Can an attorney who settled a landlord's lease dispute with a tenant later sue that same tenant on the landlord's insurer's subrogation claim arising from the same fire?

Currency note

This opinion was issued in 1981, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. Subsequent rule amendments or later opinions (including Formal Ethics Opinions 84-F-65 and 86-F-104) refined this analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Plain-English summary

An attorney defended the owner of a commercial building in a suit by the building's tenant, who sought to cancel the lease and remove his equipment after the building was damaged by a fire allegedly caused by the tenant's negligence. The lease let the tenant cancel if the building could not be repaired within 90 days, and the tenant argued it could not be. The attorney negotiated a settlement under which the owner's insurance company repaired the building within the 90-day period and the tenant dismissed his suit. Later, a member of the owner's family retained the same attorney to claim damages to personal property from the tenant, and the owner's insurance carrier retained the attorney to sue the tenant on its subrogation claim. The lease was silent on waiver of subrogation and on the tenant's responsibility for building damage. The owner then refused to cooperate and refused to be named as plaintiff in the subrogation suit, raising the question whether the attorney could properly represent the insurance company against the owner, his former client, to recover for the owner's failure to cooperate.

The Board explained that the Code of Professional Responsibility's definition of "differing interests" covers every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, and that "confidence" is defined in Disciplinary Rule 4-101. It quoted Tennessee case law describing the attorney-client relationship as an extremely delicate, fiduciary one entitled to the courts' jealous protection, in which the client relies on the attorney for guidance and the courts will look into attorney-client dealings to guard against undue consequences to the client. Citing American National Bank v. Bradford, the Board noted that even after the relationship's termination, the law continues to protect the confidence, and an attorney who once received a client's confidence about a particular matter is thereafter disqualified from acting for any other party adversely interested in the same matter. Citing Autry v. State, the Board reiterated the rigid rule that an attorney who has been engaged and has received a client's confidences cannot later serve those whose interests are adverse to the client or former client.

Applying this authority, the Board concluded that the duty of loyalty an attorney owes a client survives the formal end of the representation to the extent that, having represented a party to a transaction, the attorney may not thereafter represent any other party in an action against the former client arising out of, or closely related to, that transaction. Under the facts given, it would be impermissible for the attorney to sue the tenant on behalf of the insurance company against his former client, the building owner.

Common questions

Q: Can a lawyer sue a former client's tenant in a case related to the matter the lawyer previously handled for that client?

A: No, on facts like these. The opinion concludes "it would certainly be impermissible for the attorney to file suit on behalf of the insurance company against his former client, the building owner."

Q: Does the duty to a former client end once the earlier case is settled and closed?

A: No. The Board states "the duty or loyalty owed by an attorney to his client with respect to matters as to which the attorney acted as counsel survive the formal conclusion of the attorney-client relationship."

Q: What is the test for whether a new matter is too closely tied to the earlier representation?

A: Whether the new matter arises out of or is closely related to the earlier transaction. The opinion states the attorney "may not thereafter represent any other party in an action against his former client arising out of or closely related to the transaction."

Background and rules framework

The opinion drew on the general "differing interests" and confidentiality definitions of the Tennessee Code of Professional Responsibility (Disciplinary Rule 4-101) and on Tennessee case law describing the attorney's continuing duty of loyalty to a former client. The modern correlate is Model Rule 1.9 (duties to former clients), noted here as a navigational cross-reference rather than a rule the opinion itself applied.

Citations and references

Rules of Professional Conduct:

• DR 4-101 (definition of client "confidences"), Tennessee Code of Professional Responsibility
• Model Rule 1.9 (duties to former clients), modern correlate

Cases:

• Harris v. Marshall, 8 Tenn. App. 508, fiduciary nature of the attorney-client relationship
• Coleman v. Moody, 52 Tenn. App. 138, 372 S.W.2d 306 (1963), reaffirming the fiduciary standard
• American National Bank v. Bradford, 182 Tenn. 226, 188 S.W.2d 971 (1945), attorney disqualified from later acting adversely to a former client on the same matter
• Autry v. State, 430 S.W.2d 808 (Tenn. Crim. App. 1968), rigid rule against representing conflicting or inconsistent interests

