Can a lawyer who set up nothing for an LLC represent the majority members and the LLC against a minority member?

Plain-English summary

The inquiry concerned the representation of majority shareholders by LLC counsel against a minority shareholder. The committee determined that, since the attorney had not previously been involved in creation of the limited liability corporation (LLC) and did not represent A, B, or C, RPC 1.7(a) and 1.9 do not prohibit the attorney from representing A, B, or the LLC itself, provided that A and B removed C in accordance with the operating agreement and that removing C was in the best interests of the LLC.

The committee added that, for the same reasons, Griva v. Davidson, 637 A.2d 830 (D.C. App. 1994), may be distinguished, because in that case the law firm had organized the partnership and had represented two individual partners. The committee stated that the analysis is also premised on the interests of A and B being congruent, and not otherwise adverse to the LLC in accordance with RPC 1.7(b), or that the attorney has complied with subsections (1) and (2) of that rule. The committee said the attorney must also comply with RPC 2.2, and referred the inquirer to Hicks v. Edwards, 75 Wn. App. 156, 876 P.2d 953 (1994).

Currency note

This opinion was issued in 1998, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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. Washington's RPC 1.7 and 1.9 correspond to ABA Model Rules 1.7 (conflicts of interest) and 1.9 (duties to former clients). The cited RPC 2.2 corresponds to the former ABA Model Rule 2.2 (lawyer as intermediary), which was eliminated from the Model Rules in 2002; verify the current rules before relying on it.

Common questions

Q: Can LLC counsel represent the majority members against a minority member?

A: The committee concluded RPC 1.7(a) and 1.9 do not prohibit it where the attorney had not created the LLC and had not represented any of the members, provided the removal followed the operating agreement and served the LLC's best interests.

Q: What conditions did the committee attach?

A: That removing the minority member followed the operating agreement and was in the LLC's best interests, that the majority members' interests are congruent and not adverse to the LLC under RPC 1.7(b), and that the attorney complies with RPC 2.2.

Q: Why did the committee distinguish Griva v. Davidson?

A: Because in Griva the law firm had organized the partnership and had represented two individual partners, unlike the inquiring attorney, who had neither created the LLC nor represented the members.

Background and rules framework

The opinion applied RPC 1.7(a) and 1.7(b) (conflicts of interest), RPC 1.9 (duties to former clients), and RPC 2.2 (the former rule on a lawyer acting as intermediary), corresponding to ABA Model Rules 1.7, 1.9, and the former Model Rule 2.2. The committee made the analysis turn on the attorney's lack of prior involvement with the LLC and its members, the congruence of the majority members' interests with the LLC, and compliance with the operating agreement, distinguishing Griva v. Davidson and citing Hicks v. Edwards.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.7 (conflict of interest: current clients); Washington RPC 1.7(a), 1.7(b)
• ABA Model Rule 1.9 (duties to former clients); Washington RPC 1.9
• Former ABA Model Rule 2.2 (lawyer as intermediary; eliminated in 2002); Washington RPC 2.2

Cases:

• Griva v. Davidson, 637 A.2d 830 (D.C. App. 1994), distinguished (law firm had organized the partnership and represented two individual partners).
• Hicks v. Edwards, 75 Wn. App. 156, 876 P.2d 953 (1994), cited on compliance with RPC 2.2.

See also

• WA Ethics Op. 1789: Nonprofit Lawyer Meeting Donors
• WA Ethics Op. 1793: Office-Sharing and Adverse Clients

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1000

Original opinion text

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

Advisory Opinion: 1807
Year Issued: 1998
RPC(s): RPC 1.7; 1.9; 2.2
Subject: Conflict of interest; representation of majority shareholders by corporation counsel against minority shareholder

The Committee researched and reviewed your inquiry concerning the representation of majority shareholders by LLC counsel against a minority shareholder and determined the following:

Since the attorney had not previously been involved in creation of the limited liability corporation (LLC), and did not represent either A, B, or C, RPC 1.7(a) and 1.9 do not prohibit him from representing A, B, or LLC itself; PROVIDED, however, that A and B removed C in accordance with the Operating Agreement, and that removing C was in the best interests of the LLC. For the same reasons, Griva v. Davidson, 637 A.2d 830 (D.C. App. 1994), may be distinguished. In that case, the law firm had organized the partnership and had represented two individual partners. This analysis is also premised upon the interests of A and B being congruent, and not otherwise adverse to LLC in accordance with RPC 1.7(b), or that the attorney has complied with subsections (1) and (2) of the same rule. The attorney must also comply with RPC 2.2, and is referred to the case of Hicks v. Edwards, 75 Wn. App. 156, 876 P.2d 953 (1994).