Rule 1.7(a)(2) Materially Limited Representation Conflicts

LibraryMinnesota Legal Ethics: A Treatise (MSBA) (2022 Ed.)

Rule 1.7(a)(2)—Materially Limited Representation Conflicts

I. OVERVIEW

A. Popular Version

A shorter, more popular version of many of the subjects discussed in this chapter may be found in William J. Wernz, "Materially Limited" Conflicts: Learning by Example, BENCH & B. OF MINN., Feb. 2010, at 25.

B. Sources of Limitation

Conflicts identified under Rule 1.7(a)(2)—codified, before amendments in 2005, as Rule 1.7(b)—arise because "there is a significant risk that the representation ... will be materially limited . ..." The limitation could arise from the lawyer's own interests, from duties to a client or former client, or from the lawyer's responsibility to persons other than the client.

C. "Materially Limited"/"Directly Adverse" Conflicts

"Materially limited" refers to a concern that the lawyer's work product may be adversely affected by conflicting interests. In contrast to this material conflict, "directly adverse" conflicts, under Rule 1.7(a)(1) are formal, that is, they arise because the lawyer represents one client directly adverse to another. The directly adverse standard applies even where relevant subject matters are different and even where there is no effect on work product.

D. Key Terms

The key terms in Rule 1.7(a)(2) are "significant risk" and "materially limited representation." Rule 1.7 cmt. 8 discusses these terms.

E. Topics

This chapter will discuss the following topics in order: key terms; rules that are corollaries to Rule 1.7(a)(2); different types of responsibilities and interests that limit representation; and materially limited conflicts as they arise in several practice areas.

II. "MATERIALLY LIMITED REPRESENTATIONS"—EXAMPLES

A. More Examples

Lawyers seem to have more difficulty understanding "materially limited" conflicts than "directly adverse" conflicts. A few introductory shorthand references and examples may be helpful. More examples are given in William J. Wernz, "Materially Limited" Conflicts: Learning by Example, BENCH & B OF MINN., Feb. 2010, at 25.

B. "Pulling a Punch"

The desire not to offend, or become too adverse to, another client, or a party with whom the lawyer has some relationship, may cause the lawyer to provide a less-than-zealous representation. "Pulling a punch" may include, for example, "a 'soft,' or deferential, cross-examination." ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 92-367 (1992) (discussing a lawyer examining a client as an adverse witness).

C. "Human Nature"

A lawyer's human nature may limit the diligence and zeal clients should be able to expect. The Minnesota Supreme Court reasoned that ordinarily defense counsel represents the insured and not the insurer, because "[e]ven the most optimistic view of human nature requires us to realize that an attorney employed by an insurance company will slant his efforts, perhaps unconsciously, in the interests of his real client—the one who is paying his fee and from whom he hopes to receive future business—the insurance company." Pine Island Farmers Coop v. Erstad & Riemer, P.A., 649 N.W.2d 444, 449-51 (Minn. 2002) (citing U. S. Fid. & Guar. Co. v. Louis A. Roser Co., 585 F.2d 932, 938 n.5 (8th Cir. 1978) (discussing the tripartite relationship between lawyer, insured, and insurer and the potential for a conflict of interest to arise). Expecting more from lawyers, the court followed the lead of Katherine Hepburn, who famously explained to Humphrey Bogart—in "The African Queen," as she poured out the last of his gin—"[Human] nature, Mr. Allnut, is what we are put in this world to rise above."

D. "Me First"

"[A] personal interest of the lawyer" may materially limit a representation. Rule 1.7(a)(2). Attorney Glover represented a farmer, who was a widower with three adult children. Glover made a proposition that he thought one of the daughters (D) would not refuse. He would influence the farmer to execute a will solely to D's benefit,

in consideration for which D would give Glover a portion of the devise. Because Glover's representation of the farmer was subordinated to—not just limited by—Glover's own pecuniary interest, Glover was disbarred. In re Glover, 176 Minn. 519, 223 N.W. 921 (1929).

E. "Hands Tied"

A lesser example of conflict arising from self-interest is a lawyer standing mute at his client's motion to find that the lawyer provided ineffective assistance of counsel. See State v. Paige, 765 N.W.2d 134, 140-42 (Minn. Ct. App. 2009). As the lawyer put it, his "hands have been tied a little bit." Id. at 141. Purse strings, heartstrings, and other ties may limit a representation.

