Monday, July 28, 2014
The District of Columbia Bar Legal Ethics Committee has a new opinion on an important real-world issue
When a lawyer is seeking employment with an entity or person adverse to his client, or with the adversary's lawyer, a conflict of interest may arise under Rule 1.7(b)(4) if the lawyer’s professional judgment on behalf of the client will be, or reasonably may be, adversely affected by the lawyer’s own financial, business, property, or personal interests (for purposes of this Opinion, a lawyer’s own financial, business, property, or personal interests are collectively referred to as a “personal interest conflict”). Both subjective and objective tests must be applied to determine whether a personal interest conflict exists.
There is no “bright line” test for determining the point during the employment process when a personal interest conflict arises, and that point may vary. There are a number of factors to consider in determining whether a personal interest conflict exists, including whether the individual lawyer is materially and actively involved in representing the client and, if so, whether the lawyer’s interest in the prospective employer is targeted and specific, and/or has been communicated to, and reciprocated by, the prospective employer.
Where the prospective employer is affiliated with, but separate and distinct from, the entity adverse to the job-seeking lawyer's client, there may be no personal interest conflict in the first instance, because the adversary and the prospective employer may be separate entities for conflicts purposes.
If a personal interest conflict arises, there are three possible courses of action that may be available to the individual lawyer, each of which is subject to applicable requirements of the D.C. Rules of Professional Conduct: (a) disclosing to the client the existence and nature of the personal interest conflict and the possible adverse consequences of the lawyer's representation of the client and obtaining the client's informed consent to the representation; (b) withdrawing from the representation; or, (c) discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed.
The personal interest conflict of an individual lawyer in a law firm, nonprofit, or corporate legal department is not imputed to the other lawyers in the law firm, nonprofit, or corporate legal department, so long as the personal interest conflict does not present a significant risk of adversely affecting the representation of the client by such other lawyers. The imputation rule does not apply to a government agency.
A subordinate lawyer who discusses a potential personal interest conflict with his supervisory lawyer, and acts in accordance with the supervisory lawyer's reasonable determination of whether the subordinate lawyer has a personal interest conflict and follows the supervisory lawyer's recommended course of action, will not be held professionally responsible even if it is subsequently determined that the supervisory lawyer's determination of whether there was a personal interest conflict, and/or the recommended course of action, were incorrect under the Rules.
I have found this issue to arise with some frequency. Guidance always is helpful. (Mike Frisch)