Can a firm that represents a government entity in unrelated matters defend a private client against that same government entity in a fraud investigation, if both clients consent?

Plain-English summary

A firm represented a governmental entity (the "Government Client") in two unrelated areas of law. One attorney at the firm had never represented the Government Client; only the attorney's colleagues had. The firm also represented a "Private Client" in unrelated business matters, primarily through that same attorney. The Government Client, a governmental entity, then served a subpoena on the Private Client, investigating whether the Private Client had committed unlawful conduct including construction fraud. The firm was not representing the Government Client on the investigation, and both clients consented to the firm representing the Private Client in it. The committee was asked whether Rule 1.7 permitted the representation and whether the firm's belief that the representation would not be adversely affected was "reasonable."

The committee analyzed the question under North Dakota's Rule 1.7. It distinguished subsection (a), which addresses situations where a lawyer's responsibilities to another client will adversely affect the representation, from subsection (c), which addresses situations where the representation only might be adversely affected and can be cured if the lawyer reasonably believes there will be no adverse effect and the client consents. The committee concluded subsection (c) applied, because there was no concrete evidence that representing the Private Client would adversely affect the Government Client.

The committee then applied Comment 9, which says a lawyer representing an enterprise with diverse operations may accept employment adverse to the enterprise in an unrelated matter if doing so will not adversely affect the relationship or the conduct of the suit and both clients consent, but cautions that a suit charging fraud entails conflict to a degree not involved in some other suits. The committee observed that the attorney here would be defending, not charging, fraud, but that the comment refers to the "conduct of the suit" without distinguishing the two sides. It concluded that Rule 1.7 does not explicitly prohibit the representation, that the attorney should proceed with caution, determine whether the belief of no adverse effect is reasonable, and obtain the client's consent (preferably in writing), and that on the limited facts it could not decide whether the firm's belief was reasonable.

In practice

This opinion, approved August 15, 2019, applies North Dakota Rule of Professional Conduct 1.7 as it stood at that time, including the subsection (c) framework for curable conflicts. The committee held that the firm's representation of the Private Client against the Government Client in the fraud investigation is governed by Rule 1.7(c), is not explicitly prohibited, and may proceed only if the firm reasonably believes the representation will not be adversely affected and the clients consent. The committee held that a suit involving fraud entails a heightened degree of conflict under Comment 9, that the attorney should proceed with caution and obtain consent in writing, and that, without more facts, it could not determine whether the firm's belief of no adverse effect was reasonable.

Common questions

Q: Can a firm be adverse to a client it also currently represents in unrelated matters?

A: The committee concluded Rule 1.7 does not explicitly prohibit it where the representation only might be adversely affected; under Rule 1.7(c) the firm may proceed if it reasonably believes there will be no adverse effect and the clients consent.

Q: Does it matter that the matter involves fraud?

A: Yes. The committee, quoting Comment 9, noted that a suit charging fraud entails conflict to a degree not involved in some other suits, so the fraud investigation raised a heightened conflict concern.

Q: Did the committee approve the specific representation?

A: No. The committee concluded that, without further context or facts, it could not decide whether the firm's belief that the representation would not be adversely affected was reasonable under Rule 1.7(c).

Background and rules framework

The opinion interprets North Dakota Rule of Professional Conduct 1.7 (Model Rule 1.7, conflicts of interest), applying its subsection (a) (representation that will be adversely affected) and subsection (c) (representation that might be adversely affected, curable by the lawyer's reasonable belief and the client's consent after consultation), together with Comment 9 on representing an enterprise with diverse operations.

The opinion is issued under North Dakota Rule for Lawyer Discipline 1.2(B), the safe-harbor provision protecting good-faith reliance on a written ethics-committee opinion.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 / N.D.R. Prof. Conduct 1.7 (conflicts of interest; 1.7(a) and 1.7(c); Comment 9, enterprise with diverse operations)
• N.D.R. Lawyer Discipline 1.2(B) (safe harbor for reliance on a committee opinion)

See also

• AL Ethics Op. 1992-21: Suing a Current Client
• CA COPRAC Op. 2011-182: Subpoena on Current Client
• ISBA Ethics Op. 13-02: One Partner Suing Another

Source

• Landing page: https://www.sband.org/page/ethics_opinions
• Original PDF: https://cdn.ymaws.com/www.sband.org/resource/resmgr/ethics/opinion_19.01.pdf

Original opinion text

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

STATE BAR ASSOCIATION OF NORTH DAKOTA
ETHICS COMMITTEE
OPINION NO. 19-01

THIS OPINION IS ADVISORY ONLY
FACTS

A firm represents an enterprise with diverse and is a governmental entity (“Government Client”).
The firm currently provides services to the Government Client in two distinct areas of the law
which are unrelated to the other. The attorney at issue (“Attorney”) is employed at the firm.
Attorney does not currently represent the Government Client in any matter. Attorney has not
represented the Government Client in any matter in the past. Only Attorney’s colleagues in the
firm have represented the Government Client.

