MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2006-15
Conflict of Interest/Attorney-Client Privilege – Joint Representation
Your recent request for an opinion has been considered by the Committee on Ethics of the Maryland State Bar Association and I have been assigned to respond to you on behalf of the Committee.
In your request, you offer the following scenario and related questions:
- Attorney 1 represents Clients A & B on a patent matter as co-inventors.
- A learns that B wronged him and that the patent matter was misfiled. 3. A hires Attorney 2 to sue B.
- Attorney 2 informs Attorney 1 that he is fired with regard to representing Client A.
- Attorney 2 also tells Attorney 1 that A & B have adverse interests regarding the patent matter and other matters.
- Attorney 1 acknowledges that conflict.
You have asked whether (1) Attorney 1 must now withdraw from representing B; (2) If so, must Attorney 1 turn over his files regarding the joint representation; and (3) Does the attorney-client privilege protect Attorney 1/Client B from doing so?
Effective July 1, 2005, the Court of Appeals of Maryland adopted the latest version of the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”). A review of those rules indicates, based on the analysis below, that questions 1 and 2 must be answered in the affirmative, and question 3 in the negative.
MLRPC 1.7 sets forth the rules regarding conflicts of interest. That rule provides as follows:
Conflict of Interest: General Rule
- Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a conflict of interest. A conflict of interest exists if
- the representation of one client will be directly adverse to another client; or
- there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
- Notwithstanding the existence of a conflict of interest under paragraph (a), a lawyer may represent a client if
- the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
- the representation is not prohibited by law;
- the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
- each affected client gives informed consent, confirmed in writing.
In the scenario you have raised, the representation of Client A is now directly adverse to Client B’s interests. Moreover, there is a significant risk that the representation of Client B will be materially limited by the lawyer’s responsibilities to Client A, who is now a former client. Based on MLRPC 1.7, there is clearly a conflict of interest in this case.
Subsection (b) goes on to state, however, that a conflict is waivable if the fourpart test outlined in the rule is met. In this case, it is highly doubtful whether this conflict is waivable even if informed consent is given in writing. Subsections (b)(1) and (b)(3) are probably fatal to any waiver argument. The lawyer is likely unable to provide competent and diligent representation to clients with interests that are diametrically opposed to one another. Further, (b)(3) forbids the continued representation, even with a waiver, where one client asserts a claim against the other. That appears to be the case here, and, therefore, the conflict is not waivable.
Of note, three (3) comments in particular address problems that arise with common representation. Comments [29] through [31 ]state:
Special Considerations in Common Representation
[29] In considering whether to represent multiple clients in the same matter, a lawyer should be mindful that if the common representation fails because the potentially adverse interests cannot be reconciled, the result can be additional cost, embarrassment and recrimination. Ordinarily, the lawyer will be forced to withdraw from representing all of the clients if the common representation fails. In some situations, the risk of failure is so great that multiple representation is plainly impossible. For example, a lawyer cannot undertake common representation of clients where contentious litigation or negotiations between them are imminent or contemplated. Moreover, because the lawyer is required to be impartial between commonly represented clients, representation of multiple clients is improper when it is unlikely that impartiality can be maintained. Generally, if the relationship between the parties has already assumed antagonism, the possibility that the clients’ interests can be adequately served by common representation is not very good. Other relevant factors are whether the lawyer subsequently will represent both parties on a continuing basis and whether the situation involves creating or terminating a relationship between the parties.
[30] A particularly important factor in determining the appropriateness of common representation is the effect on client-lawyer confidentiality and the attorney-client privilege. With regard to the attorney-client privilege, the prevailing rule is that, as between commonly represented clients, the privilege does not attach. Hence, it must be assumed that if litigation eventuates between the clients, the privilege will not protect anv such communications, and the clients should be so advised. [Emphasis supplied]
[31] As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. This is so because the lawyer has an equal duty of loyalty to each client, and each client has the right to be informed of anything bearing on the representation that might affect that client’s interests and the right to expect that the lawyer will use that information to that client’s benefit. See Rule 1.4. The lawyer should, at the outset of the common representation and as part of the process of obtaining each client’s informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other. In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client’s trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients.
As the comments point out, there are a number of special considerations that lawyers must address when undertaking the joint representation of multiple clients, particularly where there exists a possibility that the clients may later have adverse interests.
In addition, MLRPC 1.9(a) states that
a lawyer who has formerly represented a client in a matter shall not thereafter 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 gives informed consent, confirmed in writing.
In addition, Comment [2] adds:
Nor could a lawyer who has represented multiple clients in a matter represent one of the clients against the others in the same or a substantially related matter after a dispute arose among the clients in that matter, unless all affected clients give informed consent.
That is precisely the scenario presented here. Attorney 1 wishes to continue representing Client B in litigation involving substantially similar matters with former-Client A. Absent a waiver from former-Client A, Attorney 1 may not continue to represent Client B.
