Ethics Hotline & Opinions

ETHICS DOCKET NO. 2021-05

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 2021-05

Joint Representation/Conflict of Interest

You requested a formal opinion from the Maryland State Bar Association Committee on Ethics concerning whether a Maryland licensed attorney associated with your law firm may jointly represent the law firm, an employee of the law firm, and a client of the law firm as co-defendants in a lawsuit. You asked that we accept as true the following factual assumptions:

Your Maryland firm is engaged regular practice of the law in the areas of mortgage banking industry, including administration and enforcement of secured real estate transactions for mortgage lenders, banks, mortgage servicers, and financial institutions. The practice includes foreclosure of deeds of trust securing the financial institution and litigation related thereto. Moreover, employees of your firm act as trustee on deeds of trust for mortgage lender clients of your firm. As a result, circumstances may arise in which a borrower institutes a legal action concerning the secured loan or property and names your firm, or a member of your firm, as a co-defendant along with your firm’s mortgage finance client.

One may discern the answer to your inquiry from the text of the Maryland Attorneys’ Rules of Professional Conduct Rule 19-301.7. Generally, when a conflict of interest situation exists a lawyer may not represent the client. Md. Rule 19-301.7. A conflict of interest exists if:

  1. the representation of one client will be directly adverse to another client; or
  2. there is a significant risk that the representation of one or more clients will be materially limited by the attorney's responsibilities to another client, a former client or a third person or by a personal interest of the attorney. Md. Rule 19-301.7(a).

Accordingly, joint representation is allowed if undertaking the representation of one client will not be directly adverse to another client and no significant risk exists that the attorney’s representation will be materially limited by his or her responsibilities to another client, former client or third person, or the lawyer’s own personal interests.

From the facts you provided, a likely unity of interest exists between your firm, its employees, and the firm’s mortgage finance clients, thus permitting a joint representation. Nevertheless, one can foresee the possibility that such unity could be undermined, for example, by a simple allegation that your firm provided negligent legal advice upon which a trustee (or member of your firm) acted to the detriment of the client or borrower. The significance of such a risk, and other potential conflicts of interest, is a matter this Committee cannot assess for you.

Even if disallowed under section (a) of Rule 19-301.7, joint representation may occur under section (b), which reads:

Notwithstanding the existence of a conflict of interest under section (a) of this Rule, an attorney may represent a client if:

  1. the attorney reasonably believes that the attorney will be able to provide competent and diligent representation to each affected client;
  2. the representation is not prohibited by law;
  3. the representation does not involve the assertion of a claim by one client against another client represented by the attorney in the same litigation or other proceeding before a tribunal; and
  4. each affected client gives informed consent, confirmed in writing. Md. Rule 19-301.7(b).

The attorney contemplating the joint representation must perform an evaluation of all the facts and circumstances to determine whether the criteria of sections (1) and (2) are met. If so, and provided the clients are not asserting claims against one another in the same litigation or proceeding, then joint representation is permitted if each client gives a written informed consent to the joint representation. We observe, though, that in preparing the written informed consent consideration be given to alerting the clients to the possibility that circumstances may arise in the future that would require the firm and its lawyer to withdraw from the representation due to a conflict of interest despite their willingness to consent to the joint representation.

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DISCLAIMER: Opinions of the Maryland State Bar Association (MSBA) Ethics Committee are an uncompensated service of the MSBA. This Committee’s opinions are not binding on the Maryland Court of Appeals, Maryland Attorney Grievance Commission, MSBA or this Committee. The reader is advised that subsequent judicial opinions, revisions to the rules of professional conduct, and future opinions of this Committee may render the Opinions stated herein outdated. As such, the Committee’s opinions are advisory only and neither the Committee nor the MSBA assumes any liability whatsoever with respect thereto. Accordingly, reliance upon the opinions of this Committee is solely at the risk of the user.