Can a Texas lawyer who prepared a partnership agreement and acted for both partners later represent one partner in a suit against the other?

Plain-English summary

A lawyer first employed by client A prepared an employment contract, then a partnership agreement between A and E, acted for both partners in later selling the business, and was designated trustee to collect the money due the business and disburse it to creditors. Although A and the lawyer considered him to represent only A, he had also advised E on several small matters. A then contemplated suing E for damages arising from E's operation of the business and asked whether the lawyer could represent A.

The Committee held he could not (8-0). It reasoned that, although first employed by A alone, the lawyer subsequently prepared the partnership agreement, acted for both partners in the sale, and acted as trustee for both in completing the partnership's affairs (probably paid with partnership funds), so he represented both A and E in the partnership relations from formation. On those facts, representing either A or E in a lawsuit growing out of the partnership relationship would violate Canon 6. Two members added that representing A would probably also violate Canon 34, on maintaining the confidences of a client.

Currency note

This opinion was issued in 1959, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer who drafted a partnership agreement later sue one partner on behalf of the other?

A: Under this opinion, no. The Committee held that a lawyer who prepared the partnership agreement and acted for both partners represented both, so suing one for the other would violate Canon 6.

Q: Did it matter that the lawyer and one partner considered him to represent only that partner?

A: No. The Committee looked to what the lawyer actually did, preparing the partnership agreement, acting for both partners in the sale, and serving as trustee for both, and concluded he represented both regardless of how he and A viewed the relationship.

Q: Was client confidentiality also implicated?

A: Two members expressed the view that representing A would probably also violate Canon 34, on maintaining the confidences of a client.

Background and rules framework

The opinion interprets former Texas Canon 6 (representation of conflicting interests) and Canon 34 (maintaining client confidences), as applied to a lawyer who had served both partners in forming, selling, and winding up a partnership and was then asked to sue one partner for the other. The Committee cited its earlier Opinion 176. The modern analogs are ABA Model Rule 1.7 (conflicts involving current clients) and Model Rule 1.9 (duties to former clients).

Citations and references

Rules of Professional Conduct:

• MR 1.7 (conflict of interest; current clients), as the modern analog
• MR 1.9 (duties to former clients), as the modern analog
• Texas Canons 6 and 34 (former canons)

Other opinions cited:

• Texas Ethics Opinion 176: conflicting representation

See also

• TX Ethics Op. 217: County Attorney Defending in a Support Case
• TX Ethics Op. 227: Texas-D.C. Partnership Letterhead
• TX Ethics Op. 232: Highway Commissioner Defending a State Suit
• TX Ethics Op. 234: Partner as a Material Witness

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-219/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_219.pdf

Original opinion text

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

QUESTION PRESENTED

The attorney for client A prepares an employment contract by which A is to hire E to act as manager of a retail business A anticipates purchasing. Prior to signing of the contract a third party enters into the negotiations and a three party partnership is discussed. The attorney prepares a partnership agreement at A's request. Subsequently the negotiations are concluded with A and E becoming partners in the business and the third party dropping out. At A's request the attorney prepares the two party partnership agreement. A and E each put up one-half of the money. E is to act as full time manager, with A taking no active part in the business.

During operation of the business some unusual financial dealings are discovered. A and E decide to sell the business, and the attorney is employed to prepare the contract of sale to a third party purchaser. The attorney is also designated a trustee to collect all money due the business and to disburse it to the business's creditors.

The attorney and A have had a close relationship for several years. At all times the attorney is looked upon as attorney for A. E does not have an attorney of his own so far as is known. Both A and the attorney consider the attorney as having represented only A and not E. However, the attorney also advised E in connection with several small matters arising in the business.

There is evidence that E might be responsible to A for damages arising from E's operation of the business, and a law suit by A against E is contemplated. Would there be a conflict of interests in violation of the Canons of Ethics if the attorney were to represent A in a law suit against E?

18 Baylor L. Rev. 303 (1966)

CONFLICTS OF INTERESTS - CONFIDENCES OF A CLIENT
An attorney may not represent one partner of a partnership in a suit against the other partner arising out of the partnership relationship where the attorney originally prepared the partnership agreement, acted for both partners in the later sale of the business, and acted as trustee for both in the completion of the partnership's affairs.

Canons 6, 34.

Although the attorney was first employed by A only, he subsequently prepared the partnership agreement, acted for both partners in the sale of the business, and acted as trustee for both in the completion of the partnership affairs. Thus the attorney represented both A and E in the partnership relations from its formation, probably being paid with partnership funds. The relation of the attorney to both A and E is such that it would be a violation of Canon 6 if he should represent either A or E in a law suit growing out of the partnership relationship. (See Opinion 176.) (8-0.)

Two members also expressed the view that the attorney probably would also violate Canon 34 regarding maintenance of confidences of a client if he should represent A in any law suit, arising from the transaction in question.

Tex. Comm. On Professional Ethics, Op. 219 (1959)