Can a firm defend a workers' comp claim when one of its associates already helped the claimant plan the same claim, and would screening or consent cure it?

Plain-English summary

An insurance carrier asked Law Firm A to defend a workers' compensation claim. The claimant was being helped by an associate at Law Firm A who was the claimant's close friend, who had earlier represented the claimant in unrelated matters, and who, after joining Law Firm A but before the firm took the defense, had informally conferred with the claimant and her counsel on strategy for pursuing the very claim the firm was now asked to defend.

The committee concluded that Law Firm A could not undertake the defense. It found the associate's involvement created a conflict arising under Rules 1.6, 1.7, and 1.9: even short of a formal attorney-client relationship, the associate's planning role gave him information that could be detrimental to the respondent and would impair the firm's ability to represent the carrier. The opinion notes the associate's conferring "with the claimant and her counsel regarding strategies for pursuing the workers' compensation claim" brought into play "the elements of legal representation from which a quasi-contract could be imputed."

The opinion holds that a screen ("Chinese Wall") would not cure the problem. It explains that a screen's purpose is to make consent possible where informed consent could cure the conflict; here, given the associate's continuing friendship with the claimant and his direct participation in building the claim, consent would not be reasonable and screening was therefore not an appropriate tool. Under Rule 1.10 the conflict passed to every other lawyer in Law Firm A. The committee added that Rule 3.7 applied because the associate could be called as a witness for the claimant, putting the firm in the position of cross-examining or impeaching its own employee.

The committee stressed it reached this result only on the specific facts, which showed an unusually direct level of involvement, and it cautioned that conflict determinations turn on the facts of each case.

In practice

Under this opinion, on the facts presented, a firm asked to take a matter against a person whom one of the firm's own lawyers has already helped plan that same matter had an imputed conflict under Rule 1.10 that the committee found could not be cured by screening the involved lawyer or by obtaining consent. The opinion ties the result to the associate's combination of a personal relationship with the claimant and active participation in strategy on the same claim, not merely to the prior unrelated representations.

The committee was careful to say it did not want to discourage lawyers from helping friends, including for free, or from discussing hypothetical situations with lawyer friends; it cautioned that such conversations can ripen, as here, into impermissible conflicts.

Common questions

Q: Our associate informally helped a friend plan a claim before joining us. Can the firm now take the other side of that claim?

A: Under Opinion 04-10, no, on facts like these. The committee found the associate's active participation in planning the claimant's strategy created a conflict imputed to the whole firm under Rule 1.10.

Q: Will a screen ("Chinese Wall") let the rest of the firm handle the case?

A: Not here. The opinion explains a screen exists to make consent possible, and because the associate's friendship and direct involvement made consent unreasonable, screening was not an appropriate tool.

Q: Does it matter that there was never a signed engagement with the friend?

A: The committee found the absence of a written agreement did not control. It said the associate's conferring on strategy brought into play the elements of legal representation from which a quasi-contract could be imputed.

Q: Why does Rule 3.7 come up?

A: Because the associate could be called as a witness for the claimant, the firm might have to cross-examine or impeach its own employee, so the committee found Rule 3.7 (lawyer as witness) also applied.

Background and rules framework

The opinion applies South Carolina's conflict rules, which track the Model Rules: Rule 1.7 (concurrent conflicts), Rule 1.9 (duties to former clients), Rule 1.6 (confidentiality), Rule 1.10 (imputation of conflicts across a firm), and Rule 3.7 (lawyer as witness). The committee treated the analysis as fact-specific, noting that a conflict "often turns on whether there has been prior representation, but a conflict may exist where there was no formal representation."

Citations and references

Rules of Professional Conduct:

• MR 1.6 / SC Rule 1.6 (confidentiality of information)
• MR 1.7 / SC Rule 1.7 (current-client conflicts)
• MR 1.9 / SC Rule 1.9 (duties to former clients)
• MR 1.10 / SC Rule 1.10 (imputation of conflicts)
• MR 3.7 / SC Rule 3.7 (lawyer as witness)

See also

• ABA Formal Op. 95-390: Conflicts in the corporate-family context
• ABA Formal Op. 494: Personal relationship with opposing counsel

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-04-10/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 04-10

RULES 1.6, 1.7, 1.9, 1.10 AND 3.7

Facts
Law Firm A is approached by an insurance carrier to defend a workers’ compensation claim. The claim is for injuries suffered by a lawyer in another firm, Law Firm B. During the course of the initial stages of the case, a partner of Law Firm A learned from its potential client that an associate of Law Firm A is a friend of the claimant and the associate, prior to joining Law Firm A, had represented the claimant in a divorce action and in an unrelated civil action. Additionally, the partner of Law Firm A has now learned from opposing counsel that after the associate had joined Law Firm A, but prior to Law Firm A’s partner’s involvement with the case, the associate had informally conferred with the claimant and her counsel regarding strategies for pursuing the workers’ compensation claim, and the associate had communicated with Law Firm B on behalf of the claimant to arrange for the return of its files in possession of the claimant. Further, the associate of Law Firm A obtained information under the Freedom of Information Act to be used in a potential claim against unrelated third parties. The associate of Law Firm A has not given any legal advice to his friend, the claimant, on this matter since the time of Law Firm A’s partner’s involvement.

