JOINT/MULTIPLE REPRESENTATION

[Home] [Table of Contents]

        Whether one calls the representation "joint" or "multiple," when a lawyer or law firm represents more the one person or entity, a number of things can go wrong.  The cases and opinions can be broken down into litigation and non-litigation.  The litigation cases are discussed at Part C below.  To go to litigation, click on C.

        Non-litigation matters can be further subdivided.  The simplest kind are matters in which the lawyer clearly knew that she was representing more than one person or entity.  These are discussed at Part A below (click on A).

        The other kind of non-litigation representation is where the lawyer unwittingly gets herself into the situation where someone claims that he was a client, and the lawyer did not think that was the case.  We call those "unintentional" joint/multiple representations.  These are the most dangerous of all.  To read about those cases and opinions, go to Part B.  Click on it below.

A.  Non-Litigation Matters - Intentional Joint/Multiple Representation - Confidences

B.  Non-Litigation Matters – "Unintentional" Joint/Multiple Representation

C.  Litigation - Joint/Multiple Representation


A.  Non-Litigation Matters – Intentional Joint Representation – Confidences

            Two persons come to a lawyer and ask her to represent them both in a business transaction. In most circumstances, the lawyer may legally and ethically do this. (For the more difficult situations - buyer vs. seller, e.g. - see the section entitled "Commercial Negotiations.")  Frequently, the lawyer will need to obtain consent under her state’s equivalent of Model Rule 1.7. The single most troublesome issue in these representations has to do with confidences. What is the lawyer to do when she learns something from one client that would be valuable information to the other? This is a serious problem when the first client does not want the other client to have the information. The lawyer is torn between her duty of confidentiality under Rule 1.6 and her duty to keep all her clients informed under Rule 1.4.

            Privilege versus confidentiality under ethics rules. Good lawyers frequently fail to make the distinction. An excellent, and all too rare, discussion of this distinction appears in Brennan’s, Inc. v. Brennan’s Restaurants, Inc., 590 F.2d 168 (5th Cir. 1979). The attorney-client privilege deals with when a client’s communication with a lawyer can be discovered in litigation or revealed at trial. Without a proceeding, the privilege plays no role. A lawyer’s duty of confidentiality under Model Rule 1.6, or her state’s equivalent, is always present. The privilege rules in joint representations have been fairly well understood. If litigation erupts between the joint clients, the privilege will not apply as to information shared between them and with their lawyer. The privilege will continue to protect that information as to the outside world. When you switch to the ethics rules on confidentiality in joint representations, it is our position that application of the rules is not clear at all. More about that in a moment.

            Comments [26]-[33] to Model Rule 1.7 deal with joint representation in non-litigation contexts, and several of them were changed or added by the ABA House of Delegates in February 2002.  Particularly noteworthy is new Comment (31], which, as to confidences, provides as follows:

    [31] As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. This is so because the lawyer has an equal duty of loyalty to each client, and each client has the right to be informed of anything bearing on the representation that might affect that client's interests and the right to expect that the lawyer will use that information to that client's benefit. See Rule 1.4. The lawyer should, at the outset of the common representation and as part of the process of obtaining each client's informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other. In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client's trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients.

            The Restatement. The Restatement deals with joint representations in a non-litigation setting at § 130.  The black letter says that consent may allow a lawyer to continue on behalf of fewer than all the clients if a conflict develops. The black letter does not deal with confidentiality, but cmt. l to § 60 does. More specifically, see illus. 2 and 3 at cmt. l. Basically, the comment provides that if the lawyer believes that the client without the information needs to know it, the lawyer has discretion to reveal it.

            A recent case that discusses this issue in detail, including the Restatement’s position, is A. v. B., 726 A.2d 924 (N.J. 1999). In that case a law firm was representing a husband and wife in estate planning. The firm discovered that the husband was a defendant in a paternity suit and believed the wife did not know about the suit. The law firm wanted to tell the wife, but the husband would not allow it. Litigation ensued, and the New Jersey Supreme Court, in a comprehensive analysis, found that the firm had discretion to tell the wife. The court specifically adopted the analysis of cmt. l to § 130 of the Restatement. (The court also relied, in part, upon New Jersey’s version of Model Rule 1.6, which is pro-disclosure in cases of potential client fraud.) The court noted that ethics committees in New York and Florida would have prohibited the disclosure. N.Y. State Bar Op. 555 (1984); Fla. Bar Op. 95-4 (1997).  D.C. Op. 327 (March 2005), deals with the issue of confidences in joint representation.  If one client reveals something to the lawyer in confidence, and the information would be important to the other client, the law must withdraw.  The opinion discusses ways to avoid this result.

        Speaking of Fla. Op. 95-4 (1997).  Chase v. Bowen, 711 So. 2d 1181 (Fla. App. 2000).  Bowen did estate planning and other legal work at various times for Naomi Chase and her mother, Reah Chase.  At one point Reah's will and trust provided that Naomi would get income for her life.  Reah asked Bowen to change her will and trust to exclude Naomi in favor of Reah's business associates.  After Reah passed away, and Naomi discovered the change, Naomi sued Bowen.  The trial court granted Bowen summary judgment.  The appellate court affirmed, providing almost no analysis.  It said simply:

It is our view that a lawyer who prepares a will owes no duty to any previous beneficiary, even a beneficiary he may be representing in another matter, to oppose the testator or testatrix in changing his or will and, therefore, that assisting that change is not a conflict of interest.

        The dissenting judge would have remanded and given Naomi an opportunity to replead.  His opinion was much longer than the majority's and contained the analysis one would have expected from the majority.  For example, The Florida Bar in Op. 95-4(1997), addressed the classic mistress situation.  The opinion said that when the husband calls the lawyer (who is also doing the wife's estate plan) to prepare a codicil for his mistress, the lawyer's duty is not to tell the wife, but decline to proceed on behalf of either.  The dissenting judge said that Naomi might be able to plead breach of fiduciary duty in connection with Bowen's failure to disclose his conflict of interest.   He also said Naomi might also be able to plead intentional interference with inheritance.  About that, the majority said simply, not "under the facts of this case."  ABA Op. 05-434 (Dec. 8, 2004) deals with this precise issue and cites Chase.

        For a wrong-headed discussion of these issues, see An Unnamed Attorney v. Kentucky Bar Ass’n., 186 S.W.3d 741 (Ky. 2006).

        Star Centers, Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72 (Minn. May 16, 2002).  Faegre's Minneapolis office represented Star Centers in borrowing money from Consortium International.  Faegre had disclosed that it represented Consortium on several small unrelated matters, and obtained waivers from both parties to represent Star Centers in the loan transaction.  After several failed attempts to consummate the loan, and while the matter was pending, Faegre's Denver office began defending Consortium in litigation pending in Denver.  When Consortium announced that it was backing out of the loan, Star Centers asked Faegre to sue Consortium.  Faegre refused because of a conflict.  Eventually Star Centers sued Faegre for breach of fiduciary duty and malpractice.  It claimed that Faegre knew things about Consortium that it should have disclosed to Star Centers.  The trial court, the appellate court, and the Minnesota Supreme Court held that what Faegre knew about Consortium was not relevant to Star Centers and that failure to make disclosures to Star Centers caused it no damage.

        Liberty Mut. Fire Ins. Co. v. Mystic Transportation, Inc., 2004 U.S. Dist. LEXIS 18564 (S.D.N.Y. Sept. 16, 2004).  The defendants, represented by one law firm, entered into an insurance agreement with the plaintiff.  The plaintiff sued the defendants for the premium.  The defendants, represented by a new law firm in this case, alleged as one of their defenses that the agreement was not valid because their prior law firm had a conflict of interest in representing all the defendants.  The court held that they were sophisticated and had made no showing that there was a conflict.

        In Re Meucci, 2000 Ohio App. LEXIS 6094 (Ohio App. 2000).  Where all the parties to a guardianship proceeding stipulated that a person should have a guardian, it was not a conflict for the same lawyer to represent the person needing the guardian and the person bringing the proceeding.