It should be noted, however, that “prior representation does not automatically cause disqualification; the two matters must be substantially related.” Strategene v. Invitrogen Corp., 225 F. Supp. 2d 608, 611 (D. Md. 2002) (Chasanow, J.) (citation omitted). “In determining whether a former and current matter are `substantially related,’ it is not necessary that the two representations involved the same operative facts `so long as there is a sufficient similarity of issue.”‘ Id. (citation omitted). Moreover, “[t]he court’s primary concern is whether there is a `reasonable probability that confidences were disclosed in the prior representation which could be used against the former client in the current litigation. …”‘ Id. (citations omitted). In Strategene, the court held that defense counsel’s former representation of the plaintiff warranted disqualification of both attorney and law firm in a patent infringement suit. See also Buckley v. Airshield Corp., 908 F. Supp. 299 (D. Md. 1995) (Williams, J.) (in patent infringement suit, holding that licensee’s attorney’s prior representation of licensee in action to enforce patent required his disqualification based on exposure to confidential information).
With regard to the remaining two issues, former-Client B should have unfettered access to Attorney l’s files under what has been recognized by some courts as the “Joint Representation Doctrine,” which provides that:
Generally, where the same lawyer jointly represents two clients with respect to the same matter, the clients have no expectation that their confidences concerning the joint matter will remain secret from each other, and those confidential communications are not within the privilege in subsequent adverse proceedings between the co-clients (see, Wolfram, Modern Legal Ethics § 6.4.8, at 274-275).
Tekni-Plex, Inc. v. Meyner and Landis, 89 N.Y.2d 123, 137, 674 N.E.2d 663, 670, (N.Y. 1996); see also Brennan’s, Inc. v. Brennan’s Rests., Inc., 590 F.2d 168, 172 (5th Cir. 1979) (“Assuming the prior representation was joint, defendants are quite correct that neither of the parties to this suit can assert the attorney-client privilege against the other as to matters comprehended by that joint representation.”); Garner v. Wolfinbarger, 430 F.2d 1093, 1103 (5th Cir.1970), cert. denied 401 U.S. 974, 91 S.Ct. 1191, 28 L.Ed.2d 323 (1971) (“In many situations in which the same attorney acts for two or more parties having a common interest, neither party may exercise the privilege in a subsequent controversy with the other.”); In re Mirant Corp., 326 B.R. 646, 649 (Bankr. N.D. Tex.2005) (stating, “[i]t is well established that, in a case of a joint representation of two clients by an attorney, one client may not invoke the privilege against the other client in litigation between them arising from the matter in which they were jointly represented.”);
Scroggins v. Powell, Goldstein, Frazer & Murphy (In re Kaleidoscope, Inc.), 15 B.R.
232, 244 (Bankr. N.D. Ga. 1981) (stating, “[t]he court believes that with regard to legal files created … during the course of joint representation … the entire contents of those legal files belong jointly to the clients in question, with each having an undivided ownership interest in, and equal right of access to, all of those files.”) rev’d on other grounds 25 B.R. 729 (N.D. Ga. 1982); Gearhart v. Etheridge, 232 Ga. 638, 208 S.E.2d 460, 462 (1974) (stating, “[i]f two or more persons jointly consult an attorney for the purpose of having him prepare a deed or contract for them, the communications which either makes to the attorney are not privileged in the event of any subsequent litigation between the parties.”) (quoting Green, Georgia Law of Evidence, § 185 (1957)); Matter of Michigan Boiler and Engineering Co., 87 B.R. 465, 469 (Bankr. E.D. Mich. 1988) (stating, “[a]nd where legal files are amassed during the joint representation of a number of clients, “the entire contents of those legal files belong jointly to the clients in question, with each having an undivided ownership interest in, and equal right of access to, all of those files.”).
Consequently, it appears that Attorney 1 must turn over his files to Attorney 2 and has no basis to invoke the attorney-client privilege.
Somewhat related, the DC Bar Board on Professional Responsibility recently issued Opinion 327 (February 2005), where it addressed the issue of disclosure of otherwise privileged matters where clients jointly retain the same counsel and there is a specific provision in the retainer regarding subsequent disclosure of the clients’ privileged information. Previously, the DC Bar had concluded that a lawyer who had jointly represented two clients may reveal such privileged information to one client where the other client waives his privilege. If that client refused to do so, the lawyer would simply have to withdraw since, the DC Bar found, there is no implied authorization to disclose by the mere joint use of an attorney without any retainer provision to the contrary. See D. C. Ethics Op. 296. However, the DC Bar Board on Professional Responsibility revisited this issue in Opinion 327, and stated that such information must be shared where there is joint representation, an acknowledgment of such in the retainer, and the information is relevant and material to the other client. The DC Bar reasoned,
Because the disclosing client previously has waived confidentiality, there is nothing to weigh against either the lawyer’s duty of loyalty to the nondisclosing client or the lawyer’s obligation to keep that client reasonably informed of anything bearing on the representation that might affect that client’s interests.
We hope this response has addressed your inquiry and we thank you for your interest. Our opinions may be found on-line at www.msba.org.