Issue/Positional Conflicts
Home/Table of ContentsMercantile Bank is attempting to repossess an automobile owned by Lawyer A's maid. Lawyer A is representing the maid on a pro bono basis in the local county court. A young associate of Lawyer A suggests that Lawyer A might successfully argue that the attorney's fees provided for in the Mercantile Bank standard retail installment contract cause the contract to violate the state's usury law. Violation of the usury law would negate the contract, and the maid would get to keep the car. Lawyer A's partner, Lawyer B, represents Republic Bank on a variety of matters. Republic Bank's standard retail installment contract has an attorney's fee provision virtually identical to that in the Mercantile contract. If Lawyer A wins the argument, client, Republic Bank may be greatly disadvantaged. Under what circumstances may Lawyer A make the argument.
Clearly, Lawyer A must do an analysis under Model Rule 1.7(a)(2). If she concludes that her firm's allegiance to Republic Bank will not adversely affect the representation of the Maid, she can proceed after explaining everything to the Maid and getting her consent. Does the law firm need Republic Bank's consent? Only if making the usury argument against a different bank is deemed direct adversity to Republic Bank. Then, the analysis is done under Rule 1.7(a)(1), and Republic Bank's consent may be necessary. This is probably not direct adversity, however - see the article at this site, entitled "Current Client."
Add some facts. While Lawyer A's case is pending, Republic Bank asks Lawyer B to represent it in the same court and oppose another litigant who is making the same usury argument that Lawyer A is making against Mercantile Bank. Can the law firm argue both sides of the usury issue at the same time in the local county court.
New Comment [24] to Model Rule 1.7 (adopted February 2002) provides as follows:
[24] Ordinarily a lawyer may take inconsistent legal positions in different tribunals at different times on behalf of different clients. The mere fact that advocating a legal position on behalf of one client might create precedent adverse to the interests of a client represented by the lawyer in an unrelated matter does not create a conflict of interest. A conflict of interest exists, however, if there is a significant risk that a lawyer's action on behalf of one client will materially limit the lawyer's effectiveness in representing another client in a different case; for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client. Factors relevant in determining whether the clients need to be advised of the risk include: where the cases are pending, whether the issue is substantive or procedural, the temporal relationship between the matters, the significance of the issue to the immediate and long-term interests of the clients involved and the clients' reasonable expectations in retaining the lawyer. If there is significant risk of material limitation, then absent informed consent of the affected clients, the lawyer must refuse one of the representations or withdraw from one or both matters.
The prior version of the comment only mentioned the inadvisability of appearing at the same time in the "same appellate court."
The court in
In re Rail Freight Fuel Surcharge Antitrust Litig., 2013 U.S. Dist. LEXIS 125054 (D.D.C. Sept. 3, 2013), agreed with the first two sentences of Comment [24]. ABA Op. 93-377 (1993) deals with issue conflicts. The Committee said the lawyer may conclude that he must withdraw from one of the representations or get consents from both clients after making full disclosure of the potential effect one ruling would have on the other.
Restatement. See § 128 and cmt. f to that section. Illus. 5 says that a lawyer can take opposite positions in two different federal district courts. In illus. 6 both matters are before the United States Supreme Court at the same time. It says that the conflict is so great, not even consent will cure it.
State and Local Ethics Opinions. A number of ethics committees have opined on these issues, and no two opinions are just alike. Ariz. Op. 87-15 (1987) (with consent, same firm can be on both sides of an employment law issue in same appellate court); Cal. Op. 1989-108 (1989) (firm may take opposite positions before same federal judge); D.C. Op. 265 (1996) (drops the trial/appellate court distinction); Mich. Op. RI-108 (1991) (lawyer may rely on regulation in one proceeding and attack its validity in a later proceeding); Mich. Op. CI-1194 (where two cases are consolidated in state supreme court requiring diametrically opposite positions, lawyer must withdraw from both; consent will not cure); Maine Op. 155 (1997) (cautions lawyer about taking opposite positions before same judge); N.M. Op. 1990-3 (1990) (in child neglect cases, firm may not take diametrically opposite positions in same trial or appellate court); N.Y. City Op. 1990-4 (1990) (firm may take pro bono cases before city human rights commission and defend private clients before commission at the same time); and Philadelphia Op. 89-27 (1990) (with consent firm may take opposite positions on behalf of environmental clients and insurers of environmental risks before the same trial or appellate courts).