        Vick v. Bailey, 777 So. 2d 1005 (Fla. App. 2000).  In a guardianship proceeding the court held that a lawyer could represent a friend of the ward and the ward in seeking to have the ward declared competent.

        More Cases on the Perils of Representing Multiple Family Members in Estate Planning, Estate Administration, Property Transfers, etc.  Meyers v. Sudfeld, 2007 U.S. Dist. LEXIS 7634 (E.D. Pa. Feb. 2, 2007); Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723 (Tex. App. 2007) (firm avoided $65.5 million verdict where it had represented various family members and a bank).  

        Tax Shelter.  Klamath Strategic Investment Fund, LLC v. United States, 472 F. Supp. 2d 885 (E.D. Tex. 2007) .  Taxpayers hired promoter's law firm to provided tax shelter opinion.  Court held that taxpayers' belief that the law firm did not have a conflict was reasonable, and, thus, taxpayers avoided penalties. 

            Other Opinions. The following opinions are consistent with the approach taken by the Ethics 2000 Commission: Cal. Op. 2003-163 (undated); D.C. Bar Op. 296 (2/15/00); Assoc. of the Bar of the City of N.Y. Ops. 1999-07 & 1994-10; Fla. Bar Op. 95-4 (1997); and N.Y. State Bar Op. 555 (1984).

            Ga. Op. 03-2 (9/11/03).  The opinion addresses a joint representation during which one client tells the lawyer something he wants held in confidence from the other client.  The opinion holds that if the information is of the sort that the lawyer should convey to the other client under Rule 1.4, the lawyer should not convey it and should withdraw.

            In-House Lawyer Employed by One Subsidiary May Perform Services for Another Subsidiary of the Same Parent.  Va. Op. 1838 (May 10, 2007).  The opinion holds that a patent lawyer employed in-house  by one wholly-owned subsidiary of a parent may perform legal services for another wholly-owned subsidiary of the same parent.  The opinion cautions that the lawyer must avoid conflicts of interest and follow other ethics rules, including the duty of confidentiality.

            Treatise.  Hazard & Hodes §§ 11.11, 11.14 & 11.15.

            Recommendation. Provide in writing at the outset of the joint representation what the lawyer is to do in an A. v. B.-type situation. Following is an example:

    If we learn something from one of you that we believe the other needs to know in connection with the representation, our obligation will be to reveal the information. You agree that in the event of a disagreement over this disclosure, we may continue to represent one or both of you. Notwithstanding this agreement, our ethical or legal obligation may be to stop representing both of you.

[Top of Page]

    B.  Non-Litigation Matters – "Unintentional" Joint/Multiple Representation

            This has become a very dangerous conflict-of-interest phenomenon confronting law firms. A perfect example is the Sverdlin case out of Texas. Before summarizing that case, it should be emphasized that law firms and their malpractice carriers are paying millions of dollars in settlements in situations just like that in Sverdlin. In all those cases, the law firm thought it was representing one or more finite clients, only to learn that others at the scene claimed that the law firm was also representing them.

            Automated Marine Propulsion Systems, Inc. v. Sverdlin, No. 97-02103, Harris County, Texas. The following description is taken from two articles in the Texas Lawyer, dated November 1, 1998, and January 31, 1999, respectively. Anatoly Sverdlin owned a marine repair and manufacturing company. He needed money to expand and brought in venture capitalists ("VCs"). The company hired a law firm to represent it in dealing with the VCs. The law firm wrote a letter to Sverdlin saying that it was representing the company. As a result of the restructuring and disputes among the parties, the VCs wound up in control of the company. Sverdlin sued everyone, including the law firm. He claimed the law firm represented him and caused him to lose his company. The law firm responded with the above letter. He denied seeing it. In October 1998, the jury returned a verdict against all defendants totalling in excess of $1 billion. The amount assessed against the law firm was approximately $50 million. That might have included significant overlapping amounts and duplication, but the law firm, according to the press, promptly settled its part of the case for $20 million.

            Restatement on "Client's" Expectation.  See the Reporter's Note to § 14 of the Restatement.  Cmt. b to § 14 provides in part:

A lawyer may be held to responsibility of representation when the client reasonably relies on the existence of the relationship . . . 

See also cmt. f:

[A] lawyer's failure to clarify whom the lawyer represents in circumstances calling for such a result might lead a lawyer to have entered into client-lawyer representations not intended by the lawyer.

       Court Said Law Firm Should Have Said in Writing Who Was and Who Was not Client.  Artificial Nail Technologies, Inc. v. Flowering Scents, LLC, 2006 U.S. Dist. LEXIS 54735 (D. Utah Aug. 4, 2006).  In Speeney v. Rutgers, The State University, 2006 U.S. Dist. LEXIS 82101 (D.N.J. Nov. 6, 2006), the court found no lawyer-client relationship, but only after lengthy hearing.  A letter would have helped.

       Lawyer Avoided Liability Because She Gave "Non-Client" a Document that Said "Non-Client" Was not a Client.  Riftin v. Stark, 808 N.Y.S.2d 920 (N.Y. Misc. 2005).

        Repeatedly Reminding Party that He Is not a Client Helps.  State of West Virginia ex rel. Blackhawk Enterprises, Inc. v. Bloom, 633 S.E.2d 278 (W. Va. 2006). 

      In Montgomery Academy v. Kohn, 50 F. Supp. 2d 344 (D.N.J. 1999), the lawyer for a private school led the director of the school into thinking he was representing her.  When the director and the school became adversaries, the lawyer attempted to represent the school but was disqualified.

        The law firm fared better in Strasbourger Person Tulcin Wolff Inc. v. Wiz Tech., Inc., 82 Cal. Rptr. 2d 326 (Cal. App. 1999).  The law firm in question represented the underwriter in a securities offering.  The offering materials said that the law firm represented the underwriter.  The materials also stated that another law firm represented the issuer.  The underwriting agreement provided that the issuer would pay the underwriter's attorneys fees.  The law firm in question later attempted to represent the underwriter in a matter against the issuer.  The trial judge disqualified the law firm.  In reviewing all the facts and procedures usually followed in offerings, the appellate court reversed, saying the law firm's status as counsel for the underwriter and not for the issuer was clear.  In Milner v. Anders, 2001 U.S. Dist. LEXIS 6227 (D. Del. 2001), the court ruled that the defendant lawyers had not represented the plaintiff noting that all the other participants testified that the lawyers orally told everyone in very clear terms who the lawyers did, and did not, represent.

         Seeley v. CCG Medical Management Group, 2002 Cal. App. Unpub. LEXIS 11397 (Cal. App. December 10, 2002).  A lawyer was representing one party to a negotiation.  He met both parties in a restaurant.  The other party did not bring a lawyer.  At one point, when the client was in the men's room, the lawyer had a one-on-one conversation with the other party.  When the client rejoined the session, the conversation was repeated.  The court held that was not enough to create a lawyer-client relationship with other party.

        ATT Systems Co. v. Tylman, 2004 U.S. Dist. LEXIS 17628 (N.D. Ill. Sept. 1, 2004).  A not-very-helpful opinion in which the court refused to disqualify the defendants' lawyer even though before the litigation the lawyer had attended a meeting with both defendants and plaintiffs and had allegedly given legal advice.

            Recommendation. Our experience suggests that whenever a lawyer is in a multi-party transaction, he must write a letter to everyone involved saying who is and who is not his client.

             Other cases.

            Blickenstaff v. Clegg, 97 P.3d 439 (Ida. 2004).  This is, in part, a suit against a lawyer who had handled a series of related transactions involving a number of parties.  The plaintiff is one of those parties.  The lawyer claimed he did not represent the plaintiff, and the trial court granted summary judgment to the lawyer.  The Idaho Supreme Court reversed, holding that there was a question of fact whether plaintiff’s belief that the lawyer represented him was reasonable.  Among other things, the plaintiff had asked the lawyer to prepare several of the deal documents, and the lawyer did not clearly document who was, and who was not, a client.

