangement can be agreed upon. It is then permissible for the inquiring attorney to turn complete copies of the partnership files over to each partner and advise Lawyers Three and Four that he will retain the originals in escrow until such time as their clients notify him as to the agreed upon recipient.

Ethics Advisory Panel advice is protective in nature. There is no requirement that an attorney abide by a Panel opinion, but if he or she does, he or she is fully protected from any charge of impropriety.