ETHICS OPINION 646-1975 CONFLICT OF INTEREST: MULTIPLE CLIENTS

NUMBER 646

QUESTION.

 

A long-standing client of a recently admitted partner in a law firm contemplates entering into a five-year agreement with a service agency to which it was introduced by the law partnership. The service agency, although not heretofore a client of the law partnership, has close contacts of a personal and business nature with it. The present client is an association of professionals. The service agency would arrange tours and other related accommodations for the association and its members. Each party would be represented by separate outside counsel in the negotiation and closing of the contemplated five-year agreement. Would it be proper for the law partnership, after the agreement has been executed, to represent both parties in future legal matters if it is understood that, should any conflict arise, the partnership would remove itself as counsel for one side or the other?

 

ANSWER.

 

On the facts stated, there would appear to be no ethical impropriety in the inquirer’s representation of both parties in future legal matters. DR 5-105; Canon 5; N,Y. County 597 (1972). As explained in EC 5-15:

 

“(T)here are many instances in which a lawyer may properly serve multiple clients having potentially differing interests in matters not involving litigation. If the interests vary only slightly, it is generally likely that the lawyer will not be subjected to an adverse influence and that he can retain his independent judgment on behalf of each client; and if the interests become differing, withdrawal is less likely to have a disruptive effect upon the causes of his clients.”

 

The inquirer should bear in mind, however, the admonition contained in EC 5-16 which provides in relevant part:

 

“(B)efore a lawyer may represent multiple clients, he should explain fully to each client the implications of the common representation and should accept or continue employment only if the clients consent. If there are present other circumstances that might, cause any of the multiple clients to question the undivided loyalty of the lawyer, he should also advise all of the clients of those circumstances.”

 

The inquirer should also bear in mind the provisions of Canon 4 and DR 4-101 concerning the preservation of the confidences and secrets of a client. If the lawyer in the course of his representation acquired confidential information from one of the parties that would operate to the disadvantage of either party in any matter where their interests were conflicting, he would have to withdraw from representation of both clients unless they consented to continued representation after full disclosure. As stated in EC 4-5: “. . . . . No employment should be accepted that might require such disclosure” 

 

Even in the absence of such confidential information, and notwithstanding the consent of both parties, the lawyer would have to withdraw from representation of both clients in the event of litigation between them. EC 5-15, supra; N.Y. State 205 (1971), See also N.Y. County 549 (1966).

 

These possibilities should be disclosed clearly to both clients before the common employment is accepted.

 

June 20, 1975