        MacFarlane v. Nelson, 2005 Tex. App. LEXIS 7681 (Tex. App. Sept. 15, 2005).  A plaintiff in this malpractice action claimed that a defendant lawyer represented the plaintiff in a business transaction and that the defendant had a conflict of interest.  The defendant claimed that he never represented the plaintiff.  The trial court granted summary judgment for the defendant lawyer.  In this opinion the appellate court affirmed, citing much evidence that the plaintiff could not reasonably have believed that the defendant had represented him in the transaction.  The court relied heavily upon Section 14 of the Restatement.

            Burnap v. Linnartz, 38 S.W.3d 612 (Tex. App. 2000).  The case involved a number of business partners, relatives, and related business entities, all represented by the same law firm.  One of the individuals wound up guaranteeing an obligation that he claims he did not fully understand or know about.  The law firm claims he was not a client.  There was no letter clarifying who was and who was not a client, or explaining potential conflicts of interest.  The appellate court reversed the trial court's grant of summary judgment for the lawyers, on all but one count.

            Nosnik v. Ginsburg and Brusilow, P.C., 2000 Tex. App. LEXIS 3730 (Tex. App., 5th Dist., June 7, 2000). Malpractice action against law firm that represented company and shareholders in transaction. The law firm had sent a letter to all clients at the beginning of the transaction pointing out the potential for a conflict. Later, when one of the clients sued the law firm for having a conflict, the law firm raised the Statute of Limitations. The client claimed the Statute was tolled by fraudulent concealment. The court held that the letter negated fraudulent concealment and upheld application of the Statute. Comment: This is a perfect illustration of the value of such letters.

            Premarital Agreements.  Bonds v. Bonds, 5 P.3d 815 (Cal. 2000). The California Supreme Court held that a party to a premarital agreement need not have independent counsel for the agreement to be enforceable.  The opinion collects cases from all over the country and also analyzes the Uniform Premarital Agreement Act, which was largely adopted by the California legislature.

            Marital Separation Agreements and Post-Nuptial Agreements.  In In re Egedi, 105 Cal. Rptr. 2d 518 (Cal. App. 2001), the court held that a marital support agreement drafted by one lawyer for both parties was enforceable.  The lawyer had obtained a written conflicts waiver and agreed to act only as a scrivener.  To a very similar effect involving a post-nuptial agreement, see Friedman v. Friedman, 122 Cal. Rptr. 2d 412 (Cal. App. July 15, 2002).

             Will Not Invalidated.  In re Estate of Maddox, 60 S.W.3d 84 (Tenn. App. 2001).  Court held that the fact that a lawyer preparing a will also represents one of the beneficiaries on other matters does not, standing alone, invalidate the will.

             Lawyer for Estate May Be Deemed Lawyer for Beneficiary.  Gagliardo v. Caffrey, 800 N.E.2d 489 (Ill. App. 2003).  The lawyer previously had represented a decedent's estate.  The sole beneficiary sued the executor.  When the same lawyer tried to represent the defendant/executor, the court ruled he should be disqualified.  The court held that in the "narrow circumstance" where the sole beneficiary, whose complaint was with the executor, not the estate, the lawyer would be treated as if he had represented the estate.

             Lawyer for Estate Deemed Lawyer for Executor Personally Because of Ambiguous Engagement Letter.  Est. of Albanese v. Lolio, 923 A.2d 325 (N.J. Super. 2007) .  Decedent left her estate to Sisters 1, 2, and 3, and named Sister 1 Executor.  Sister 1 hired Lawyer to help her with the estate.  Lawyer’s engagement letter was signed by Sister 1 as “[Sister 1] Individually and as Executrix of the Estate of [Decedent]."  While Lawyer had considerable contact with Sister1, he had no contact with Sisters 2 and 3.  Lawyer arguably made some tax planning mistakes that cost all three sisters considerable damage.  All three sued Lawyer.  The trial court granted Lawyer summary judgment, reasoning that Lawyer’s only duty was to the estate.  The appellate court, in this opinion, affirmed as to Sisters 2 and 3, but reversed as to Sister 1.  The court, in citing the above language and other language, in the engagement letter held that the ambiguity of the letter could enable Sister 1 to claim that she reasonably believed that Lawyer was also looking out for her personal interests.

        Bond Counsel.  The Bank of New York v. Sheff, CAL 02-21119 (Circuit Court for Prince George’s County, Maryland, Sept. 10, 2003).  Someone failed to file a UCC-1 in D.C. in connection with a conduit borrowing, in which the issuer was Prince George’s County, Maryland.  The investors sued the law firm that rendered the bond opinion.  In granting summary judgment for the law firm, the court first found that the law firm did not represent the investors.  It relied, in part, on the official statement, which said that the law firm “is bond counsel to Prince George’s County,” meaning, to the court evidently, that the county was the law firm’s client.  The court also relied, in substantial part, on documents that said the conduit borrower (as opposed to the county) was responsible for filing UCC-1s.  This opinion will not be published.  We have a summary of it in pdf format.  Anyone wishing a copy should write as follows: wfreivogel@yahoo.com.  [Author’s note: we do not like the phrase “bond counsel to the issuer.”  That phrase does not appear outside the tax-exempt tax area.  The law firm here was lucky that the court bought it.  A less ambiguous statement would be:

      XYZ law firm will provide the opinion on the legality of the bonds and on their tax-exempt status.  XYZ’s client will be the issuer and no other party to this transaction.] 

        Patent Prosecution.  A lawyer representing an employer in prosecuting a patent must be conscious of her relationship with the employee/inventor.  An excellent discussion of this relationship – or lack thereof – is at David Hricik, Trouble Waiting to Happen: Malpractice and Ethical Issues in Patent Prosecution, 31 AIPLA Q. J. 385, 407-410 (Fall 2003).  He cites several cases dealing with patent prosecution and this issue.  In addition, he counsels patent prosecution lawyers of the wisdom of documenting up front who is, and who is not, a client.  Cases holding that the lawyer for the employer is not necessarily the lawyer for the employee/inventor: Univ. of W. Va. v. Vanvoorhies, 278 F.3d 1288, 1304 (Fed. Cir. 2002); Sun Studs, Inc. v. Applied Theory Assocs., Inc., 772 F.2d 1557, 1568 (Fed. Cir. 1985); and Emory Univ. v. Nova Biogenetics, Inc., 2006 U.S. Dist. LEXIS 67305 (N.D. Ga. Sept. 20, 2006).

    [Top of Page]

    C.  Litigation - Joint/Multiple Representation

        In most respects the considerations in representing multiple parties in litigation are similar to those above. In litigation, the lawyer asked to represent more than one party must do an analysis to ensure that the joint parties’ interests are not adverse. That involves the usual analysis of the relevant state’s version of Model Rule 1.7 or Model Code DR 5-105. That should also include a written agreement or engagement letter stating what the lawyer’s obligations and rights are if a conflict arises midstream.

        In re Rite Aid Corp. Securities Litigation v. Grass, 139 F. Supp. 2d 649 (E.D. Pa. April 17, 2001).  This is a securities class action against Rite Aid and several of its executives.  Early in the case the General Counsel of Rite Aid retained Ballard Spahr to represent Rite Aid and one of the executives, Alex Grass.  Ballard Spahr sent Grass an engagement letter saying that if a conflict developed between the Rite Aid and Grass, Ballard Spahr would withdraw from representing Grass and would continue on behalf of Rite Aid.  A conflict did develop, Ballard Spahr dropped Grass, and it continued on behalf of Rite Aid.  Grass moved to disqualify Ballard Spahr, and the court, relying in part upon the engagement letter, denied the motion.