The Cases. We are aware of one reported court decision that deals directly with issue conflicts. It is Williams v. State, 805 A.2d 880 (Del. 2002). There, a lawyer found himself with two death penalty appeals before the Delaware Supreme Court at the same time. In one case he was arguing that it was error for the trial judge to give "great weight" to the jury's 10-2 recommendation for the death penalty. In the other case he was arguing that it was error for the trial judge not to give "great weight" to the jury's 2-10 vote for the death penalty. He moved to withdraw from one of the cases. The court granted the motion, saying it would be unethical for the lawyer to handle both cases before the court at the same time. The court cited the Comment to Delaware's version of Rule 1.7, which is the same as the Model Rule Comment. This may be the first reported court decision dealing with an issue conflict in such a direct way.
IMEG Corp. v. Patel, No. 2101310 (3d Cir. April 8, 2022). This is
not really an issue conflict, but it's close. It is, in fact, a Rule 11
issue. In an earlier iteration of this case Lawyer successfully argued
against IMEG that a suit brought by IMEG is subject to an arbitration
clause in a merger agreement, causing a California District Judge to
dismiss that case. IMEG then filed a demand for arbitration with the AAA
in Wilmington, as provided in the arbitration clause. Lawyer then
switched gears, arguing that the case was not subject to arbitration.
The arbitrator agreed with Lawyer and refused to proceed. IMEG then
petitioned to compel arbitration under the Federal Arbitration Act.
Lawyer moved to dismiss that petition, and IMEG moved for Rule 11
sanctions. The District Judge ordered the case to proceed to arbitration
and ordered Lawyer and his law firm to pay almost $90,000 in sanctions.
Lawyer failed to appeal those orders properly, and in this opinion the
appellate court dismissed this appeal.
The following cases have been cited by some writers in connection with these issues. Upon closer examination, they involve situations where a law firm's taking a position for one client will (or could) harm another client in a specific matter.
Fiandaca v. Cunningham, 827 F.2d 825 (1st Cir. 1987);
GATX/Airlog Co. v. Evergreen Int'l. Airlines, Inc., 8 F. Supp. 2d 1182 (N.D. Cal. 1998) (discussed at "Current Client and Direct Adversity");
Estates Theatres, Inc. v. Columbia Pictures Industries, Inc., 345 F. Supp. 93 (S.D.N.Y. 1972) (really a "hot potato" case); and
Maritrans GP Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d 1277 (Pa. 1992).
See Sumitomo Corp. v. J.P. Morgan & Co., Inc., 2000 U.S. Dist. LEXIS 1252 (S.D.N.Y. 2000).
Advanced Display Systems, Inc. v. Kent State University, 2001 U.S. Dist. LEXIS 19466 (N.D. Tex. November 29, 2001). This is patent infringement litigation between ADS and various entities related to Kent State University. While this case was pending, Clark, a lawyer for ADS, sued several of the Kent State entities, including KDI and KDS, claiming that they defamed him by republishing on their Web site a Texas Lawyer article about his litigation conduct. Kent State moved to disqualify Clark in this case, because Clark is claiming in this case that KDI and KDS are separate entities, while in the defamation case he is claiming that one is the alter ego of the other. The court denied the motion to disqualify, stating as follows:
While equity may require application of the alter ego doctrine in one case, it may not in another. Thus, Clark may permissibly argue that KDI is the alter ego of KDS in his defamation lawsuit without necessarily implying that the separateness of the two corporations should be disregarded for all purposes.
Patent Prosecution. David Hricik, Trouble Waiting to Happen: Malpractice and Ethical Issues in Patent Prosecution, 31 AIPLA Q. J. 385, 407-410 (Fall 2003). The author discusses the problems with representing clients in similar technologies.
Referral Relationship. Estate of Re v. Kornstein, Veisz & Wexler, 958 F. Supp. 907 (S.D.N.Y. 1997). Paul Weiss referred substantial business to the Kornstein firm. The Kornstein firm represented Re in an arbitration against Bear Sterns, Re's former employer. Bear Sterns was an important client of Paul Weiss, although Paul Weiss did not handle the Re arbitration. A Paul Weiss partner testified against Re in the arbitration. The Kornstein firm lawyer did not cross examine him. In a malpractice action against the Kornstein firm, Re claimed that the Kornstein firm breached its fiduciary duty to him by not telling him about the referral relationship and by not cross examining the Paul Weiss partner. In this opinion the court denied summary judgment to the Kornstein firm on the breach of fiduciary count.
