Ethics Spotlight: Conflicts of Interest Arising During Representation

June 2021

By Carole J. Buckner

Where a lawyer agrees to represent more than one client in the same matter, there is often, if not always, a potential that the interests of the lawyer’s multiple clients may conflict with each other. This can occur in many ways. In an employment case, where the lawyer jointly represents both employer and employee, the employer may decide to terminate the employee. In litigation against jointly represented partners, one partner may turn against another, or litigation strategies or settlement goals may conflict. In probate litigation, one trustee may find fault with another. In a personal injury case, a lawyer may represent multiple plaintiffs in a negligence or products liability matter, where the conflict may involve division of the settlement proceeds. The lawyer’s ethical obligations in such scenarios are governed by the original engagement agreement, the terms of any informed written consent obtained, and the Rules of Professional Conduct governing conflicts of interest and withdrawal from representation.

Whether addressed in the initial engagement agreement between a lawyer and multiple clients or in concurrent separate written conflict disclosures and consent, lawyers must anticipate and address such conflicts of interest at the outset of the representation. The State Bar of California has published Sample Fee Agreements that include language addressing joint client disclosure and informed written consent, available here. Pursuant to rule 1.7 of the Rules of Professional Conduct, lawyers must obtain the clients’ informed written consent to the joint representation if there is a “significant risk” that the representation of one client will be “materially limited” by the representation of another client. The parties’ informed written consent can be memorialized through a separate written conflict waiver letter. Informed written consent requires disclosure of the pros and cons of joint representation, including the reasonably foreseeable adverse consequences to the multiple clients involved. (See rules 1.0.1(e) and (e-1).) 

There are many ways conflicts can arise in a joint representation. Jointly represented clients may give lawyers conflicting instructions or have differing objectives, such as positions on settlement. COPRAC Form. Op. 1999-153. Conflicts can also arise if one client asks the lawyer not to share confidential information with other jointly represented clients. A preexisting relationship with one jointly represented client could create a conflict if that relationship adversely impacts representation of the other jointly represented clients. Clients may require lawyers to advocate conflicting legal positions or make conflicting demands for the original file after the representation. Id. 

As these possibilities illustrate, there is a risk that a potential conflict may develop into an actual conflict during representation. The lawyer may no longer be able to continue with the joint representation. The parties typically agree in the initial engagement agreement regarding what will occur if the jointly represented clients develop a conflict of interest. Typically, there are several options. One option in the event an actual conflict develops is for the lawyer to withdraw from representation of all parties entirely. Another option is for the lawyer to continue representing one or more parties while the others engage new counsel. Whether the lawyer can continue representation of some clients will depend on the language in the initial conflict waiver. Sometimes, the parties will provide that in the event an actual conflict arises, the lawyer will withdraw from representation of all parties. In other situations, the parties will agree that the lawyer will continue to represent specific identified parties, and the other parties will need to engage new counsel. 

In some cases, the parties agree that the lawyer may exercise discretion as to which parties the lawyer will continue to represent in the event of a conflict. Careful attention to these provisions is important. Even when these options are agreed, the continued representation of one joint client adverse to another may be prohibited, depending on the circumstances giving rise to the conflict. 

Even if the jointly-represented clients provided informed written consent at the inception of the representation, their interests might diverge for any number of reasons during the course of the ongoing representation. Comment [10] to rule 1.7 recognizes that the jointly represented parties’ interests can change during the representation. “A material change in circumstances … may trigger a requirement to make new disclosures, and …obtain new informed written consents….” It is important that the lawyer address such situations proactively. Important limitations exist when considering whether a client’s informed written consent will resolve a conflict of interest arising during the ongoing representation. Comment [8] to Rule 1.7 provides that some conflicts of interest are not consentable such that “even informed written consent may not suffice to permit the representation.” In addition, Rule 1.7(d) provides that the lawyer must reasonably believe that the lawyer can provide competent and diligent representation to each affected client. This may not always be possible depending on the conflict of interest that arises during the representation. The lawyer cannot proceed with joint representation if doing so requires that the lawyer sacrifice the interests of one client for those of the other.

There are several additional scenarios in which informed written consent (regardless of whether given at the onset of the representation or when a conflict of interest arises during the course of the ongoing representation) will not suffice to resolve a midstream conflict of interest. If the joint representation is “prohibited by law,” the conflict is not consentable under Rule 1.7(d)(2). If the representation involves the assertion of a claim by one client against another client represented by the lawyer in the same litigation or another proceeding before a tribunal, Rule 1.7(d)(3) provides that the conflict is not consentable. For more on this topic, see Kevin Mohr, Spotlight on Ethics: Unwaivable Conflicts of Interest.