        Another case that shows the value of such an agreement is Zador Corp. v. Kwan, 37 Cal. Rptr. 2d 754 (Cal. App. 1995). There the law firm obtained from both parties an agreement that if a conflict developed, the law firm could continue on behalf of Zador Corp. A conflict did develop and the court held that the agreement was effective in allowing the law firm to continue on behalf of Zador Corp. The court cites, seemingly with approval, Cal. Op. 1989-115, which says that a law firm can enforce such an agreement even if it means using confidences from the former client against the former client.  Watch out, though.  ABA Informal Opinion 1441 (1979) rejected that approach in a similar situation.  In Rymal v. Baergen, 686 N.W.2d 241 (Mich. App. 2004), co-defendants signed an agreement similar to that in Zador.  The court allowed the law firm to drop one client and continue on behalf of the other.  However, the court noted that the law firm had not obtained confidences from the dropped client, implying that if it had, the court might have disqualified the firm.  

        While obtaining such an agreement may not be unethical, the court may not enforce it. The court may find that a non-waivable conflict had existed at the outset, or that one or more parties lacked the sophistication to understand the consequences of the agreement.

        ABCNY Op. 2004-02 (June 2004), mentions Rite Aid and Zador in its discussion of multiple representations in government investigations, counseling lawyers on dealing with waivers, confidences, and preserving the right to withdraw from one client and stay on behalf of another.

        Other State and Local Ethics Opinions.  L.A. Co. Op. 471 (1992); and Tex. Op. 487 (1992)

        Restatement. § 128, "Representing Parties With Conflicting Interests in Civil Litigation," provides as follows:

    Unless all affected clients consent to the representation under the limitations and conditions provided in § 122, a lawyer in civil litigation may not:

    (1) represent two or more clients in a matter if there is substantial risk that the lawyer's representation of one of the clients would be materially and adversely affected by the lawyer's duties to another client in the matter; or

    (2) represent one client in asserting or defending a claim against another client currently represented by the lawyer, even if the matters are not related.

        Model Rules.  Cmt. [23] to Model 1.7 specifically recognizes the acceptability of representing more than one party in civil litigation, if the appropriate conflicts analysis is done at the outset.

        Derivative Actions.  A separate section has been devoted to derivate actions.  To go there, click here. 

        Treatise.  Hazard & Hodes § 11.12.

        Multiple Defendants with Conflicting Settlement Issues.  See Hayes v. Eagle-Pitcher Industries, 513 F.2d 892 (10th Cir. 1975); Scognamillo v. Olsen, 795 P.2d 1357 (Colo. App. 1990); In re Lauderdale, 549 P.2d 42 (Wash. App. 1976; and Quintero v. Jim Walter Homes, Inc., 709 S.W.2d 225 (Tex. App. 1985).

        Article.  William E. Wright, Jr., Ethical Considerations in Representing Multiple Parties in Litigation, 79 Tulane L. Rev. 1523 (2005) .

        Insurance Defense.

        Article.  Tanya S. Bryant, Note, Loyalty Divided? The Ethical Considerations of the Tripartite Relationship in Insurance Defense Litigation, 29 Okla. City U.L. Rev. 889 (2004) .

        Duty to provide separate counsel for insured when reserving rights.  Magnolia Healthcare, Inc. v. The Hartford Fin. Services Group, Inc., 2006 U.S. Dist. LEXIS 85079 (N.D. Miss. Nov. 17, 2006).

        Reservation of Rights Letter Does not Automatically Create a Conflict between the Insurer and Insured.  Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Bev. Co. of S.C., LP, 433 F.3d 365 (4th Cir. 2005).

        The North Carolina Approach.  Nationwide Mutual Fire Ins. Co. v. Bourlon, 617 S.E.2d 40 (N.C. App. 2005).  Suit by casualty insurer against insured regarding allegedly non-covered acts.  This 2-1 opinion deals with several discovery disputes involving communications with the lawyer retained by the insurer and the application of the attorney-client privilege to those communications.  The disputes are very fact-specific, and the opinion is long and hard to follow.  However, several holdings are noteworthy.  (1) The lawyer retained by the insurer to represent the insured has two clients.  (2) As to communications with the lawyer regarding the underlying defense, communications with the lawyer are not privileged as between the insured and insurer.  (3) As to communications between the lawyer and insured regarding matters unrelated to the defense, such as communications relating to coverage, the insured enjoys a privilege as to those communications.  Stated another way, the insurer cannot see those communications.

        In Nevada Lawyer Has Two Clients.  Nevada Yellow Cab Corp. v. Eighth Jud. Dist. Ct., 152 P.3d 737 (Nev. 2007).

        In California Lawyer Has Two Clients unless there Is a Conflict between the Insured and the Carrier.  J.R. Marketing, L.L.C. v. Hartford Cas. Ins. Co., 2007 Cal. App. Unpub. LEXIS 8797 (Cal. App. Oct. 30, 2007).

        In New York Defense Counsel has One Client.  Federal Ins. Co. v. North American Specialty Ins. Co., 2007 N.Y. App. Div. LEXIS 11139 (N.Y. App. Nov. 8, 2007).

        "Staff Counsel" OK.  American Home Assurance Co. v. Unauthorized Practice of Law Committee, 121 S.W.3d 831 (Tex. App. 2003).  The court held that insurance companies that employ staff lawyers to represent insureds do not violate unauthorized practice of law rules, and the staff lawyers do not violate the Texas Rules of Professional Conduct.  That was also the holding in Ala. Op. 2007-1 (March 2007).

        Impact of Reservation of Rights on Insured's Right to Hire Own Counsel.  Armstrong Cleaners, Inc. v. Erie Ins. Exchange, 364 F. Supp. 2d 797 (S.D. Ind. 2005).  The first paragraph of the opinion summarizes the court’s holding:

  This case presents a recurring conflict of interest question within law's "eternal triangle" -- the liability insurance company, the insured, and the insurance defense attorney. The question is whether an insurer's reservation of rights created a conflict of interest sufficient to entitle the policyholders to have their insurer pay attorneys of the policyholders' choice to defend them in the underlying litigation. As explained below, the court finds that the reservation of rights posed, in the terms of Rule 1.7(a)(2) of the Indiana Rules of Professional Conduct, "a significant risk" that representation of the policyholders by attorneys chosen by the insurer would be materially limited by the attorneys' responsibilities to the insurer. As a result, the policyholders are entitled to select their own counsel to defend the underlying claim, subject to reasonable approval by the insurer, with reasonable fees and expenses paid by the insurer.

        The court held that because the trier of fact could make findings, some of which could result in no coverage, the law firm selected by the insurance company would have a conflict.

        Another "Eternal Triangle" Case.  Kuhlman Electric Corp. v. Chappell, 2005 Ky. App. LEXIS 252 (Ky. App. Dec. 2, 2005).  Law Firm was retained by Insurance Carrier (“Carrier”) to defend Employer in a worker’s compensation case.  The claimant received an award.  Some years later, after Employer became self-insured, the claimant re-opened the case to seek a higher award.  The claimant claimed that his condition worsened over the years.  Carrier retained Law Firm to defend the matter.  Law Firm devised a strategy to make the claimant’s condition a new one, thus shifting the award to the self-insured Employer.  Employee’s counsel cooperated in this effort, because if the condition were deemed a new one, the award would be greater.  After a higher award was entered against Employer, Employer sued Law Firm.  The trial court granted Law Firm summary judgment.  The appellate court, in this opinion, found that favoring Carrier was malpractice.  However, the court affirmed the summary judgment, because Employer could not show that the result would have been different had Carrier employed different counsel to protect its position.

        Whether Insurance Defense Lawyer Represents the Insurer Is a Fact Issue.  Pharmacists Mut. Ins. Co. v. Billet & Connor, 2006 U.S. Dist. LEXIS 5168 (E.D. Pa. Feb. 9, 2006).

        Lawyer has one client (insured) if insured and insurer disagree on settlement.  Swiss Reinsurance America Corp., Inc. v. Roetzel & Andress, 837 N.E.2d 1215 (Ohio App. 2005).

        Another Reservation of Rights Case.  Tyson v. Equity Title & Escrow Co., 282 F. Supp. 2d 829 (W.D. Tenn. 2003).  The court held that a lawyer hired by the insurance company to defend an insured, where the insurance company had issued a reservation of rights, did not have a conflict of interest.

