Switching sides: may a lawyer ever represent someone against a former client?

• Author: Pope, Daniel J.

Let us have faith that right makes might; and in that faith let us to the end, dare to do our duty as we understand it.

--ABRAHAM LINCOLN

CONSIDER this scenario. The CEO of a major corporation wants to retain your firm in a $500 million lawsuit against its largest competitor. He tells you that he wants the very best and brightest of your lawyers working on the case--money is no object. You do not need to do a conflicts check. You used to represent the large competitor--the proposed target of the lawsuit--until three years ago when new management fired you. Your firm eventually had to eat a large unpaid fee. For good measure, this large competitor made it clear that neither you nor your firm would never be retained by them for as long as current management was there.

What should you do? What factors must you consider in determining what you can do?

Although this scenario is simplified, it is becoming all too common. In some cases, while no "technical" conflict may exist, a former client can insist that your duty of loyalty remains even though the client has chosen new counsel. Your failure to heed a conflict, whether technical or obvious, can have some pretty horrifying consequences. Conflicts do arise in this context, but there are some guidelines to help determine when a conflict of interest with a former client exists, and when one can undertake representation despite the conflict.

Why do conflicts arise?

Lawyers owe our clients duties of loyalty and confidentiality. These duties continue after the termination of the attorney-client relationship. Conflicts of interest arise when lawyers subsequently are asked to take on a representation that may compromise their continuing duties to a former client. In that situation, lawyers must refrain from an engagement on behalf of another client that could result in the use of confidential information about the former client to that client's disadvantage.

There are two strong policy reasons for this rule. First, the duties of loyalty and confidentiality assure clients that any confidences shared with their attorneys will not be used against them later. These twin duties allow clients to confide completely in their attorneys and maintain the integrity of the legal system and legal profession.(1) Second, without the corresponding obligations placed on lawyers because of their unique role, the public would lose confidence in the legal system as a means of adjudicating disputes.(2) Therefore, although clients may be less than loyal at times, lawyers must not.

Thus, it seems that when lawyers are faced with a conflict of interest, the only acceptable option is to decline representation of the new client. While one could attempt to represent the new client and simply refrain from disclosing confidential information of the former client, it is usually not a wise option.

As the Second Circuit recognized in Fund of Funds Ltd. v. Arthur Andersen & Co.:

Even the most rigorous self-discipline might not prevent a lawyer from unconsciously using or manipulating a confidence acquired in the earlier representation and transforming it to telling advantage in the subsequent litigation.... The dynamics of litigation are far too subtle, the attorney's role in that process is far too critical, and the public's interest in the outcome is far too great to leave room for even the slightest doubt concerning the ethical propriety of a lawyer's representation in a given case.(3) However, it is not always clear when a conflict of interest exists. How are we supposed to foresee when a representation will conflict with our duties to a former client?

A look at the rules

The American Bar Association Model Rules of Professional Conduct provide guidance to lawyers faced with these issues, and they serve as a reminder of lawyers' continuing duties of loyalty and confidentiality. Model Rule 1.9 governs duties to former clients.(4) Under it, a lawyer cannot represent another client (1) if the lawyer had an attorney-client relationship with a party in the past, (2) the present case involves a matter that is substantially related to the prior representation, (3) the present client's interests are materially adverse to the former client's interests, and (4) the former client did not consent to the present representation after disclosure. Let's look at each prong in turn.

Was there an attorney-client relationship?

In analyzing a potential conflict of interest, the first issue is whether there was an attorney-client relationship with the opposing party. As a general rule, lawyers owe duties only to former clients.(5) Accordingly, the client who had an attorney-client relationship with the lawyer is generally the only one who has standing to seek that lawyer's disqualification under Rule 1.9. For example, in Emons Industries Inc. v. Liberty Mutual Insurance Co.,(6) an insurer moved to disqualify an...