My firm does lender work and I want to add closings representing both lender and borrower with consent. What if I later have to foreclose for a lender against a borrower I represented on the purchase?

Plain-English summary

The inquiring attorney was employed by a law firm that represented lenders in financing transactions, including foreclosure and bankruptcy work. The attorney anticipated adding real estate closings to the practice, representing both lender and borrower in closings with the consent of both parties. The attorney asked whether a conflict of interest would arise if he or she represented a foreclosing lender in an action against a borrower whom he or she had represented in connection with the purchase of the real estate subject to the defaulted mortgage.

The panel addressed the dual representation under Rule 2.2 ("Intermediary"), which allows a lawyer to act as intermediary between clients only if the lawyer consults with each client about the implications of common representation and obtains each client's consent; reasonably believes the matter can be resolved on terms compatible with the clients' best interests, that each client can make informed decisions, and that there is little risk of material prejudice if the resolution fails; and reasonably believes the common representation can be undertaken impartially. Rule 2.2(c) requires the lawyer to withdraw as intermediary if any client so requests or if any condition in paragraph (a) is no longer satisfied, and, on withdrawal, not to continue representing any of the clients in the matter that was the subject of the intermediation.

The panel noted the comment's caution that if the relationship between the parties is subject to contentious litigation or negotiations, or is presently antagonistic, intermediation is an impossible task. It advised the attorney to follow the criteria set forth in Rule 2.2, and concluded that if and when a conflict of interest arises between the lender and the borrower, the attorney must withdraw from representation of both parties pursuant to Rule 2.2(c).

Currency note

This opinion was issued in 1995, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 2.2 (Intermediary) as it then stood. Rule 2.2 was later deleted in many jurisdictions during the nationwide Ethics 2000 process (the American Bar Association deleted Model Rule 2.2 in 2002), with the topic folded into Rule 1.7, and Rhode Island revised its Rules of Professional Conduct in 2007. 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 mentioned here.

Common questions

Q: Could the lawyer represent both lender and borrower at a closing?

A: The opinion allowed it under Rule 2.2 if the lawyer satisfied that rule's intermediary criteria, including consultation, consent, and the required reasonable beliefs.

Q: What happens if the lender and borrower end up in conflict?

A: The opinion held that if and when a conflict of interest arises between them, the lawyer must withdraw from representing both parties under Rule 2.2(c) and may not continue representing either in that matter.

Q: Does the parties' relationship matter before taking on the dual role?

A: Yes. The opinion, citing the comment to Rule 2.2, noted that if the relationship is subject to contentious litigation or is presently antagonistic, intermediation is an impossible task.

Background and rules framework

The opinion applied Rhode Island Rule of Professional Conduct 2.2 (then Model Rule 2.2), the intermediary rule permitting a lawyer to serve two or more clients with potentially conflicting interests under stated conditions of consultation, consent, and reasonable belief, and requiring withdrawal from all clients in the matter once a condition fails. The panel treated the anticipated foreclosure against a former purchase client as a circumstance in which those conditions could cease to be satisfied, triggering the withdrawal duty.

Citations and references

Rules of Professional Conduct:

• Model Rule 2.2 / RI RPC 2.2 (intermediary; conditions for common representation; mandatory withdrawal under 2.2(c))

See also

• RI EAP Op. 2024-03: Representing both buyer and seller in the same real estate sale is a conflict
• RI EAP Op. 2017-02: Nonwaivable conflict representing both buyer and seller in a business sale

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%2095-25.pdf

Original opinion text

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

FINAL

ETHICS ADVISORY PANEL
OPINION # 95-25, Request # 587
Issued May 4, 1995

The inquiring attorney is employed by a law firm that represents lenders in financing transactions including foreclosure and bankruptcy work. The inquiring attorney anticipates including real estate closings to his/her practice. In this regard, the inquiring attorney anticipates representing both lender and borrower in real estate closings, with the consent of both parties. The inquiring attorney asks if a conflict of interest would arise if he/she represented a foreclosing lender in an action against a borrower who he/she represented in connection with the purchase of real estate subject to the defaulted mortgage.

Rule 2.2 entitled "Intermediary" is appropriate when a lawyer represents two or more parties with potentially conflicting interests. The Rule states:

(a) A lawyer may act as intermediary between clients if:

(1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each client's consent to the common representation;

(2) the lawyer reasonably believes that the matter can be resolved on terms compatible with the clients' best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and

(3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients.

(b) While acting as intermediary, the lawyer shall consult with each client concerning the decisions to be made and the considerations relevant in making them, so that each client can make adequately informed decisions.

(c) A lawyer shall withdraw as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation.

In considering whether to act as an intermediary, a lawyer should consider the relationships between the parties. If the relationship between the parties is subject to contentious litigation or negotiations or is presently antagonistic, then intermediation is an impossible task. See, Comments to Rule 2.2. The Panel opines that the inquiring attorney should follow the criteria set forth in the Rule. If and when a conflict of interest arises between lender and borrower, the inquiring attorney must withdraw from representation of both parties pursuant to Rule 2.2(c).