        Reservation of Rights: Questionable Conduct of Carrier-Retained Counsel.  Williams v. American Country Ins. Co., 833 N.E.2d 971 (Ill. App. 2005).

        Law Firm Does not Have a Conflict with Insured Where Carrier Had Initially Denied Coverage but then Admitted Coverage.  Bartolotta v. Gibney, 731 N.W.2d 385 (Wis. App. 2007) .

         Pine Island Farmers Coop v. Erstad & Riemer, P.A., 649 N.W.2d 444 (Minn. 2002).  An insurer attempted to sue for malpractice a law firm it had retained to defend an insured.  The court held that ordinarily the lawyer for the insured is not also lawyer for the insurer and, therefore, cannot sue the lawyer for malpractice.  For the lawyer to represent both, the court held that a lawyer must explain to the insured the potential conflicts that could develop and then get the insured’s express consent for the lawyer to represent both.  The court also held that the insurer could not sue the law firm for equitable subrogation.  The court distinguished Atlanta International Insurance Co. v. Bell, 475 N.W.2d 294 (Mich. 1991), in which the Michigan court did allow such an action.  In Bell the insured had not sued the defense lawyer.  In this case the insured had sued the law firm.  One justice in this case dissented, noting that the insured was only suing for its deductible.  The dissenter did not quarrel with the majority’s equitable subrogation finding, but felt that the default rule should be that the defense lawyer does represent both the insured and insurer.  (The author of the majority opinion is Alan Page, formerly of the Minnesota Vikings and Chicago Bears, and in the Pro Football Hall of Fame.)

        Lawyer for insured not necessarily lawyer for insurer, but may still owe duty of care to insurer.  Paradigm Ins. Co. v. Langerman Law Offices, P.A., 24 P.3d 593 (Ariz. 2001).  The Arizona Supreme Court held that the lawyer hired by an insurer to defend the insured is not thereby necessarily lawyer for the insurer.  However, the court also held that even though the insurer is not a client, the lawyer may hold a duty of care to the insurer.  One of the interesting aspects of this opinion is the court's heavy reliance on the Restatement.  For example, as to when a lawyer-client relationship is formed, the court relies on Restatement § 14.  As to whether the lawyer for the insured is also lawyer for the insurer, the court quotes from cmt. f to Restatement § 134.  As to conflicts generally, the court cites Restatement § 121.  The court relies, in part, upon Restatement § 51(3) in holding that the lawyer may owe a duty of care to the insurer, even though not a client.  The court remanded the case to the trial court to determine whether the lawyer did, in fact, violate his duty to the insurer.

        "Additional Insured" Has Right to Defense Even Though It Might Be Adverse to Primary Insured.   BP Air Conditioning Corp. v. One Beacon Ins. Group., 821 N.Y.S.2d 1 (N.Y. App. 2006).  Additional insured's lawyer does not have a conflict even though he is being paid by the insurance company, and he is adverse to the primary insured.

        Ramifications of Personal Injury Plaintiff Taking from Insured Defendant Assignment of Claim against Casualty Carrier.  Jackson v. American Safety Ins. Holdings, Ltd., 2006 U.S. Dist. LEXIS 2167 (E.D. Ky. Jan. 20, 2006).

        Alleged wrongful termination of captive counsel.  Lewis v. Nationwide Mut. Ins. Co., 2003 U.S. Dist. LEXIS 5126 (D. Conn. March 18, 2003).  The plaintiff, a lawyer, had been a full time employee of defendant.  His job was to defend the defendant’s insureds.  He is now suing the defendant for wrongful discharge.  The plaintiff claims that he was harassed and fired for his refusal to take direction from superiors that would have impaired his ability to competently represent insureds.  He claims that following his superiors’ orders would have required him to violate Connecticut’s version of Model Rules 1.8(f)(2) and 5.4 (c).  The court in this opinion denied the defendant’s motion to dismiss.

        Hartford Cas. Ins. Co. v. Halliburton Co, 826 So. 2d 1206 (Miss. 2001.  In an earlier case, Ringer represented Pierce who was sued for his role in an oil well "blow-out."  When that suit was filed, Pierce claimed that he was covered by Hartford.  Hartford initially denied coverage.  Pierce then hired Ringer.  Later, Hartford relented and began paying Ringer's fees and expenses.  This case is a dispute between Halliburton and Hartford arising from the same blow-out.  Ringer appeared for Halliburton.  Hartford moved to disqualify Ringer, claiming it was a former client of Ringer.  The trial judge denied the motion.  The Mississippi Supreme Court affirmed.  The court noted that ordinarily, where the insurance company retains defense counsel, the lawyer represents both the insured and the insurance company.  Not so in this case because Ringer had been hired by Pierce and not by Hartford.  The fact that Hartford had ultimately paid Ringer's fees did not make Hartford a client.

         Adjuster conflict does not disqualify lawyer.  Underwriters Ins. Co. v. L&L Marine Transportation, Inc.., 2001 U.S. Dist. LEXIS 18978 (E.D. La. 2001).  A ship sank, and a guest aboard was killed.  Underwriters provided hull coverage to the ship owner.  Piccolo represented Underwriters in declaratory judgment action against ship owner contesting the hull coverage.  Underwriters also provided liability coverage to the ship owner.  The decedent's family brought a wrongful death action against the ship owner and Underwriters.  Piccolo was not involved in the latter action.  However, initially Underwriters assigned the same adjuster to both matters.  The ship owner moved to disqualify Piccolo in the hull case, because Piccolo might have obtained the ship owner's confidences from the adjuster because of the adjuster's contacts with the ship owner in the wrongful death case.  The adjuster is no longer involved with either matter.  The court held that because there was no showing that Piccolo ever had any contact with the adjuster, Piccolo should not be disqualified.

        In State ex rel. Neb. State Bar Ass'n v. Frank, 262 Neb. 299 (2001), a disciplinary case, the court held that a lawyer handling insurance defense cases for a carrier could not bring a workmen's compensation case against that carrier's insured.

         United States v. Daniels, 163 F. Supp. 2d 1288 (D. Kan. 2001).  Health care fraud prosecution against a doctor.  In addition to two criminal defense lawyers, the doctor was being represented by the same law firm that defends him in malpractice cases.  The doctor's malpractice insurance company is paying the firm's fees in the criminal case.  The government moved to disqualify the law firm because it was being paid by the insurance company.  The court denied the motion, saying it saw no differing interests.  Moreover, the court felt the presence of the two criminal defense lawyers would provide the doctor further protection.

        Joint defense with insurance carrier.  In re Skiles, 102 S.W.3d 323 (Tex. App. 2003).  Skiles sold property to Bridecam.  Bridecam has now sued Skiles for fraud.  Bean is Bridecam’s lawyer in this case.  After this case began, Bean joined the Chambers firm.  For that reason, Skiles has moved to disqualify the Chambers firm.  This is because the Chambers firm has previously represented Skiles’ insurance carrier in a coverage dispute arising out of this case.  The trial court denied the motion.  The Appellate Court reversed because Skiles’ lawyer had communicated with the Chambers firm pursuant to the joint defense privilege.  Skiles claims this included Skiles’ confidential information, which Bridecam did not deny.

        Plaintiff's lawyer had no duty to protect subrogation rights of plaintiff's automobile insurance company.  Farm Bureau Mut. Ins. Co., Inc. v. Carmody, 88 P.3d 1250 (Kan. App. 2004).

        Conflict with insurance company: when costs of defense are recoverable due to conflict.  Santa’s Best Craft, LLC v. St. Paul Fire and Marine Ins. Co., 353 F. Supp. 2d 966 (N.D. Ill. 2005).  The plaintiff is suing St. Paul for declaratory judgment that St. Paul owes the plaintiff a defense in another action.  Part of its claim for reimbursement of costs of defense from St. Paul is that St. Paul has a conflict with plaintiff because they disagree in this case.  The court denied the claim saying that only if the plaintiff and St. Paul had had a conflict in the underlying case, would plaintiff be entitled to costs of defense.