F. "Two Masters"

A famous maxim sounds descriptive of materially limited conflicts, "No man can serve two masters; for either he will hate the one, and love the other; or else he will hold to the one, and despise the other." Matthew 6:24. However, in some situations, with proper disclosures, lawyers may properly serve two or more masters, i.e. joint clients. Rule 1.7 cmts. 29-33. Some types of joint representations are ordinarily acceptable, e.g., spouses in estate planning, co-defendants where one fully indemnifies the other, and selling shareholders who agree on terms. On the other hand, some types of proposed joint representations call for special caution or, depending on the circumstances, declination. These include joint criminal defendants, principals in start-up companies, and driver-passenger representations. Such conflicts are considered in Rule 1.7 cmts. 8 & 23, and in Martin A. Cole, Handling Driver-Passenger Conflicts, MINN. LAW., May 2, 2005, at 4.

G. "My Bad"

As discussed below, a lawyer's own material malpractice in a matter may unduly limit a continuing or follow-on representation.

H. "Independent Professional Judgment"

In general, any factor that "will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client" will produce a conflict of interest. Rule 1.7 cmt. 8.

III. NATURAL OR CUSTOMARY LIMITS—THREE EXAMPLES

Some limits on representation do not ordinarily fall within the type oflimit contemplated by Rule 1.7(a)(2). Among these are natural or customary limits. All representations have limits that derive from custom, practice, and the nature of the work. Three examples illustrate this principle.

First, a lawyer who agrees to represent a client in the purchase of a property does not thereby also agree to undertake litigation as to any disputes regarding the purchase. The fact that the lawyer would not sue the seller or lender, either because the lawyer is not a litigator or because of other relationships with the seller or lender, is not a limitation of the type contemplated by Rule 1.7(a)(2).

Second, preparation of an estate plan does not imply an undertaking to advise clients on all future tax changes that may affect the plan.

Third, a lawyer retained to draft a deed that would convey a father's real estate to his son on the father's death was found to have been retained for a real estate transaction and not for tax advice, absent special agreement. Marker v. Greenberg, 313 N.W.2d 4 (Minn. 1981); see also McIntosh County Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538 (2008) (clarifying application of the Marker rule). The allegedly excess estate taxes caused by the conveyance were regarded by the court as "the natural result of the form of ownership chosen by the decedent," notwithstanding that the lawyer was originally retained for estate planning. Marker, at 6.

IV. SCOPE OF REPRESENTATION LIMITED BY AGREEMENT

A. Limitation on Scope of Work

Some representations are limited by agreement, as to the scope of the work. So long as such limits are reasonable, they may provide a means of avoiding materially limited representation. In this regard, Rule 1.2 and Rule 1.5(b) interface with Rule 1.7(a) (2). Rule 1.5(b) requires a lawyer to communicate "the scope of the representation" before or promptly after undertaking a matter. Rule 1.2(a) requires a lawyer to "abide by a client's decisions concerning the objectives of representation ... ."

B. Scope Limitations/Conflict Management

Limitations on scope of representation might be used to avoid materially limited and directly adverse conflicts. For example, a lawyer and client might agree that the lawyer will render an infringement opinion only as to products or marks of parties A, B, and C, but not as to D, because D is the lawyer's client in other matters. However, if the issues relating to D are the most important ones, the limitation may well be too material to waive.

C. Collaborative Law and More—ABA Formal Opinion 07-447 (2007)

"Collaborative law" normally involves two opposing parties and two lawyers. Information is openly exchanged and mutually advantageous resolution is sought. If the process breaks down, the lawyers withdraw and do not handle any related litigation. ABA Formal Opinion 07-447 (2007) states, "When a client has given informed consent to a representation limited to collaborative negotiation toward settlement, the lawyer's agreement to withdraw if the collaboration fails is not an agreement that impairs her ability to represent the client, but rather is consistent with the client's limited goals for the representation." In effect, the conflict is avoided because the limitation on representation arises from the initial engagement agreement, not from other or later circumstances. The ABA's acceptance of this principle is significant for conflicts-management generally. The opinion notes the potential for broader application: "Although collaborative practice currently is utilized almost exclusively by family law practitioners, its concepts have been applied to employment, probate, construction, real property, and other civil law disputes where the parties are likely to have continuing relationships after the current conflict has been resolved." Id. n.5.

V. LIMITED REPRESENTATION—"ACCOMMODATION CLIENTS"

A. Controversy

A...

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