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The New York County Lawyers’ Association
NYCLA ETHICS OPINION NO. 716 (Issued 7/9/96)
REPRESENTATION OF A PRESENT CLIENT IN A MATTER ADVERSE TO A FORMER CLIENT
AN ATTORNEY MUST OBTAIN THE CONSENT OF A FORMER CLIENT AFTER FULL DISCLOSURE IN ORDER TO REPRESENT A PRESENT CLIENT WHO WILL PROVIDE TESTIMONY AGAINST THE FORMER CLIENT IN A MATTER SUBSTANTIALLY RELATED TO THE PRIOR CLIENT’S REPRESENTATION.
DR 5-108(A) (1) and (2); DR 5- 101(A); 4-101(A); DR 4-101(B) (2) and (3); DR 4- 101(C); DR 2-110(B) (2); EC 2-32; EC 4-1; EC 4-5; EC 4-6; EC 5-1; Canon 6; Canon 7
An inquirer (“Attorney”) jointly represented partners (“Client A” and “Client B”) who were engaged in a currency trading program. The partners subsequently ended their association with each other. Attorney continues to represent Client A actively. Client B, however, recently fired Attorney.
Client A and Client B are both under investigation by a regulatory body. This regulatory body has subpoenaed Client A to testify against (former) Client B. Client A will testify to matters substantially related to Attorney’s former representation of Client B. The inquirer has asked if he may represent Client A in this matter.
DUTY TO FORMER CLIENT:
The Code of Professional Responsibility (“Code”) provides in Disciplinary Rule 5- 108(A) that “[e]xcept with the consent of a former client after full disclosure a lawyer who has represented the former client in a matter shall not: 1. 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.”
SUBSTANTIALLY RELATED MATTER:
The information communicated by the inquirer specifies that the testimony concerns matters substantially related to Attorney’s former representation of Client B.
It is clear from the nature of the inquiry that Client A’s interests are “materially adverse” (DR 5-108(A) (1)) to Client B’s interests. Client A has an interest in cooperating with a regulatory body that is investigating her. Client B has an interest in having Client A not testify against her. Client’s A’s interest in cooperating is materially adverse to Client B’s interest.
Because the matters are substantially related and the interests of Client A are materially adverse to Client B, it would be a violation of DR 5-108(A) (1) for Attorney to represent Client A in this matter without the fully informed consent of Client B.
FORMER CLIENT CONFIDENCES:
Attorney must also be wary of the ethical requirement that she not “[u]se and confidences or secrets of the former client except as permitted by DR 4-101(C) or when the confidence or secret has become generally known.” DR 5-108(A) (2). Attorney is further restricted in that she may not knowingly use “a confidence or secret of a client to the disadvantage of the client” (DR 4-101(B) (2)) or “for the advantage of the lawyer or of a third person, unless the client consents after full disclosure.” (DR 4-101(B) (3)).
The fact that client B is a former client does not relieve attorney’s duty to preserve Client B’s confidences and secrets. “The obligation to protect confidences and secrets of a client continues after the termination of employment.” EC 4-6. Attorney must be careful not to use the information acquired in the course of her representation of Client B to the disadvantage of Client B. EC 4-5. “Both the fiduciary relationship existing between lawyer and client and the proper functioning of the legal system require the preservation by the lawyer of confidences and secrets of one who has employed or sought to employ the lawyer. A client must feel free to discuss anything with his or her lawyer . . . . The observance of the ethical obligation of a lawyer to hold inviolate the confidences and secrets of a client . . . facilitates the full development of facts essential to proper representation of the client.” EC 4-1. Accordingly, confidences and secrets that Client B does not consent to release must be held inviolate by Attorney.
CLIENT B’S CONSENT:
Client B’s consent would have to be obtained after full disclosure in order for Attorney to represent Client A in the testimony before the regulatory body. DR 5- 108(A). The full disclosure to Client B should include, at least, the fact that Client B is under no obligation to give her consent and that no negative consequences will attend her denial of consent. The former client must also be informed that she has the right to insist that all her confidences and secrets or specific confidences and secrets be held inviolate. Client B should not be pressured by Attorney to provide her consent.
CLIENT A’S CONSENT:
Client B’s consent after full disclosure would cure the former client conflict protected against in DR 5-108. There is also, however, the issue of the informed consent of Client A. “The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of the client and free of compromising influences and loyalties.” EC 5-1. Attorney has the duty to represent Client A competently (Canon 6) and zealously within the bounds of the law (Canon 7). Any restriction placed on Attorney by the need to keep inviolate a Client B confidence or secret certainly may constitute a compromising influence and prevent Attorney from representing Client A zealously and competently.
If Client B were to consent to Attorney’s representation of Client A, Attorney, before accepting Client A’s offer of employment, would have to conclude that the confidences and secrets of Client B would not compromise Attorney’s representation of Client A. Attorney’s conclusion in this regard must be reasonable.
Attorney would then have the duty to inform fully Client A of Attorney’s duty to Client B and to inform Client A how this duty might compromise Client A’s representation. If Attorney could not fully inform Client A of the compromising circumstances and potential risks because doing so would reveal a confidence or secret of Client B, then Attorney must decline to represent Client A. A lawyer cannot accept employment, except with the consent of the client after full disclosure, “if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by the lawyer’s own financial, business, property, or personal interests.” DR 5- 101(A).
If Attorney is already representing Client A in this matter and decides that this representation is in violation of a Disciplinary Rule, she must withdraw. DR 2-110 (B) (2). As well, Attorney must withdraw from the representation in a manner carefully considered to minimize the possible adverse effect on the rights of Client A. EC 2-32.
For the foregoing reasons, if Client A’s testimony concerns a matter substantially related to Attorney’s representation of Client B and client A’s testimony is materially adverse to Client B, then Attorney may not represent Client A without Client B’s fully informed consent. If Client B consents, Attorney must fully inform Client A of any limitations of Attorney’s representation due to Attorney’s continued duty of confidentiality to Client B. If Attorney cannot fully inform Client A without disclosing a confidence or secret of Client B, then Attorney may not represent Client A during the testimony.