MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2002-10
Conflict of interest in representing husband in divorce proceedings where attorney’s firm represented husband and wife in filing bankruptcy petition
You have asked whether you can represent a Husband in a divorce after you and your firm represented the Husband and his Wife in the preparation and filing of a bankruptcy petition during the marriage. The information before the Committee indicates that the bankruptcy representation was recent. You advise that in your view all of the information your firm received in the prior representation was disclosed in the documents filed in the bankruptcy court. The Wife disagrees and says that she provided other, confidential information to your firm during the prior representation. As a result, she objects to your representation of her Husband in the current divorce proceedings.
As an initial matter, your inquiry describes various tasks performed by you and another attorney in your office. Under Rule 1.10(a) of the Rules of Professional Conduct, when lawyers are associated in a firm, "none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1,7, 1.8(c), 1.9 or 2.2." The comment to the Rule states that "a firm of lawyers is essentially one lawyer for purposes of the rules governing loyalty to the client..." Thus, for the purposes of this Opinion, the Committee will consider all of the acts performed for the clients to have been performed by you.
Your inquiry is controlled by Rule 1.9, which provides, in pertinent part:
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 client unless the former client consents after consultation:
Rule 1.9(a) has two subparts: the subsequent representation must be the "same or a substantially related matter" and the new client's interests must be materially adverse to the former client's interests.1 As to the latter issue, there is no question that the Husband's current interests are materially adverse to the Wife's interests. The question then becomes whether the divorce proceeding and the bankruptcy are a "substantially related" matters.
In determining whether two matters are substantially related, the Committee looks at whether the lawyer "reasonably could have learned confidential information in the first representation that would be of significance in the second." Hazard, Jr. and Hodes, The Law of Lawvering, section 13.5, p. 13-13 (3rd Ed. 2001) (Italics in original). Information that reasonably could have been obtained based on the type of matter at issue is presumed to have been obtained. This presumption is generally considered irrebuttable "for if the lawyer was permitted to contest the point, the former client would have to reveal the very information that he sought to protect." Id. See T. C. Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F.Supp. 265 (S.D.N.Y. 1953).
Thus, in order to protect fully the former client's confidences, whether confidential information was in fact disclosed is not the determining factor. Rather, to avoid forcing a client to make public information that the Rules allow her to keep confidential, the analysis centers on the types of matters involved in the prior and current representations rather than the specific disclosures made. Thus, for example, if the prior representation involved a separate criminal matter that is now closed, it is not reasonable to believe that the client would have disclosed information in that matter that would be significant to the divorce proceedings. On the other hand, where the two matters involve similar issues and goals, they may be considered "substantially related".
For example, in Opinion 97-27, the committee addressed Rule 1.9(a) where a lawyer first represented a couple with regard to the preparation of wills and estate planning and then sought to represent the husband in the couples' divorce proceeding. The Committee stated that
[w]ill preparation would have required full passage of financial information from the Wife testatrix to Lawyer A. Estate planning would ordinarily involve coordination of spouses' wills to conserve finances of the marital parties and their issue. Because separation and divorce necessarily involve the division of the spouses' marital assets and alters the legal rights of the spouses in each others' estates, it is the opinion of this Committee that the former estate representation of Wife and the new domestic representation of Husband are not the same but are representations concerning substantially related matters."
As a result, the subsequent representation of the husband could only be undertaken with the consent of the wife.
The analysis set forth in Opinion 97-27 regarding Rule 1.9(a) applies to your inquiry. A decision to file for bankruptcy requires an analysis of all of the assets, income potential and debts of each spouse. Preparation of a bankruptcy filing similarly entails an examination of the financial status of both clients. Thus, like the situation in Opinion 97-27, the prior representation here necessarily involved "full passage of financial information" from the Wife as well as the Husband.
With regard to the current representation, one of the key components to contested divorce proceeding is the ultimate division of all marital assets. In addition, divorce proceedings often involve cash payments from one spouse to the other, for alimony, support or for other purposes. Such a determination requires an examination of the financial status of each spouse, including their ability to earn and the debts incurred during the marriage.
Stripping the emotion from the legalities of each representation, at bottom, bankruptcy and divorce both center on preservation and distribution of the couples' assets. The bankruptcy representation occurred recently. Thus, although the bankruptcy and the divorce proceedings are not the same matter, they are substantially related matters. Therefore, under the facts you have presented, representation of the Husband against the Wife is not permitted by the Rules absent the Wife's consent.
The approach set forth in Hodes' Law of Lawyering is consistent with this result. In order to prepare a bankruptcy petition properly, a lawyer must inquire as to all of the assets of the client. Thus, you "reasonably could have learned confidential information in the first representation" regarding the Wife's assets and liabilities. Information that reasonably could have been obtained based on the type of matter at issue is presumed to have been obtained. Further, because the divorce would involve identifying and dividing the assets of the Wife as well as the Husband, such information obtained in the first representation "would be of significance in the second". See, Hodes, The Law of Lawyering, section 13.5, p. 13-13 (Italics in original). Thus, again, the subsequent representation of the Husband is precluded absent the Wife's consent.
You indicate in your inquiry that you believe that all of the information the Wife provided was included in public filings. Even if true, that fact is not relevant to a consideration under Rule 1.9(a). Because Rule 1.9(a) concerns "the basic duty owed to former clients", Id., at p. 13-12, and the general requirement of loyalty to a client, there is no "unless generally known" exception to Rule 1.9(a).
As a result of the foregoing analysis, the Committee does not reach the issues under Rule 1.9(b) of whether the information is considered "generally known" upon the filing of the bankruptcy documents in light of the Wife's protestations to the contrary and whether the lawyer or the client bears the burden of showing that all of the confidential information is or is not contained in those public documents.2
Thank you for your inquiry.
1 The exception under Rule 1.9(a) for the consent of the former client does not apply in the facts you have presented.
2 In Opinion 97-24, the Committee addressed the issue of whether prior representation of a married couple in a bankruptcy precluded the lawyer from later representing the husband in the couples' divorce. The Committee, however, did not address Rule 1.9(a) and, therefore, did not consider the "substantially related matter" issue. Rather, after citing Rule 1.9(b), the Committee stated that although it had "substantial questions" whether that subsection could be satisfied, the factual determination required under 1.9(b) "is a judgment call" left to the lawyer.