I represent ABC Corporation in one lawsuit. A minority-shareholder officer wants me to represent him against the other shareholders. Can I, even if I withdraw from the corporation?

Plain-English summary

The inquiring attorney represents ABC Corporation in a single litigation matter. Mr. X is an officer and minority shareholder of ABC. A dispute arose between Mr. X and other shareholders over the value of Mr. X's interest in the corporation, and Mr. X wanted to retain the inquiring attorney to represent him in that dispute. The attorney was also willing to withdraw from representing ABC to avoid a conflict.

The opinion applies Rule 1.7, "Conflict of Interest: General Rule," under which a lawyer shall not represent a client 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. Quoting the comment -- that ordinarily a lawyer may not act as advocate against a current client even in a wholly unrelated matter, but may do so for an enterprise with diverse operations in an unrelated matter with both clients' consent -- the opinion concludes the attorney may not represent Mr. X against the other shareholders unless the corporation and Mr. X consent after consultation.

On the proposed withdrawal, the opinion turns to Rule 1.17, "Declining or Terminating Representation," which sets the criteria for when an attorney shall and may withdraw. Unless the attorney can apply Rule 1.17 to the situation, withdrawal is not permitted. The opinion cites Massachusetts Ethics Opinion 92-3, which opined that a firm may not represent one long-term client to the detriment of a current client's interests where the firm, over the current client's objection, withdrew from that client's ongoing and unrelated representation.

In practice

Under this opinion, the lawyer cannot simply drop the corporation to clear the way for the shareholder's case: the Rule 1.7 conflict is resolved by consent from both the corporation and Mr. X, and any withdrawal must independently satisfy Rule 1.17. The cited Massachusetts opinion reinforces that a lawyer may not maneuver around a current-client conflict by withdrawing from the disfavored client's unrelated matter over its objection.

Common questions

Q: Can a lawyer for a corporation represent a shareholder in a dispute against it?

A: Only with consent. The opinion concludes the attorney may not represent Mr. X against ABC Corporation unless both the corporation and Mr. X consent after consultation under Rule 1.7.

Q: Can the lawyer avoid the conflict by withdrawing from the corporation?

A: Not freely. The opinion says withdrawal is permitted only if the attorney can apply Rule 1.17's criteria to the situation.

Q: Does it matter that the shareholder dispute is a different matter from the corporation's litigation?

A: The opinion relies on the Rule 1.7 comment that ordinarily a lawyer may not act against a current client even in a wholly unrelated matter, absent both clients' consent.

Background and rules framework

The opinion interprets Rhode Island Rule of Professional Conduct 1.7, "Conflict of Interest: General Rule" (analog of Model Rule 1.7), and Rule 1.17, "Declining or Terminating Representation," as the Rhode Island Rules then numbered the withdrawal provision. Rule 1.7(a) bars representation directly adverse to a current client absent reasonable belief and each client's consent after consultation; the withdrawal rule governs when a lawyer shall and may withdraw.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / RI RPC 1.7 (conflict of interest: general rule)
• RI RPC 1.17 (declining or terminating representation, as cited in the opinion)

Other opinions cited:

• Massachusetts Ethics Opinion 92-3 (9-22-92) (firm may not represent one long-term client to the detriment of a current client by withdrawing from the current client's unrelated matter over objection)

See also

• RI EAP Opinion 93-43: may serve as special prosecutor for an agency adverse in another case under 1.7
• RI EAP Opinion 93-23: representing a shareholder adverse to a current or former client-employee under 1.7/1.9

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%2093-44.pdf

Original opinion text

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

Final
ETHICS ADVISORY PANEL
Opinion #93-44, Request #390
Issued June 30, 1993

The inquiring attorney represents ABC Corporation in a single litigation matter. Mr. X is an officer and minority shareholder of ABC Corporation. A dispute has arisen between Mr. X and other shareholders of ABC Corporation over the value of Mr. X's interest in the corporation. Mr. X would like to retain the inquiring attorney to represent him in this dispute. The inquiring attorney is also willing to withdraw from representing ABC Corporation to avoid a conflict of interest.

Rule 1.7 entitled "Conflict of Interest: General Rule" states that:

(a) 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.

The comments to the rule state that:

Ordinarily, a lawyer may not act as advocate against a client the lawyer represents in some other matter, even if the other matter is wholly unrelated. However, there are circumstances in which a lawyer may act as advocate against a client. For example, a lawyer representing an enterprise with diverse operations may accept employment as an advocate against the enterprise in an unrelated matter if doing so will not adversely affect the lawyer's relationship with the enterprise or conduct of the suit and if both clients consent upon consultation.

The Panel believes that the attorney may not represent Mr. X in a dispute with other shareholders of ABC Corporation unless the corporation and Mr. X consent after consultation.

Rule 1.17 entitled "Declining or Terminating Representation" sets forth the criteria where an attorney shall and may withdraw from representing a client. Unless the attorney can apply Rule 1.17 to the situation, withdrawal from representation is not permitted. See, Massachusetts Ethics Opinion 92-3 (9-22-92) which opined that a law firm may not represent one long-term client in a matter which is to the detriment of a current client's interests where the firm, against the current client's objections, withdrew from that client's ongoing and unrelated representation.