Handling Investigations and Litigation

• Pages: 189-212

189

CHAPTER X

HANDLING INVESTIGATIONS

AND LITIGATION

An association’s involvement in an antitrust investigation or

litigation may raise a variety of difficult practical and legal issues. To

begin with, the cost of an antitrust i nvestigation or lawsuit may strain, if

not exceed, the resources of many associations. Moreover, when an

association becomes involved in an antitrust investigation or lawsuit, t he

association and its counsel are likely to face a number of difficult legal

tasks and decisions, including: preserving the attorney-client privilege,

formulating and executing a strategy for responding to subpoena s, and

determining whether to seek to resolve the investigation or suit through

settlement. These and related topics are discusse d in this chapter. Also

covered are issues that arise where an associ ation seeks to instigate a

government investigation and where an a ssociation is the plaintiff in

private litigation.

A. The Attorney-Client Relationship

This section summarizes the general principles that apply to the

attorney-client relationship in the association context and addresses

some of the ethical and pri vilege issues that may arise when an

association becomes involved in an antitrust investigation or liti gation.

1

1.

Who Is the Client?

The general rule is that a lawyer who represents an organizational

client such as an association r epresents the organization and not its

individual members.

2

Information obtained by an association’s lawyer

1. For further discussion of the ethical and privilege issues that may be

encountered representing trade associations and their members, see

Christopher J. MacAvoy, Ethical and Practical Challenges Representin g

Trade Associations and Their Members, THE ANTITRUST SOURCE,

May 2003, available at http://www.abanet.org/antitrust/at-source/03/05/

challenges.pdf.

2. See, e.g., D.C. RULES OF PROF’L CONDUCT R. 1.13(a) (2007); D.C. Bar

Legal Ethics Comm., Op . No. 305 (2001); CAL. RULES OF PROF’L

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Antitrust and Associations Handbook

while acting for the association is protected by the attorney-client

privilege and the lawyer’s duty to maintain a client’s confidences. The

privilege belongs to the association and not the members.

3

An

association’s lawyer is not, under the genera l rule, prohibi ted from

representing the associ ation in a matter in which its interests are adverse

to those of a member.

4

There may be an obligation, though, for the

association’s counsel to advise any member whose interests are adverse

to those of the assoc iation that there is an actual or potential conflict,

that the lawyer represe nts only the association, and that the member may

wish to seek separate counsel.

5

Notwithstanding the general rule, in some situations an association’s

lawyer may be deemed to ha ve an attorney-client relationship with a

member of the association despite the absence of a formal engagement.

If the facts and circumstances surroundi ng the communications between

the association’s lawyer and the member were such that t he member had

a reasonable expectation of confidentiality and t hat the lawyer was

acting on its behalf, an attorney-client relationship may be implied.

6

In

the leading case, Westinghouse Electric Corp. v. Kerr-McGee Corp.,

7

the Seventh Circuit held that a law firm was disqualified fr om

representing a party in a l awsuit adverse to some of the members of an

association. The law fir m also represented the association and had

received confidential information from its members in connection with

the associ ation’s l obbying efforts. The court held that , under the

circumstances, the members had a reasonable belief that the law firm

CONDUCT R. 3-6000(a) (1992); N.Y. LAWYER’S CODE OF PROF’L

RESPONSIBILITY EC 5-18, DR 5-109(a) (2007) ; TEX. DISCIPLINARY RULES

OF PROF’L CONDUCT R. 1.12(a) (1989); Robinson v. Te x. Auto. Dealers

Ass’n, 214 F.R.D. 432, 451-52 (E.D. Tex. 20 03).

3. See, e.g., D.C. Bar Legal Ethics Comm., Op. No. 305, at 2 n.3.

4. Id. at 2 (citing D.C. RULES OF PROF’L CONDUCT R. 1.7 cmt. [13] and D.C.

Bar Legal Ethics Comm., Op. No. 216 (1991)).

5. See, e.g., D.C. RULES OF PROF’L CONDUCT R. 1.13 cmt. [9].

6. See D.C. Bar Legal Ethics Comm., Op. No. 305; Ass’n of the Bar of the

City of N.Y. Comm. o n Prof’l and Judicial Ethics, Formal Op. 01 (1999);

ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 390 (1995).

7. 580 F.2d 1311 (7th Cir. 1978) .