ETHICS OPINION 505-1963 CONFLICT OF INTEREST. PRIVILEGE

NUMBER 505

QUESTION.

 

A party designated as A acquired several parcels of property and offered same for syndication to various investors by a letter contract outlining the terms and conditions with space at the end thereof provided for acceptance of the investor. The letter, the acceptance and the payment of money over to A constituted the entire transaction.

 

By virtue of the contract A, as Trustee, undertakes to manage, develop and sell the tract which consists of vacant land and to account for the proceeds to the investors.

 

Lawyer B was instrumental in drafting the letter agreement at the request of A to be used as the contract between the Trustee and the beneficiaries. Further than that Lawyer B has no connection with the Trustee.

 

An action has been instituted by one of the beneficiaries to remove A as Trustee for violation of his trust and to account for all moneys received. In connection with said action Party A is about to be examined before trial.

 

QUERY: A. Would it be proper for Attorney B to conduct the examination of A on behalf of the plaintiff and acting as counsel for plaintiff’s attorney for that examination only?

 

B. If the answer to the foregoing is in the negative, would it be proper for Attorney B to sit in at the examination for the purpose of assisting plaintiff’s attorney then conducting the examination?

 

C. In any event upon the trial of the action, if Attorney B is subpoenaed could he claim privilege, bearing in mind that the said pro forma agreements were for the benefit of all parties?

 

ANSWER.

 

The relationship of client and attorney was established between Party A, the organizer of the syndicate, and Lawyer B, when Party A retained Lawyer B to prepare the letter agreement. This relationship was not diluted by the fact that the letter agreement subsequently was accepted by various investors. The situation is distinguishable from one where two or more persons Jointly consult an attorney for their mutual benefit.

 

An attorney should not accept employment antagonistic to the interests of a former client where there is a possibility that the issues might involve information which he obtained from his former client in the course of his professional employment. (Canons 6 and 37; See County Lawyers Association Answers to Questions No. 202 and 207). Assuming this possibility to exist, it would not be proper for Lawyer B to assist plaintiff in the action against Party A either by personally conducting, or by assisting plaintiff’s attorney in conducting the examination before trial of Party A.

 

“Entire confidence between a lawyer and his client is essential to the proper discharge of the lawyer’s functions, and such confidence would be impossible if the client should be exposed to the risk of having the lawyer use or even put himself in the position of appearing to use in hostility to his former client information which he obtained in confidence.” (Opinion No. 207).

 

Queries “A” and “B” are answered in the negative.

 

Query “C” is answered affirmatively in so far as it relates to any disclosure or other evidence from Lawyer B which would constitute a privileged communication or advice. (See Sections 353 and 354, CPA).

 

March 19, 1963