MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2000-24
CONFLICT OF INTEREST - REPRESENTATION OF TWO PARTIES AFTER DISAGREEMENT ARISES BETWEEN THEM
Your letter of inquiry indicates that you were initially retained by the parents of two young men who had been sexually molested. You filed a civil action against the individual who had molested the boys and in May 1996 obtained a judgment in the Circuit Court for Charles County against this individual, on behalf of the two young men, in the total amount of $849,476.70. The damages awarded broke down almost exactly to seventy five percent in favor of the primary plaintiff and twenty five percent for the secondary plaintiff.
In December of 1996 you served a Writ of Garnishment upon the employer for the defendant. Since that time, the garnishment has yielded approximately $200.00 per month towards satisfaction of the judgment. For approximately three years, your office has collected the garnishment proceeds, placed them in escrow, and three or four times each year made distribution to the plaintiffs, who are now adults, on a pro rata basis of 75/25 of the collected garnishment proceeds.
In November of 1999 you received correspondence from counsel, who had been retained by the secondary plaintiff, expressing dissatisfaction with the manner in which the garnishment proceedings are being distributed. The new counsel has indicated that the secondary plaintiff no longer approves of the pro rata formula which has been followed to this point.
The questions you pose to this Committee are as follows:
1. In light of the correspondence received from the secondary plaintiff, do you have a conflict of interest between these two plaintiffs and should you withdraw from representation, at least insofar as the secondary plaintiff is concerned?
2. If you do withdraw from representing the secondary plaintiff, or if he elects to discharge you as his counsel, may you still continue to represent the primary plaintiff?
3. If you no longer represent the secondary plaintiff, what is your responsibility regarding any future garnishment funds obtained pursuant to the writ currently in force, insofar as the share of the secondary plaintiff is concerned?
4. If the secondary plaintiff is no longer agreeable to the 75/25 pro rata distribution of garnishment funds, and the primary plaintiff likewise insists that the formula is fair and should continue, what should you do insofar as future distribution to these two plaintiffs?
Rule 1.7 of the Maryland Rules of Professional Conduct states:
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
(2) each client consents after consultation.
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after consultation.
(c) The consultation required by paragraphs (a) and (b) shall include explanation of the implications of the common representation and any limitations resulting from the lawyer's responsibilities to another, or from the lawyer's own interests, as well as the advantages and risks involved.
It is assumed by this committee that the two parties had come to an agreement as to the pro rata distribution of funds. It is clear from the correspondence received on behalf of the secondary plaintiff that he no longer wishes to abide by this agreement. The representation of the secondary plaintiff, in attempting to obtain a larger portion of the garnishment proceeds, would be directly adverse to the primary plaintiff. As such, there would be a conflict of interest pursuant to Rule 1.7, unless you reasonably believed that the representation of one client will not adversely affect the relationship with your other client, and each client consented after consultation. It is this committee's opinion that it would be unreasonable to believe that the representation of one of your clients would not adversely affect your relationship with the other and as such a conflict of interest does exist.
The next issue to address is whether you may continue to represent the primary plaintiff in the event you cease to represent the secondary plaintiff. Rule 1.9 of the Maryland Rules of Professional Conduct states:
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former~c1ient unless the former client consents after consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
It is clear that you represented both the primary and secondary plaintiff in the distribution of the garnishment funds. As stated above, the interest of the primary plaintiff is materially adverse to the interests of the secondary plaintiff. As this committee opined in Ethics Docket 86-58,". . .we have never opined that an attorney or a law firm is barred from successive representation of different parties in the same litigation where the former client knowingly, voluntarily and intelligently consents to the new representation. By this opinion we expressly determine that such representation is allowed where consent is given." As such, absent the consent of the secondary plaintiff, you may not continue your representation of the primary plaintiff.
Your next two questions deal with your responsibility regarding the distribution of the garnishment funds which will come into your possession. As the secondary plaintiff no longer agrees with the pro rata distribution of funds, it is this committee's opinion that you should hold the funds in escrow until such time as a new agreement is reached by the parties, each individually represented by counsel, or the issue is resolved through a Court proceeding. The case of Scamardella v. Illiano, 126 Md. App. 76 (1999), is illustrative of the issues that you present. The Committee recommends that you review this opinion for guidance in your handling of this matter.
We hope the foregoing is responsive to your inquiry and we thank you for consulting the Committee on this matter.
References: Ethics Opinion 86-58