Representing Peter While Representing Paul: Navigating Ethical Hazards In Multi-Client Representation

When a law firm engages multiple clients for the same matter, you must adhere to several best practices to mitigate potential risks, maintain ethical standards, and protect both the clients and your firm. This process involves navigating the complexities of conflicts of interest, confidentiality, and communication, all while ensuring compliance with the American Bar Association (ABA) Model Rules of Professional Conduct.

1. Identifying and Managing Conflicts of Interest

Rule 1.7 (Conflict of Interest: Current Clients): requires a lawyer must not represent a client if the representation involves a concurrent conflict of interest unless the lawyer reasonably believes they can provide competent and diligent representation to each affected client, the representation is not prohibited by law, and each client gives informed consent in writing.

Best Practice: Before representing multiple clients in the same matter, you must conduct a thorough conflict check. If a potential conflict exists, assess whether it can be resolved with a waiver or whether the conflict necessitates the declination of representation of some or all of the clients.

System/Tool: Implement a robust conflicts checking system that requires every attorney to input potential clients, adversaries, and related parties before any engagement. This system should flag potential conflicts and generate alerts when a conflict arises. Clearance of conflicts should NOT be done by the originating attorney, but instead a conflicts team or at least a disinterested partner.

2. Upjohn Warnings & Corporate Clients

Upjohn Warnings: from the SCOTUS case, Upjohn Co. v. US, 449 U.S. 383 (1981), an Upjohn warning informs corporate employees that the lawyer represents the corporation only and not any individual owners, officers, or employees. This is crucial when communicating with individual constituents to ensure they understand who the client is and that the attorney-client privilege belongs to the corporation.

Rule 1.4 (Communication): requires a lawyer to keep the client reasonably informed about the status of their matter and to promptly comply with reasonable requests for information. The Rule also mandates that a lawyer explain a matter to the extent reasonably necessary to allow the client to make informed decisions regarding the representation.

Best Practice: Always provide an Upjohn warning when conducting internal investigations or when interviewing corporate individuals as part of representing a corporate client. Document the warning and obtain acknowledgment from the interviewee.

System/Tool: Use standardized forms and scripts for Upjohn warnings to ensure consistency and proper documentation. These forms should be integrated into the firm's document management system for easy access and record-keeping. Set time-period and event milestones to review each matter to see if any individual needs a written Upjohn warning or any update.

3. Handling Payment by a Third Party

Rule 1.8 (Conflict of Interest: Current Clients: Specific Rules): Section (f) allows a lawyer to accept compensation from someone other than the client only if the client gives informed consent, there is no interference with the lawyer's independence of professional judgment, and the client's information is protected as required by Rule 1.6.

Best Practice: When a third party (including co-client) pays for legal services, the firm must ensure that the client understands the arrangement, consents to it, and that confidentiality is not compromised.

System/Tool: Create a client consent form that outlines the payment arrangement, potential risks, and the client's rights. This form should be signed by the client and kept in the client’s file. Consider whether third party payment is appropriate for every individual matter, never assume compliance.

4. Joint Representation and Common Interest Agreements

Rule 1.9 (Duties to Former Clients): This rule concerns conflicts involving former clients and highlights the importance of maintaining confidentiality and avoiding conflicts even after the representation has ended.

Best Practice: When representing multiple clients in a joint representation, it is crucial to clarify the scope of representation, the sharing of confidential information, and the implications of joint representation. A common interest or joint defense agreement can help protect shared communications from disclosure and avoid misunderstandings later in the representation.

System/Tool: Utilize standardized joint representation and common interest agreement templates that address confidentiality, scope of representation, and the handling of conflicts. Ensure that all parties understand and agree to the terms before commencing representation.

5. Advanced Conflicts Waivers

Rule 1.7 (Conflict of Interest: Current Clients): allows clients to waive conflicts of interest if they are fully informed of the implications and the lawyer reasonably believes that the representation will not be adversely affected.

Best Practice: Advanced conflicts waivers should be used judiciously and with full disclosure to the client. The waiver should detail the potential conflicts, the specific risks involved, and the client's right to seek independent legal advice before consenting.

System/Tool: Develop an advanced conflicts waiver checklist that guides attorneys through the process of explaining potential conflicts, documenting the client's understanding, and obtaining informed consent. This checklist should be part of the firm's standard intake procedures. Don't avoid using an advanced waiver just because they can be complicated.

By adhering to these best practices and utilizing the simple systems and tools mentioned above, your law firm can effectively manage the complexities of representing multiple clients in the same matter.

Proper conflict checks, clear communication through Upjohn warnings, informed consent for third-party payment, carefully drafted joint representation or common interest agreements, and comprehensive advanced conflicts waivers are essential to mitigating risk while upholding our ethical standards.

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