Does a lawyer who drafts a form contract for one client have a conflict if another client might later negotiate against it?
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This page answers the general question as of 2018. 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 EF-18-03 (August 27, 2018) addresses a lawyer asked to draft a model contract form ("form contract") for a client, where the lawyer assumes the client may later present that form to other companies or persons who are also clients of the firm. The committee analyzes the question under SCR 20:1.7. It finds no direct-adversity conflict under SCR 20:1.7(a)(1), because the lawyer is not drafting for a specific matter and is not negotiating terms with another client; drafting a form that may or may not be used in future dealings is not direct adversity.
The analysis turns instead on whether there is a "significant risk" of material limitation under SCR 20:1.7(a)(2). Drawing on ABA Comment [8], the committee concludes the mere possibility that a form contract may someday be used in a transaction with another client does not pose a significant risk of materially impairing the lawyer's representation of the requesting client. It is uncertain whether the form will be used at all, and any counterparty remains free to negotiate or reject its terms, so the risk is less than even the "mere possibility" of harm the comment describes. The committee notes the analysis may differ if the lawyer believes there is a significant risk the form will be used in a specific transaction with a specific other client, especially where the lawyer holds that client's material confidences or wishes to protect that client's interests.
The committee identifies where conflicts do arise. A direct conflict under SCR 20:1.7(a)(1) exists if the client asks the lawyer to help negotiate or draft a specific contract, based on the form, with another current client. A conflict also arises if, after drafting the form for one client, the lawyer is asked by a second client to negotiate a contract based on the form against the first client: if the first client is current, that is a direct SCR 20:1.7(a)(1) conflict; if the first client is now a former client, it is a substantially related matter governed by SCR 20:1.9(a). In each case the lawyer needs the informed consent of both clients, and the committee notes some concurrent conflicts are non-consentable. Throughout, the lawyer may not use or disclose another client's confidential information in drafting the form.
In practice
Under this opinion, conduct matching its fact pattern is treated as follows. As the rules stood at the time of the opinion, a Wisconsin lawyer could ordinarily draft a form contract for a client even knowing the client might use it in future dealings with other firm clients, because that possibility alone is neither direct adversity nor a significant risk of material limitation. The committee concludes the lawyer may not use or disclose another client's confidences in the drafting, and that the lawyer would have a conflict requiring both clients' informed consent if later asked to negotiate or review a contract based on the form against the original client (under SCR 20:1.7(a)(1) for a current client, or SCR 20:1.9(a) for a former client).
Common questions
Q: Is drafting a form contract a conflict if a client might use it against another firm client later?
A: Not by itself. The committee concludes there is no direct adversity and ordinarily no significant risk of material limitation, so the mere possibility of future use does not create a conflict.
Q: When does drafting a form contract create a conflict?
A: When a specific adverse use is in view. The committee concludes a conflict arises if the lawyer is asked to negotiate or review a contract based on the form against the original client, or if the lawyer holds material confidences of a specific client the form will be used against.
Q: Can the lawyer use another client's confidential information when drafting the form?
A: No. The committee concludes the lawyer may not use or disclose the confidential information of other clients in drafting a form contract.
Q: Can a conflict over the form be cured by consent?
A: Sometimes. The committee concludes the lawyer needs the informed consent of both clients, while noting that some concurrent conflicts are non-consentable under SCR 20:1.7(b).
Background and rules framework
The opinion interprets SCR 20:1.7 / Model Rule 1.7 (concurrent conflicts, both direct adversity and material limitation) and SCR 20:1.9 / Model Rule 1.9 (duties to former clients in substantially related matters). The committee applies ABA Comment [8] to Rule 1.7 in assessing whether a future, hypothetical use of a form contract presents a "significant risk" of material limitation.
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20:1.7, 20:1.7(a)(1), 20:1.7(a)(2), 20:1.7(b) / Model Rule 1.7 (concurrent conflicts)
- Wis. SCR 20:1.9(a) / Model Rule 1.9 (duties to former clients)
See also
- WI Ethics Op. EF-20-02: Examining a Current or Former Client as an Adverse Witness
- WI Ethics Op. EF-23-02: Guardian ad Litem Conflicts
- DC Ethics Op. 265: Positional Conflicts in Simultaneous Representation
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/EF-18-03%20Form%20Contract%20FINAL.pdf
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