See also

• Tenn. Ethics Op. 84-F-65: Former Insurer-Client Conflict
• Tenn. Ethics Op. 86-F-104: Substantial Relationship Test for Former-Client Conflicts

Source

• Landing page: https://www.tbpr.org/ethic_opinions/81-f-9

Original opinion text

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

81-F-9 - Former Client

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 81-F-9

On April 8, 1981, Disciplinary Counsel issued an Advisory Ethics Opinion and the Board has now been asked to issue a Formal Opinion pursuant to Section 26 of Rule 9 adopted by the Supreme Court of Tennessee at Nashville on January 28, 1981.

The following factual situation was presented:

The attorney defended the owner of a commercial building in a suit brought by the tenant in the building to cancel the lease and be allowed to remove his equipment where the building had been damaged by fire allegedly as a result of the tenant's negligence. The lease provided the tenant could cancel the lease if the building could not be repaired within 90 days and it was the tenant's contention that such could not be done. The attorney effected a settlement between the parties, as a result of which the owner's insurance company repaired the building within the 90 day period and the tenant dismissed his suit. Sometime later, a member of the owner's family retained the attorney to make claim against the tenant for damages to his personal property, and the insurance carrier of the owner retained the attorney to file suit against the tenant on its subrogation claim. The lease was silent as to waiver of subrogation and as to the tenant's responsibility for damage to the building. The owner refused to cooperate and refused to be named as plaintiff in the subrogation suit and the attorney raised the question as to whether he could properly represent the insurance company in an action against the owner, his former client, to recover the proceeds paid for failure of the owner to cooperate.

Rule 8 of the Rules of the Supreme Court of Tennessee incorporates the Code of Professional Responsibility. In the section on Definitions, we find "Differing Interests" defined to include every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest." The word Confidence" is defined in Disciplinary Rule 4-101.

The Court of Appeals, in the case of Harris v. Marshall, 8 Tenn. App. 508, quoted with approval the following language:

The relationship of attorney and client is an extremely delicate and fiduciary one, so far as the duty of the attorney toward the client is concerned, and the Courts jealously hold him to the utmost good faith in the discharge of his duty ....

The relation he (the attorney) bears to the client implies the highest trust and confidence. The client lays bare to his attorney his very nature and heart, leans and relies upon him for support and protection in the saddest hours of his life, knowing not which way to go to obtain his rights, he puts himself under the guidance of his attorney and confides that he will lead him aright ....

The Court from general principles of policy and equity will always look into the dealings between attorney and client, and guard the latter from any undue consequences resulting from a situation in which he may be supposed to stand unequal.

The language of the first paragraph of the quote was cited with approval again in the case of Coleman v. Moody, 52 Tenn. App. 138,372 S.W. (2d) 306,313.

In the case of American National Bank v. Bradford, 188 S.W. (2d) 971, the Middle Section of the Court of Appeals, at page 981, stated:

It is true the relation of client and attorney is one of great confidence and even after its termination the law continues to protect that confidence. An attorney who has once been made the recipient of the confidence of a client concerning a particular matter is thereafter disqualified from acting for any other party adversely interested in the same matter.

The Tennessee Court of Criminal Appeals, in the case of Autry v. State, 430 S.W. (2d) 808 at page 809, held:

It has long been firmly established, both in the canons of professional ethics and by judicial opinions, that attorneys cannot represent conflicting interests or undertake to discharge inconsistent duties. When an attorney has once been engaged and receives the confidences of his client, he cannot enter the services of those whose interests are adverse to that of his client or former client. The rule is a rigid one, and it is well that it is so.

The duty or loyalty owed by an attorney to his client with respect to matters as to which the attorney acted as counsel survive the formal conclusion of the attorney-client relationship to the extent that, having represented a party to a transaction, the attorney may not thereafter represent any other party in an action against his former client arising out of or closely related to the transaction. Under the facts given, it would certainly be impermissible for the attorney to file suit on behalf of the insurance company against his former client, the building owner.

This 25th day of June, 1981.

ETHICS COMMITTEE:

Joseph G. Cummings

F. Evans Harvill

John R. Rucker

APPROVED AND ADOPTED BY THE BOARD