Can a lawyer represent both the majority and minority investors when forming a partnership or corporation, and keep representing one of them if the joint representation has to end?
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This page answers the general question as of 1989. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-89-10 asked under what circumstances a lawyer may represent both majority and minority investors in forming a business partnership or corporation, and whether the lawyer may continue representing only one or some of those clients if the common representation has to end. The committee concluded that a lawyer may generally undertake the joint representation if the lawyer's conduct comports with SCR 20:1.7 and SCR 20:2.2, treating SCR 20:2.2 ("Intermediary") as setting the primary guidelines for accepting, conducting, and terminating common representation of this kind.
Under SCR 20:2.2(a), the committee explained, a lawyer may act as intermediary only if the lawyer consults with each client about the implications of common representation (including the advantages, risks, and effect on the attorney-client privilege) and obtains each client's consent, reasonably believes the matter can be resolved on terms compatible with the clients' best interests with little risk of material prejudice, and reasonably believes the representation can be undertaken impartially. The committee pointed to the Comment to SCR 20:2.2, which recognizes the propriety of such representation in helping to organize a business in which two or more clients are entrepreneurs, and which lists factors bearing on appropriateness such as the compatibility of client interests, any prior or contemplated future representation of only one client, and any antagonistic relationship among the clients.
The committee added that although SCR 20:2.2 does not itself require written client consent, the committee believed written consent would nevertheless be required by SCR 1.7(b), which also governs acceptance of common representation. It noted that before explaining the risks, advantages, and implications, the lawyer should caution the clients that the explanation may include matters the lawyer would not state to the others if representing only one of them. Finally, the committee emphasized that under SCR 20:2.2(c) a lawyer must withdraw as intermediary if any client so requests or if any condition in paragraph (a) is no longer satisfied, and upon withdrawal "shall not continue to represent any of the clients in the matter that was the subject of the intermediation." Quoting Hazard and Hodes, the committee described this as making withdrawal from the entire matter mandatory as a precaution, and as an exception to SCR 20:1.9's general rule allowing adverse representation against a former client who consents after consultation.
Currency note
This opinion was issued in 1989, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update). SCR 20:2.2 ("Intermediary"), which this opinion treats as central, was among the rules later affected; the Model Rules deleted Rule 2.2 in 2002 and Wisconsin's rules were revised accordingly. 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 one lawyer represent both the majority and minority investors in forming a company?
A: Generally yes. The committee concluded that a lawyer may represent both if the lawyer complies with the intermediary rule SCR 20:2.2 and the conflict rule SCR 20:1.7, including each client's informed consent.
Q: Did the opinion require the clients' consent to be in writing?
A: The committee concluded that although SCR 20:2.2 itself did not require written consent, written consent would nevertheless be required by SCR 1.7(b), which also governs acceptance of common representation.
Q: If the joint representation breaks down, can the lawyer keep representing one of the investors?
A: No. The committee concluded that under SCR 20:2.2(c) the lawyer must withdraw and may not continue to represent any of the clients in the matter that was the subject of the intermediation.
Background and rules framework
The opinion interpreted SCR 20:2.2 / Model Rule 2.2 (lawyer as intermediary, since deleted from the Model Rules in 2002) together with SCR 20:1.7 / Model Rule 1.7 (concurrent conflicts of interest) and SCR 20:1.9 / Model Rule 1.9 (duties to former clients), as applied to common representation of investors forming a business.
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20:2.2 / Model Rule 2.2 (intermediary; deleted from the Model Rules in 2002)
- Wis. SCR 20:1.7 / Model Rule 1.7 (conflicts of interest)
- Wis. SCR 20:1.9 / Model Rule 1.9 (duties to former clients)
Other opinions cited:
- Hazard and Hodes, The Law of Lawyering 316 (1985, 1988 Supp.)
See also
- WI Ethics Op. E-95-5: Forming a Client Relationship
- WI Ethics Op. E-99-1: Insurer Audits and Defense Limits
- WI Ethics Op. E-92-1: Plaintiff and Subrogated Insurer
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-89-10.pdf
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