Owning and Representing a Competing Business as Grounds for Discipline. Florida Bar v. Herman, 2009 Fla. LEXIS 244 (Fla. Feb. 19, 2009). Disciplinary proceeding. While representing Company A Lawyer established a competing Company B. Lawyer represented Company B and ultimately became sole owner of Company B. Lawyer never disclosed his interest in Company B to the owner of Company A. In this opinion the court found that Lawyer violated Florida's versions of Model Rules 1.7(a)(1), 1.8(a), and 8.4(c). As to 1.7, the court said that it does not just apply in litigation. What Lawyer did was directly adverse to his client, Company A. As to 1.8(a), the court applied the second prong of the rule about acquiring an interest adverse to a client. As to 8.4(c), the court said that Lawyer's failure to request Company A's consent to his competing business was deceitful. The bottom line: Lawyer was suspended for 18 months.
Lawyer’s Web Site Inconsistent with Argument in Case. In re Adoption of T.A.M., 2010 Minn. App. LEXIS 175 (Minn. App. Dec. 14, 2010). This opinion has a conflicts point largely unrelated to the merits, so we will try to shorten things. Lawyer had argued in the trial court that same-sex adoptions were invalid. The trial court rejected Lawyer's position on procedural grounds and imposed sanctions against Lawyer and his client. One of the bases for sanctions was the fact that Lawyer had a Web site, in which Lawyer solicited same-sex adoption cases. Thus, the trial court held the lawyer's argument was "disingenuous" and a basis for sanctions. The appellate court affirmed the sanctions award but rejected the "disingenuous" finding, relying in part upon Minnesota Rule 1.7, Comment [24], which appears to be the same as the comment to the Model Rule. That is the comment that says a lawyer may ethically take different positions in different tribunals.
Multimedia Patent Trust v. Apple Inc., 2011 U.S. Dist. LEXIS 46237 (S.D. Cal. April 29, 2011). Law Firm represents the plaintiff in this patent infringement case. Direct TV, a non-party, sought leave to intervene and disqualify Law Firm, because Law Firm represented Direct TV in other matters. Direct TV claimed that this case was antagonistic to its interests in other patent cases, in which Law Firm was not involved. In this opinion the court denied the motion to disqualify. The court noted two similar cases with different results:
Rembrandt Techs. LP v. Comcast Corp., 2007 U.S. Dist. LEXIS (E.D. Tex. Feb. 8, 2007) (finding disqualification); and
Enzo Biochem. v. Applera Corp., 468 F. Supp. 2d 359 (D. Conn. 2007) (finding no disqualification). The court found the latter more compelling in this circumstance.
Johnson v. Crete Carrier Corp., No. 3:15-cv-613 (M.D. Tenn. Oct. 21, 2016). Law Firm represents Plaintiff in this personal injury action. Defendants moved to disqualify Law Firm because Plaintiff has expressed an intent to challenge Tennessee’s statutory cap on certain personal injury recoveries. Defendants point to Law Firm’s attempt to enforce the cap in another case and to Law Firm’s representation of many entities that would favor caps. Law Firm responded that the cap issue is not yet ripe and that when it is in play, other lawyers will step in to handle the cap challenge. In this opinion the court denied the motion.
Treatise. Hazard, Hodes, & Jarvis § 10.10; Rotunda & Dzienkowski § 1.7-6(o).
Articles. Douglas R. Richmond,
Choosing Sides: Issue or Positional Conflicts of Interest, 51 Fla. L. Rev. 383 (1999); Peter Margulies,
Multiple Communities or Monolithic Clients: Positional Conflicts of Interest and the Mission of the Legal Services Lawyer, 67 Fordham L. Rev. 2339 (1999); Norman W. Spaulding,
The Prophet and the Bureaucrat: Positional Conflicts in Service Pro Bono Publico, 50 Stan. L. Rev. 1395 (1998); John S. Dzienkowski,
Positional Conflicts of Interest, 71 Tex. L. Rev. 457 (1993); Nancy Ribaudo,
Issue Conflicts, 2 Geo. J. Legal Ethics 115 (1988); Walther & Kass,
Positional Conflict: Considering a One-Side-Representation Rule, 13 Am. J. Fam. L. 137 (1999).
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