        Standard for Employment of "Cumis Counsel."  Silacci v. Scottsdale Ins. Co., 2006 U.S. Dist. LEXIS 6076 (N.D. Cal. Feb. 16, 2006).

        No Conflict for Cumis Purposes just Because Amount Claimed against Insured Exceeds Policy Limits.  Ghiglione v. Discover Prop. & Cas. Co., 2007 U.S. Dist. LEXIS 22901 (N.D. Cal. March 29, 2007). 

        Insurance Company Employee Knew Joint Representation Would Be a Conflict, but Wanted to Save Money.  Jurinko v. The Medical Protective Co., 2006 U.S. Dist. LEXIS 13601 (E.D. Pa. March 29, 2006).

        Lawyer Selected by Insurer to Represent Insured not thereby Lawyer for Reinsurer and cannot Be Sued by Reinsurer.  Zenith Ins. Co. v. Cozen O’Connor, 55 Cal. Rptr. 3d 911 (Cal. App. 2007).

        Policy Limit Offers and Conflicts.  American Modern Home Ins. Co., Inc. v. Gallagher, 2008 U.S. Dist. LEXIS 9523 (S.D. Cal. Feb. 7, 2008).  Ins. Co. retained Lawyer to defend a property owner in a tort claim.  The policy limits were $300,000.  Plaintiff demanded the limits.  Ins. Co. did not respond in a timely manner, and Ins. Co. ultimately settled with Plaintiff for $5 million.  Ins. Co. then sued Lawyer for malpractice and breach of fiduciary (this case).  In this opinion the court denied Lawyer’s motion for summary judgment.  As to the effect of a policy limits demand on the lawyer’s relationship with a casualty carrier, the court said as follows:

  . . . [C]ase law does not suggest that a conflict arising between an insurance company and its insured nullifies an insurance defense attorney's duty to its insurance company client in favor of having a sole duty to the insured . . . . 

Other Cases.

        "Potential Conflicts in California."  Glahn & Hirschfield v. Taylor, 2004 Cal. App. Unpub. LEXIS 3249 (Cal. App. April 7, 2004).  Suit to collect legal fees.  The former clients defended the case by alleging the law firm had a conflict of interest in the underlying matter and should forfeit its fees.  In the underlying matter the firm defended two individuals and their partnership in a foreclosure action.  The defendants alleged in this case that that representation was a “potential conflict” under California Rule 3-310, California’s unique version of Model Rule 1.7.  In the case of a “potential conflict” the lawyer must obtain informed written consent to proceed.  That did not happen here.  In this opinion the appellate court said that a “potential conflict,” would exist only if there was a “reasonable likelihood” that an “actual conflict” would arise.  The court went on to say that representing multiple defendants does not alone create a reasonable likelihood of an actual conflict and is, thus, not a “potential conflict.”  The court also noted that in the underlying foreclosure all three defendants had the same interest in slowing it down, something they hired the law firm to do.

        Law Firm Cannot Represent all Five Defendants in Medical Malpractice Case.  Reitzel v. Hale, 820 N.Y.S.2d 845 (N.Y. Misc. 2006).

        Flaherty v. Filardi, 2004 U.S. Dist. LEXIS 12300 (S.D.N.Y. July 1, 2004).  Marie Flaherty and Jason Filardi are playwrights.  Flaherty has sued Filardi and Walt Disney Company for copyright infringement.  Filardi and Disney have the same law firm.  Flaherty moved to disqualify their law firm claiming it had a conflict.  The court denied the motion, holding that as long as the defendants agree on strategy and theory, a united front was proper.  The court did not mention standing.  For similar holdings, also not mentioning standing, see Hollenbeck v. Boivert, 330 F. Supp. 2d 324 (S.D.N.Y. 2004);  Bell v. Rochester Gas & Electric Corp., 2004 U.S. Dist. LEXIS 14343 (W.D.N.Y. July 21, 2004), and Jackson v. Adcock, 2004 U.S. Dist. LEXIS 14222 (E.D. La. July 21, 2004).

        City of Dallas v. Redbird Development Corp., 143 S.W.3d 375 (Tex. App. 2004).  Lawyer represented defendants A and B in a suit.  With the agreement of B, Lawyer withdrew from representing B and continued representing A.  B was then severed from the case.  The plaintiff moved to disqualify Lawyer.  The trial court denied the motion, and the appellate court affirmed, noting B’s waiver and noting that because B was no longer in the case, there was no conflict between A and B.  The court did not mention standing.

        Lawyer May Represent Trustee and Beneficiaries.  In re Allen, 2003 Tex. App. LEXIS 4830 (Tex. App. June 5, 2003).  One of the beneficiaries of a trust brought an action against the trustee for an accounting and an order removing the trustee.  The trustee and two other beneficiaries of the trust hired the same lawyer to oppose the suit.  The plaintiff moved to disqualify the defendants’ lawyer claiming it was a conflict for the lawyer to represent the trustee and beneficiaries.  The trial court granted the motion.  On mandamus, the appellate court reversed, saying it was not per se a conflict.  The onus was on the plaintiff to demonstrate that there was a conflict, and plaintiff had not done so.

        Law Firm May Represent Conservator and Grandchildren of Incompetent in Dispute with Daughter of Incompetent.  In re Anderson, 2006 Neb. App. LEXIS 20 (Neb. App. Feb. 14, 2006). 

        Drag Racing Technologies, Inc. v. Universal City Studios, Inc., 2003 U.S. Dist. LEXIS 6861 (S.D.N.Y. April 24, 2003).  Plaintiff moved to disqualify the law firm for defendants because the law firm was representing multiple defendants.  The court denied the motion noting that the defendants had consented to the representation, had agreed upon a “narrow” defense, and that the conflict was only “potential.”  The court rejected the defendants’ claim that the plaintiff did not have standing to bring the motion.  Another case where the court permitted a lawyer to represent both a corporate defendant and several of the corporations officer is Moses v. Sterling Commerce (America), Inc., 2005 U.S. App. LEXIS 19 (6th Cir. Jan. 3, 2005).

        Bulkmatic Transportation Co. v. Pappas, 2001 U.S. Dist. LEXIS 6066 (S.D.N.Y. 2001).  Bulkmatic sued defendants for fraud, breach of fiduciary duty, and RICO violations.  The defendants filed a third-party action against certain Bulkmatic managers claiming they induced the complained-of conduct.  A law firm represented both the plaintiff and the managers.  The defendants moved to disqualify the law firm.  The law firm represented to the court that it conducted an investigation, found no conflict, and obtained a waiver from the managers.  The law firm also offered the managers an opportunity to hire their own lawyers, which they declined.  The court denied the motion.

        Breezevale Ltd. v. Dickinson, 759 A.2d 627 (D.C. App. 2000).  Gibson, Dunn & Crutcher ("GDC") represented Breezevale, a tire distributor, in a $20 million suit against Firestone.  The day before her deposition, a Breezevale employee disclosed to GDC that she forged some of the documents that GDC produced to Firestone.  The deposition proceeded, the alleged forgeries were disclosed, Firestone took a $3.5 million offer off the table, and the case settled with Firestone paying $100,000 to Breezevale.  Breezevale then sued GDC for malpractice and recovered a jury verdict of $3.4 million.  During the malpractice trial the plaintiff's expert witness testified that GDC had a conflict of interest in two respects.  First, when the employee disclosed the forgeries, that created a conflict between her and Breezevale.  GDC should not, then, have represented both in connection with the deposition.  Second, GDC had a conflict with Breezevale created by GDC's concern that it had produced forged documents during discovery, causing GDC to recommend the $100,000 settlement.  The trial judge granted GDC a judgment N.O.V.  The Court of Appeals said the judgment N.O.V. was not appropriate and sent the case back for the trial judge to rule on a motion for new trial.

