By: The NBI Team
Tuesday, February 15, 2022
Practice Tips Series: Attorney Conflict of Interest Examples
As an attorney, you will run into conflicts of interest at one point or another. But sometimes it's hard to picture how it might actually happen, or how the conflict will adversely affect the client or you. In this article, we’re walking through five common attorney conflict of interest examples to help you and your law firm prepare for the inevitable.
Example 1: Two Parties with Different Interests
Being asked to represent more than one client is extremely common. You might be asked to represent two clients in a business transaction, writing a will, or even in a divorce. This is sometimes possible to do.
It’s not uncommon to write both wills for a married couple or to represent two individuals looking to become business partners. However, these situations could conjure a potential conflict.
According to Rule 1.7 of the Model Rules of Professional Conduct, a conflict exists between two current clients if:
- the representation of one client will be directly adverse to the other client; or
- there’s a “significant risk” that representing one client will be “materially limited” by your responsibilities to the other client.
However, under Rule 1.7(b), if all of the following are true, you can represent both clients:
- you believe you can represent both clients competently and diligently, and that belief is reasonable;
- representing both parties is not illegal;
- you’re not asserting a claim against a client on behalf of the other client in the same litigation or other proceeding before a tribunal; and
- you’ve attained informed consent from both clients.
If you decide to represent both clients, remember that even if undertaking the representation is okay now, conflicts can arise down the road. So, make sure both clients receive full disclosure of the risks and be prepared to make the tough decision of terminating representation if necessary.
Example 2: Participating on a Board
Non-profits and other organizations often ask lawyers to serve on their board of directors. Serving on a board is a great way to get involved in the local community, network, and build a reputation.
For organizations, lawyers bring a unique skill set and background to the organization. However, if lawyers get too involved with the organization's legal matters, they might end up forming an unwanted attorney-client relationship. When a lawyer represents an organization, they can accidentally create conflicts of interest with their other clients or their own personal interests.
If you’re considering serving on a board, make it clear that you cannot represent the organization as their lawyer. Be sure to document that you informed the board in writing, and make it clear what your role on the board will be from the beginning. If you’re concerned that you may run into a conflict down the road, consider serving on a different board.
Example 3: Conflicts Between Current and Former Clients
Conflicts between current (or potential client) and former clients are common, but sometimes harder to recognize. They are especially hard to find if they involve seemingly unrelated matters. The key is to remember that even if you’re no longer representing a client, you still owe them certain duties. Here are some tips for lawyers undertaking a new client that may cause a conflict with a former client:
Keep Detailed Records
Keep detailed records of past cases. The best way to keep records is by using law firm management software, but if you’re not there yet, consider keeping a spreadsheet.
Be Clear About The Scope of Representation
A successful conflict check for one legal matter doesn’t necessarily mean there’s no conflict for another legal matter. If you have a client who would like help with an additional legal matter, consider whether another conflict check is necessary.
Example 4: Entering Into a Business Relationship with a Client
Entering into a business relationship with a current or former client can create conflicts in many ways. Under Model Rule 1.8(a), there are circumstances where you can enter a business transaction with a client, but you must meet certain requirements:
- The transaction must be fair and reasonable to the client.
- The details of the transaction must be in writing and communicated to the client in a way that is “reasonably understood” by the client.
- The client must give informed consent in writing. This consent must be signed by the client and include the “essential” terms of the transaction. It must also disclose your role in the transaction, including whether you are representing the client in the transaction.
- You must inform the client that they can and should seek advice from independent counsel. The rest of Rule 1.8 covers other specific business-related circumstances, such as accepting gifts, providing clients with financial assistance, and others.
Example 5: Conflicts Between Attorney’s Personal Interest and a Client’s Interests
You may encounter a potential client whose interests conflict with your personal interest. For example, a conflict would exist if you’ve invested in a business that the potential client would like to sue. A conflict would also likely exist if your client would like assistance divorcing a family member of yours.
Under the Model Rules, a conflict of interest exists if pursuing the potential client’s interests either:
- conflicts with your personal interests, or
- presents a significant risk that the representation would be materially limited by your personal interests.
If you realize that a potential client’s interests conflict with yours, expose yourself to as little information as possible, inform them of the conflict, and document the conversation.
To learn more about conflicts of interest, order the OnDemand course, Conflicts of Interest: How to Avoid Common Ethical Missteps.
This blog post is for general informative purposes only and should not be construed as legal advice or a solicitation to provide legal services. You should consult with an attorney before you rely on this information. While we attempted to ensure accuracy, completeness and timeliness, we assume no responsibility for this post’s accuracy, completeness or timeliness.