Assuming that the conflict of interest is consentable and the lawyer’s multiple clients are willing to waive the conflict, the lawyer must make new disclosures and obtain a new informed written consent. Care must again be given to the disclosures required under Rule 1.0.1(e) to obtain a new consent to the lawyer’s continuing representation of the multiple clients. Again, as required under rule 1.0.1(e), this will include a new explanation of the relevant circumstances and the material risks, including any actual and reasonably foreseeable adverse consequences of the proposed course of conduct. In any joint representation, one of the material risks and foreseeable adverse consequences is that a lawyer in a joint representation would not be able to bring a claim, such as a claim for indemnity, against a jointly represented client of the lawyer.  Another risk of joint representation involves the monetary costs of starting over with a new lawyer in the event of withdrawal due to a conflict of interest. Another concern is that the lawyer representing multiple clients cannot deflect blame from one client by casting blame on or attributing liability to another jointly represented party. By thinking through the circumstances that have arisen methodically, the lawyer can make the disclosures required. The disclosures and the informed consent must be in writing. 

Sometimes divergent interests cannot be reconciled, in which case withdrawal from the representation may be required. Under Rule of Professional Conduct 1.16, withdrawal is mandatory if continued representation would violate the Rules of Professional Conduct, including rules governing conflicts of interest. If withdrawal from representation of one or more of the multiple clients is required, a lawyer must take reasonable steps to avoid prejudice to the client(s), including giving the client(s) sufficient notice to permit the client(s) to obtain other counsel. In addition, the lawyer must obtain the consent of the tribunal to the withdrawal if the matter is pending before a tribunal, either through submission of a substitution of attorney or by filing a motion to withdraw from representation with the tribunal. In proceeding with withdrawal, the lawyer should be mindful to maintain the lawyer’s obligations under the duty of confidentiality under Rule 1.6 and Business and Professions Code section 6068(e).

In such situations, clients may consent to withdrawal. But that may not always be the case. A recent case illustrates this scenario in the context of multiple representation of parties in litigation. In Abdo v. Fitzsimmons, 2020 WL 4209246, 202 US Dist Lexis 129623, No. 17-cv-01232-TSH (July 22, 2020), the law firm represented multiple defendants in a joint defense, beginning in 2017. The initial fee agreement addressed the possible conflict stating that if a conflict developed, the firm would withdraw from representation of the party with the conflict and continue representing the rest of the clients involved. When a conflict arose in the course of the joint representation, the firm addressed it directly with the clients. The firm advised the clients that it would not be able to take certain positions, and could not assert certain defenses. The firm requested that the clients execute a new conflict waiver if they wished to continue with the representation. Some of the multiple clients engaged new counsel. One client stopped participating in the case, so the firm advised the client that, if that client did not sign a new conflict waiver, the firm would need to withdraw from representation due to the conflict of interest. The client said that he had never been told about the conflict, and opposed the motion to withdraw, citing the financial burden of obtaining new counsel. The court found that withdrawal was mandatory because otherwise the firm would be in violation of Rule 1.7. The court also found that Rule 1.16(b)(4) applied, and that withdrawal was warranted because the client’s conduct made it unreasonably difficult for the lawyer to continue with the representation. The court also examined the need to avoid foreseeable prejudice in connection with the firm’s withdrawal from the representation. In the Abdo case, the dispositive motions were 89 days out and there was no trial set. The court ordered the substitution to be filed within 30 days, in order to avoid prejudice to the client. 

When conflicts of interest arise in the course of an ongoing representation, the lawyer must comply with all applicable ethical obligations. Where appropriate, a new conflict waiver may be obtained. In the event that the parties cannot reconcile their conflicts, or where a waiver is prohibited, withdrawal in a manner that does not prejudice the client is appropriate. 

Carole J. Buckner is a partner and general counsel at Procopio, Cory, Hargreaves and Savitch, LLP. She represents lawyers and law firms, including discipline defense matters, and serves as an expert witness, mediator and arbitrator in disputes involving lawyers and law firms. She is a member of the Ethics Committee of the California Lawyers Association. The views expressed herein are her own. She can be reached at carole.buckner@procopio.com.