        Lawyers Representing Selves and Clients in Same Litigation.  H&H Acquisition Corp. v. Financial Intranet Holdings, 2000 U.S. Dist. LEXIS 5463 (S.D.N.Y., April 27, 2000). A law firm and a partner in the law firm were sued along with a client in a securities fraud case. The law firm represented all defendants, including itself. The plaintiff moved to disqualify the law firm alleging the law firm had a conflict of interest. The court denied the motion. The court was influenced by the fact that the non-lawyer defendant had obtained the advice of separate counsel before specifically waiving the conflict. The court did not see a problem in that no real conflict had yet surfaced. As to the possibility that the law firm might be tempted to use its client’s confidences, the court noted that the law firm was going to be in the case as a defendant anyway, and would be watched very closely in this respect, in any event.  Similar result in Cooke v. AT&T Corp., 2006 U.S. Dist. LEXIS 32489 (S.D. Ohio May 23, 2006).  A husband and wife sued the telephone company for improper billing.  The husband was a lawyer and represented himself and his wife.  The telephone company, claiming the husband had a conflict, moved to disqualify him.  The court brushed aside all the telephone company’s arguments and denied the motion.  However, in Jamieson v. Slater, 2006 U.S. Dist. LEXIS 86712 (D. Ariz. Nov. 27, 2006), the court felt the conflicts were just too great.

        McPhearson v. Michaels Co., 117 Cal. Rptr. 2d 489 (Cal. App. 2002).  Riestenberg represented Harris in a labor-related claim against Michaels Co., Harris’ employer.  Shortly before settling Harris’ claim, Riestenberg began representing McPhearson in a different labor-related claim against Michaels Co., also McPhearson’s employer.  Riestenberg then settled Harris’ claim.  Part of the settlement was Riestenberg’s agreement to keep the Harris settlement confidential.  Harris would be a witness in McPhearson’s case.  Michaels Co. moved to disqualify Riestenberg in the McPhearson case.  The trial court granted the motion, relying upon Gilbert v. National Corp. for Housing Partnerships, 71 Cal. App. 4th 1240 (1999), a similar case involving successive lawsuits on behalf of different employees against the same employer.  The Appellate Court in this case reversed the trial judge.  The court first said it felt the Gilbert court “exaggerated” the conflict.  The court then noted that both Harris and McPhearson filed declarations waiving any conflict, and that the Harris settlement would not be admissible in the McPhearson case, in any event.  Lastly, the court seemed to rely in part upon the fact that it was Michaels Co. that was making the motion, suggesting that Michaels Co. lacked standing.

        Yost v. V.K. Truck Lines, Inc., 2006 U.S. Dist. LEXIS 3286 (D. Kan. Jan. 27, 2006).  Personal injury action.  A semi-trailer truck rear-ended a pickup truck.  The driver of the pickup sued the owner of the semi and its driver.  The same lawyer appeared for both defendants.  The magistrate judge raised the possible conflict sua sponte.  First, the court noted that the defendants’ lawyer had made inconsistent statements as to whether the semi driver was an employee of the owner or an independent contractor.  The court also noted the disparate ways the plaintiff’s prayer for punitive damages might impact the defendants.  The court, applying Kansas Rule 1.7(b) (Model Rule 1.7(a)(2)), ruled that the defendants’ lawyer would have to drop one of the defendants, and warned the lawyer of Rule 1.9’s former-client requirements in continuing to represent the other defendant. 

        Bi-State Dev. Agency v. Watson, 40 S.W.3d 403 (Mo. App. 2001).  A bus collided with an automobile.  The bus owner and the bus driver sued the driver of the automobile.  The bus owner's lawyer also represented the bus driver.  The bus driver had previously collected workmen's compensation from the bus owner.  When the bus owner attempted to realize on its workmen's compensation subrogation rights  from the bus driver, the trial judge denied it, saying the bus owner had forfeited it subrogation rights because of the conflict of interest of the bus owner's lawyer.  The appellate court reversed, saying the employer's subrogation rights were not abrogated by the conflict of interest.

        Robertson v. Wittenmyer, 736 N.E.2d 804 (Ind. App. 2000) Wittenmyer was driving, and Robertson was a passenger.  They rear-ended a truck, and a station wagon rear-ended them.  McGlone represented Wittenmyer and Robertson against the station wagon.  They settled.  Robertson's share was less than his medical bills.  McGlone then sued Wittenmyer on behalf of Robertson.  During all this time McGlone was representing Wittenmyer in a workmen's compensation matter.  The court held that McGlone should be disqualified and that the conflict was non-waivable.

        Boyd v. Trent, 731 N.Y.S.2d 209 (N.Y. App. 2001).  The father of infants owned an automobile in which they were injured.  New York law makes the owner of a vehicle vicariously liable in some situations.  The father filed suit against certain defendants in his individual capacity and in his capacity as guardian of the infants.  The court held he had a conflict and removed him as guardian.  The court also affirmed disqualification of the law firm that attempted to represent him in both capacities.  The court held the law firm could continue to represent the father in his individual capacity.

        Alcantara v. Mendez, 756 N.Y.S.2d 90 (N.Y. App. 2003).  Automobile accident.  A lawyer attempted to represent the driver and minor passengers of one of the cars in a suit against the driver of the other car.  The driver of the other car counterclaimed against the plaintiff/driver.  The court held that the lawyer should be disqualified because the interest of the plaintiff/driver differed from that of the passengers.

        Shaikh v. Waiters, 710 N.Y.S.2d 873 (S. Ct. 2000).  Automobile collision case.  A lawyer attempted to represent two plaintiffs, a driver of one of the cars and her infant daughter, who was a passenger.  The defendants, who were associated with the other car, moved to disqualify plaintiffs' counsel.  The judge granted the motion, citing DR 5-105 and EC 5-17 of the New York Code of Professional Responsibility and three cases with similar fact patterns, Pessoni v. Rabkin, 220 A.D.2d 732 (N.Y. App. 1995); Sidor v. Zuhoski, 261 A.D.2d 529 (N.Y. App. 1999); and Fugnitto v. Fugnitto, 113 Misc. 2d 666 (N.Y. App. 1982).  The judge ruled that the conflict was not consentable and that the disqualified lawyer had to withdraw from representing both plaintiffs for confidentiality reasons.  In In re Bruno, 327 B.R. 104 (E.D.N.Y. 2005), the court cited Shaikh and held that a lawyer who attempted to represent a driver and passengers had a conflict and should be denied fees.  Other cases disqualifying a lawyer for representing both the driver and a passenger, and citing Shaikh are Dorsainvil v. Parker, 829 N.Y.S.2d 851 (N.Y. Misc. 2006) ; Ferrara v. Jordache Enterprises Inc., 819 N.Y.S.2d 421 (N.Y. Misc. 2006).

        In In the Matter of Thornton, 421 A.2d 1 (D.C. App 1980), a lawyer was suspended for one year for representing the driver and passengers in a case against another driver.  In LaRusso v. Katz, 818 N.Y.S.2d 17 (N.Y. App. 2006), the lawyer representing both the driver and passenger was sued for malpractice.

          Central Community Church of God v. Ent & Imler CPA Group, PC, 2004 U.S. Dist. LEXIS 24339 (S.D. Ind. Nov. 24, 2004).  This is a securities fraud case against an accounting firm, arising out of the sale of notes by the financial arm of a religious organization.  The court held that the same law firm could represent the receiver of the issuer as well as the note holders, both as plaintiffs.  The court noted that the law firm had a “hypothetical potential” for having a conflict of interest, but that, without more, would not disqualify the law firm.

        In Smith v. The City of New York, 611 F. Supp. 1080 (S.D.N.Y. 1985), an individual got into a scuffle with several police officers.  He sued them, and they counterclaimed.  The court said that a city attorney could represent all the officers in both the claim and the counterclaim.

        Straubinger v. Schmitt, 792 A.2d 481 (N.J. App. 2002).  A lawyer represented both the driver and passenger of an automobile, who were injured in a collision with a drunk driver.  The drunk driver had a single limit liability policy of $300,000.  At a hearing on fees the court held that conflict between the driver and passenger was “inconsequential,” because everyone agreed that the drunk driver was 100% responsible for the accident.  However, because of the single limit policy, the court held the lawyer should have disclosed the conflict and gotten the clients’ knowing consent.  He had not done so, and the court reduced his fees accordingly. 