Questions
Given the facts of Law Firm A’s associate’s relationship with and counsel to the claimant, is Law Firm A barred from representing the insurance carrier, and by implication, the defending employer, because of any conflict or potential conflict created by the actions of its associate? Would a “Chinese Wall” cure any potential conflict? Would consent of all parties cure any potential conflict?

Summary
Law Firm A may not undertake the defense of the claim. Under the facts presented by the inquirer, the members of the Ethics Advisory Committee believe that the information learned by the associate constitutes an impermissible conflict of interest, not curable by the erection of “Chinese Wall” nor by consent.

Opinion
Conflicts of interest are treated in the various sub-divisions of Rule 1 of the South Carolina Rules of Professional Conduct, SCACR 407. Under Rule 1.10, a conflict is imputed to the entire firm.

A conflict of interest depends on specific facts of a case. A determination of a conflict of interest often turns on whether there has been prior representation, but a conflict may exist where there was no formal representation.

Some conflicts may be cured by consent of the parties. Lawyers are implicitly allowed under the Rules of Professional Conduct to represent adverse parties by consent, but only where there is a reasonable belief that the representation will not adversely affect the relationship with the other client. Consent of the parties is not sufficient here due to the degree of the direct involvement of the associate with the facts of the case. (See Rules 1.7 and 1.9.)

In this situation, the associate of Law Firm A has had two levels of involvement: 1) prior to his association with Law Firm A, the associate represented the claimant in matters which were wholly unrelated to the present claim; and 2) after his association with Law Firm A (but prior to Law Firm A’s having undertaken the defense of the claim), he actively participated in the preparation of the claimant’s case. It is conceivable that consent from the former client (the claimant) would suffice for the prior, unrelated representation, but an issue troublesome to the members of the committee arises out of the subsequent relationship between the claimant and the associate. After the associate joined Law Firm A (but before Law Firm A became involved in the case), the associate continued his role as advisor and counselor to the claimant, even to the extent of advising the claimant and her counsel on how to proceed in filing the claim. (See FACTS: “Additionally, the partner of Law Firm A has now learned from opposing counsel that after the associate had joined Law Firm A, but prior to Law Firm A’s partner’s involvement with the case, the associate had informally conferred with the claimant and her counsel regarding strategies for pursuing the workers’ compensation claim,. . .”)

While apparently no representation agreement was signed between the associate and the claimant for this work, the fact that the associate “. . . conferred with the claimant and her counsel regarding strategies for pursuing the workers’ compensation claim . . .” brings into play the elements of legal representation from which a quasi-contract could be imputed.

Not only do we see prior representation here, but we see involvement by the associate in the factual setting of the case. The associate has learned facts that may be detrimental to the respondent in the workers’ compensation claim. The building of a “Chinese Wall” around the associate will not, in the opinion of the members of this committee, cure the problem. The associate has an on-going relationship with the claimant (“best friends”), and has already participated with the claimant in preparing the claim, presumably drawing upon the associate’s expertise gained while employed by Law Firm A and the associate’s knowledge of Law Firm A’s tactics and strategies in defending such cases. The purpose of a “Chinese Wall” or screen is as a device to make consent possible in cases where informed consent by the involved parties can cure the conflict. Where conflicts arise out of situations under Rule 1.9, consent may be reasonable, depending on the circumstances. In some specific instances, screening may be used to make the client more comfortable in giving consent.

In this instance, the conflict (under this very limited set of facts), arises out of Rules 1.6, 1.7, and 1.9. The associate’s involvement in planning and determining strategy for the worker’s compensation claim may fall short of a formal attorney-client relationship, but this relationship would certainly impair the ability of the lawyer to represent the insurance company. Because of this degree of involvement, consent would not be reasonable in this case, and thus screening would not be an appropriate tool. Subsequently, Rule 1.10 would pass the conflict onto all other members of the Law Firm A such that representation of the insurance company in this matter would not be appropriate.

There is a real possibility that the associate of Law Firm A could be called as a witness for the claimant, thereby invoking the provisions of Rule 3.7. If Law Firm A is defending the case, it may well be put in the position of cross-examining its employee, even to the extent of attempting to impeach its own employee. Having found an impermissible conflict, we further find that Rule 3.7 applies.

We have reached this result only under the specific facts of this case, which speak to a degree of relationship that creates the conflict. We caution the Bar that determination of the applicability of the Rules of Professional Conduct must turn on the facts of each case. In the instant case, it is the opinion of the members of the committee that the extensive involvement of the associate with the elements of the claim makes Law Firm A’s representation in this situation an impermissible conflict.

We do not wish, however, to discourage lawyers from helping and advising their friends. We think it admirable for lawyers, when appropriate, to assist their friends, and others, at no charge. We also find it useful for lawyers to discuss hypothetical situations with their lawyer friends, but we caution that such conversations may ripen, as in this case, into impermissible conflicts.