ETHICS OPINION 573-1969 CONFLICT OF INTERESTS

NUMBER573

QUESTION.

 

 

I would appreciate it very much if your Committee on Legal Ethics could advise me whether the following situation involves a question of conflict of interests.

 

I am representing the wife in a matrimonial case which has been dragging on for years. The fight has been bitter and both parties do not only distrust each other but also distrust the attorney on the other side.

 

The parties have been discussing the possibility of selling their marital home which is held by the entirety, and out of the proceeds of the sale the wife is to receive, in addition to her share also several thousand dollars in alimony payments which are past due. Since the wife is afraid that, once the house is sold, the husband will not live up to the promises even if they are in writing, it was suggested that the deed to the house shall be transferred to two attorneys in escrow; the escrow agreement shall set forth in detail how the proceeds of the sale are to be distributed. The attorney for the husband insists that he must be one of the escrowees and suggests that I am the other escrowee.

 

I feel that the escrowees should not be the attorneys for the parties since it may involve the attorneys in a conflict of interests. If any difference should arise concerning the construction of a sentence (and there has not been a judgment or decision which has not been interpreted differently by the two parties), the attorneys would have to interpret the escrow agreement (in which each attorney represents both parties), and at the same time they would have to listen to their clients and advance the interpretation which is most advantageous to their client. I have suggested to the attorney for the husband that under these circumstances it would be unethical for the attorneys for the parties to be the escrowees. He disagrees with me and insists that he always does it that way. Please give me your opinion.

ANSWER.

 

Canon 6 of the Canons of Professional Ethics has application to this question insofar as it relates to conflicting interests. Canon 6 states in part:

 

“It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose”.

 

Canon 6 requires an attorney to avoid not only the circumstances which present an obvious conflict of interests, but also circumstances in which there is the probability or possibility that a conflict of interests will develop. Drinker, Legal Ethics at pp. 104-105.

 

No conflict of interests is presented where an attorney acts as escrow agent with the consent of both parties and also represents one party to the escrow agreement. Informal Opinion No. 923, April 26, 1966, American Bar Association <text not clear>

 

In a divorce action where by mutual agreement of the parties the wife’s attorney held, as escrow agent, money to be paid to her when the divorce decree concluded the rights of the parties, there was no unethical conduct. Opinion No. 357, New York County Lawyers’ Association Committee on Professional Ethics (1934), Even if the proposed escrow agreement did present a possible conflict of interests, the full and knowing consent of the parties in entering the escrow agreement would remove the arrangement from the inhibitions of Canon 6.

 

It is our opinion that it would not be in violation of the Canons of Ethics for the attorney to act jointly as escrow agents while continuing to represent their individual clients.

 

However, since the inquirer anticipates the likelihood of a conflict arising between the escrow agents, the escrow agreement should provide, with the express consent of both parties, that if any conflict should arise each attorney shall represent his own client only and disqualify himself from representation of the other party.

 

September 25, 1969