The American Bar Association Standing Committee on Ethics and Professional Responsibility released Formal Opinion 510 on March 20. The opinion addresses how lawyers and firms can avoid being accused of a conflict of interest under Model Rule 1.18.
Rule 1.18 stipulates that a lawyer who consulted on an issue with a prospective client but wasn’t retained may not represent another client adverse to the prospective client in the same or a substantially similar matter if they received disqualifying information from the prospective client. If a lawyer takes “reasonable measures” to avoid exposure to more disqualifying information that’s not reasonably necessary to determine whether they’ll represent the client and the firm takes “specified procedural precautions,” then the lawyer’s conflict of interest doesn’t apply to others at the lawyer’s firm.
What’s a conflict of interest under the rule?
Opinion 510 notes under Rule 1.10(a), conflicts of interest for lawyers practicing at firms, including conflicts arising under Rule 1.9(a), are “imputed to other lawyers of the firm.” Under Rule 1.18, the conflict of interest wouldn’t be imputed to the firm in two cases.
In the first case, the conflict of interest isn’t applicable to the attorney’s firm if both the affected client and the prospective client provide informed consent in writing. The second case is discussed at greater length in Opinion 510.
Generally, the conflict of interest isn’t transferred to the lawyer’s law firm if the disqualified attorney took reasonable measures to avoid exposure to more disqualifying information than what was reasonably necessary to determine whether they should represent the prospective client. The committee noted in the opinion though that little guidance has been provided to date on what constitutes “reasonable measures” under the rule.
Another case the conflict wouldn’t be imputed to the firm would be if the disqualified lawyer is “timely screened from any participation in the matter and receives no portion of the fee.” Finally, law firms can avoid imputation of the conflict if written notice is promptly given to the prospective client.
Whether or not a lawyer took reasonable measures under the rule may depend on their background and experience, the client’s identity and the nature of the engagement, the committee explained.
‘Relevant information’ under the rule
The committee noted that not all the information from a prospective client will relate to the rule’s determination of “relevant information.” The opinion states attorneys should see if the information relates to the attorney’s professional responsibilities, including if the rules permit them to take on the matter and if the information may relate to the lawyer’s more general business decisions, like if they want to accept the matter.
In the former case, Rules 1.1, 1.2(d), 1.16(a)(4), 1.4, 1.7-1.12, 1.18 and 3.1 may apply. A lawyer may also need to seek out additional information to see how conflict rules apply.
“Certain purposes for learning disqualifying information would be unrelated to the lawyer’s determination ‘whether to represent the prospective client,’” the committee noted. If a lawyer makes a factual inquiry into the client’s matter, it wouldn’t relate to the information that would disqualify an attorney under Rule 1.18. The committee noted the inquiry would relate more to the prospective client’s decision to retain the lawyer or not.
When is disqualifying information ‘reasonably necessary?’
The committee acknowledged the more difficult question under Rule 1.18 is whether disqualifying information learned by a lawyer was “reasonably necessary.” “It is easier to show that the lawyer’s conduct was intended to serve a legitimate purpose than to show that it was necessary to serve that purpose,” the committee said in the opinion.
Opinion 510 notes that lawyers can ordinarily determine whether a proposed lawsuit is frivolous with a modest inquiry. Comments 1 and 2 to Rule 1.16(a) explain a lawyer needs to look into the matter enough to ascertain whether a prospective client wants to use a “lawyer’s services to commit or further a crime or fraud.”
The committee asserts that, under Rule 1.16, such an inquiry isn’t only permissible but falls within Rule 1.18’s information-gathering step.
The opinion explained the “imputation provision strikes a balance between the prospective client’s interest in being assured that the lawyer will comply with the confidentiality obligation, on one hand, and other clients’ interest in access to counsel as well as the law firm’s legitimate business interests, on the other.”
Reasonable measures
The committee opined there’s limited guidance on what constitutes a reasonable measure to limit exposure to more information than what’s reasonably necessary.
Lawyers can limit the scope of conversations with prospective clients during the initial interactions to avoid being provided with information that exceeds what’s strictly necessary for them to decide if they’ll take on the client’s matter. The committee also suggests lawyers warn prospective clients they’ve not yet agreed to take on the matter and information should be limited only to what’s necessary for the lawyer to determine whether they want to move forward with the client’s case.
“The reasonableness of a lawyer’s measures depends on whether they are designed to limit the information received before a lawyer-client relationship is established,” the committee explained.