        Ethics opinion on representing multiple occupants of automobile.  Fla. Op. 02-3 (2002); and N.Y. Op 778 (2004).

        In Abbott v. Kidder, Peabody & Co., Inc., 42 F. Supp. 2d 1046 (D. Colo. 1999), a lawyer attempted to represent more than 200 plaintiffs in a securities fraud case. Settlement would be controlled by a minority of the plaintiffs.  Everyone signed a representation agreement.  Nevertheless, the court disqualified the lawyer.

        Sears, Roebuck  & Co. v. Emerson Elec. Co., 2001 U.S. Dist. LEXIS 15737 (N.D. Ill. 2001).  Strict liability action arising out of an accident with a radial saw manufactured by Emerson and sold by Sears.  In 1968 Emerson had agreed in writing to defend (but not necessarily indemnify) Sears in such actions.  In this instance, Emerson provided the defense for itself and Sears at trial, and the jury found against both, awarding compensatory and punitive damages.  Sears then demanded that Emerson indemnify Sears.  Emerson refused.  Sears then hired separate counsel for an appeal of the verdict.  In this case Sears seeks to recover from Emerson the cost of hiring separate counsel for the appeal.  Sears takes the position that it had to hire separate counsel because Emerson’s counsel would have a conflict on appeal.  The district judge disagreed, holding the Emerson’s counsel would have no incentive to take positions on appeal that would be beneficial to Emerson but harmful to Sears.

        Representing brokerage house and broker/employee.  Nassau County (N.Y.) Op. 01-5 (undated).  The issue was whether, in a securities arbitration proceeding, a lawyer could represent both the brokerage company and the individual broker/employee.  The company would agree to pay the lawyer's fees, and the broker/employee would agree to pay any settlement or award.  The opinion said that the lawyer could represent both after adequate disclosure of any potential conflicts.  The opinion noted that the lawyer could find himself in the situation where the employer would want an early settlement to reduce fees, whereas the employee might want to fight (and win) in order to avoid paying the settlement.  The opinion also said that the lawyer must withdraw from representing both if a conflict arises.

        Brewer v. Swan Magnetics, Inc., 2004 Cal. App. Unpub. LEXIS 3179 (Cal. App. April 8, 2004).  Brewer sued Swan and Swan’s CEO for consulting fees.  Wilson Sonsini appeared for both defendants.  Brewer moved to disqualify Wilson Sonsini because the CEO had defrauded Swan, and they had a conflict of interest.  The appellate court affirmed the trial court’s denial of the motion.  The court held that while the CEO and Swan may have a conflict at some point, their interests in this case were the same in seeking to deny Brewer his consulting fees.  Wilson Sonsini was not representing the defendants in any matters relating to the potential conflict.  Moreover, Wilson Sonsini, as soon as it learned that Brewer was objecting to their joint representation, obtained written consents from both defendants. 

         Cassidy v. Lourim, 2004 U.S. Dist. LEXIS 5634 (D. Md. March 19, 2004).  A lawyer represented Plaintiffs A, B, and C.  During settlement discussions A and B wanted one result, and C wanted another.  The lawyer dropped A and B and continued to represent C.  A and B moved to disqualify the lawyer, and the court, using a classic Rule 1.9/former client analysis, granted the motion.  This case was almost too routine to post, but it involved the heirs (A and B) of singer Eva Cassidy, who died in her thirties.  Posthumously, they were able to market several albums of her music, one of them selling more than a million copies.

        Patent Prosecution: Representing Competing Applicants.  Sentinel Products Corp. v. Platt, 64 U.S.P.Q.2d (BNA) 1536, 2002 U.S. Dist. LEXIS 13217 (D. Mass. July 22, 2002).  The court held that even though the same law firm was representing competing applicants, to sustain a cause of action the losing applicant must show the result would have been different if one of the applicants had a different law firm.

        Li v. Prediwave Corp., 2005 Cal. App. Unpub. LEXIS 8664 (Cal. App. Sept. 23, 2005).  Plaintiff (“Li”), director of Companies A and B, brought this action to examine corporate records of A and B.  Company C is a minority shareholder and customer of A and B and is a co-plaintiff with Li.  They share the same law firm (“Law Firm”) in this action.  C is suing A and B in other actions.  A and B moved to disqualify Law Firm in this action claiming that representing Li and C is a conflict of interest.  The trial court denied the motion, and on appeal, this court affirmed.  The appellate court held that representing Li and C was not a conflict. 

         Plaintiff's Lawyer Representing In-house Lawyer for Defendant in Deposition.  Perin v. Spurney, 2005 Ohio App. LEXIS 6112 (Ohio App. Dec. 22, 2005).  Lawyers Dawson and Kelm represented Brooke Perin in this unlawful termination case against Honda and a number of its employees.  Perin had complained to higher-ups that Honda was illegally shipping hazardous materials.  Shortly thereafter she was fired.  Brooke’s husband, Doug Perin, was, at all times relevant to this case, in-house counsel at Honda.  He was also on the ethics committee at Honda, which had under consideration the hazardous materials issue.  Honda subpoenaed Doug for a deposition in this case.  At the deposition Brooke’s lawyer Kelm announced that he was representing Doug for purposes of the deposition, primarily to protect the spousal privilege.  Doug acknowledged that Kelm was representing him.  Subsequently, the defendants moved to disqualify Dawson and Kelm.  The trial court granted the motion, and the appellate court, in this opinion, affirmed.  The court relied primarily on the appearance of impropriety doctrine, although there was no showing that Doug Perin actually gave Honda confidences to Dawson or Kelm.  As to Honda’s standing to make the motion, the court said that the protection of Honda’s confidences under these unique circumstances gave Honda sufficient standing.

        Lawyers Attempting to Represent Four Applicants for the Same Position in Civil Rights Case Disqualified.  Murray v. Village of Hazel Crest, 2006 U.S. Dist. LEXIS 89388 (N.D. Ill. Dec. 7, 2006).

        Court Allowed Lawyer to Represent City and City Officials in Unlawful Termination Case.   Almonte v. City of Long Beach, 2007 U.S. Dist. LEXIS 21782 (E.D.N.Y. March 27, 2007). 

        Cargill, Inc. v. Budine, 2007 U.S. Dist. LEXIS 48405 (E.D. Cal. June 22, 2007).   In this case Cargill is suing several former employees for stealing trade secrets and related remedies.  Cargill is a defendant in a class action in Louisiana.  Many of the facts relevant to the class action are arguably relevant to this case.  Three lawyers representing the plaintiffs in the class action are representing several defendants in this case.  Cargill moved to disqualify those lawyers in this case.  In this opinion the court granted the motion.  The court described these relationships as “unwieldy.”  A principal reason for the disqualification was that one of the former employees, while still with Cargill, was privy to confidential and privileged information gained during preparation of the defense of the Louisiana class action.  The court did not explain how that would not be a problem for any lawyer hired by that employee.  The court also commented on the fact that the disqualified lawyers had been privy to Cargill confidences in the Louisiana class action and were subject to confidentiality orders.

        M&T Mortgage Corp. v. White, 2007 U.S. Dist. LEXIS 71589 (E.D.N.Y. Sept. 26, 2007).  White, a defendant, filed a third-party action against A and B.  B was a former employee of A in connection with the claim against White.  A and B had the same lawyer (“Lawyer”) in this case.  White moved to disqualify Lawyer, claiming that representing both A and B was a conflict.  In this opinion the magistrate judge denied the motion.  The court held a hearing at which time A and B testified that they understood the conflict argument but stated they wished to have the same lawyer.  The court acknowledged that under some circumstances a former employee might want to assert a cross-claim against his former employer, and vice versa.  But, the court said that they were entitled to the same lawyer so long as they were unified in arguing that White’s claim completely lacked merit.

        Ariz. Op. 07-04 (Nov. 2007) states requirements for joint representation in litigation.

[Home] [Table of Contents]

Freivogel on Conflicts