The firm also represents another client (“Private Client”) concerning a business. The firm’s
services to the Private Client are unrelated to the firm’s representation of the Government Client.
Attorney has primarily represented the Private Client. Although other counsel within the firm have
provided services to the Private Client, none of the other counsel are currently providing services
for the Government Clients.

The Government Client served a subpoena on the Private Client indicating that Government Client
(a governmental entity) is investigating whether the Private Client have committed unlawful
conduct including construction fraud (“Investigation”). The firm is not providing any services to
the Government Client regarding the Investigation.
The Private Client have asked Attorney to represent the Private Client regarding the Investigation.
After consultation, both the Government Client and the Private Client have consented to the
firm’s representation of the Private Client regarding the Investigation.

QUESTIONS PRESENTED
Under the North Dakota Rules of Professional Conduct, according to Rule 1.7:

1. Does Rule 1.7 of the North Dakota Rules of Professional Conduct permit the firm to
   represent the Private Client in the Investigation?

2. If the firm believes the representation will not be adversely affected, is the firm’s belief
   “reasonable” as required by N.D.R.Prof.Conduct 1.7(c)(1)?

OPINION
I. APPLICABLE NORTH DAKOTA RULES OF PROFESSIONAL CONDUCT

North Dakota Rules of Professional Conduct, Rule 1.7 is most applicable in this case.

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The Rule states in pertinent part:

a. A lawyer shall not represent a client if the lawyer's ability to consider, recommend,
or carry out a course of action on behalf of the client will be adversely affected by
the lawyer's responsibilities to another client or to a third person, or by the lawyer's
own interests.

c. A lawyer shall not represent a client if the representation of that client might be
adversely affected by the lawyer's responsibilities to another client or to a third
person, or by the lawyer's own interests, unless:

1. the lawyer reasonably believes the representation will not be
   adversely affected; and

2. the client consents after consultation.

Il. DISCUSSION

Subsection (a) addresses the situation where a lawyer’s responsibilities to another client will
adversely affect the lawyer’s representation of a client. N.D.R. Prof. Conduct 1.7, Comment 2.
Subsection (c), on the other hand, addresses the situation where a lawyer’s responsibilities to
another client may adversely affect the lawyer’s representation of a client. Id. Under subsection
(c), the lawyer may cure the conflict if the lawyer reasonably believes there will not be an adverse
effect and the client consents. In this circumstance, subsection (c) applies because there is no
concrete evidence that Attorney’s representation of the Private Client will adversely affect the
Government Clients.

“Ordinarily, a lawyer may not act as an 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 an 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 after
consultation.” N.D.R. Prof. Conduct 1.7, Comment 9 (emphasis added). However, concurrent
representation of this nature can depend on the nature of the litigation. Id. Specifically, “a suit
charging fraud entails conflict to a degree not involved in a suit for a declaratory judgment
concerning statutory interpretation.” Id. (emphasis added).

On its face, “charging” fraud could be construed differently than “defending.” In this case,
Attorney would be defending the fraud allegation. However, the Comment references “conduct of
the suit,” but does not state either charging or defending and does not distinguish between the two.
Because of that lack of distinction, it is possible that the phrase “a suit charging fraud” is making
a general statement about what type of suit it is, as opposed to which side of the suit an attorney is
on.

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Rule 1.7 does not explicitly prohibit Attorney from undertaking the representation. However, an
Attorney in this situation should proceed with caution and the Attorney must make a determination
of whether Attorney reasonably believes that the representation will not be adversely affected
given the circumstances; then Attorney must get the client’s consent, preferably in writing.

Without further context or facts concerning this representation, the question of whether the firm’s
belief that the representation would not be adversely affected is reasonable, cannot be answered.

CONCLUSION
This opinion was drafted by Sarah Atkinson and was unanimously approved by the Ethics
Committee on the 15 day of August, 2019.

Ethics Committee Chairperson

This opinion is provided under Rule 1.2(B), North Dakota Rules for Lawyer Discipline, which
states:

A lawyer who acts with good faith and reasonable reliance on a written
opinion or advisory letter of the ethics committee of the association is not
subject to sanction for violation of the North Dakota Rules of Professional
Conduct as to the conduct that is the subject of the opinion or advisory letter.

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