Perhaps one of the most puzzling issues practicing lawyers deal with is determining if there is a conflict of interest that will affect their representation. On February 10, 2021 the American Bar Association Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 497 – Conflicts Involving Materially Adverse Interests to address conflicts involving representing a current client with interests that are “materially adverse” to the interests of a former client under Rule 1.9(a) or a prospective client under Rule 1.18(c) on the same or a substantially related matter. Neither Rule, the Opinion notes, specifies when the interests of a current client are “materially adverse” to those of a former or prospective client.
The Opinion found that courts, regulatory authorities, and ethics scholars generally concluded that “material adverseness” includes, but is not limited to, matters where the lawyer is directly adverse on the same or a substantially related matter.
The Opinion noted that “material adverseness” does not reach situations where representation of a current client is simply harmful to a former client’s economic or financial interests, without some specific tangible direct harm. In the absence of direct adverseness, generalized financial harm or a claimed detriment that is not accompanied by demonstrable harm to the former or prospective client’s interest does not constitute “material adverseness.”
The Opinion then listed three types of situations where “material adverseness” may be found:
- Suing or negotiating against a former client – The Opinion characterized this as being on the opposite side of the “v” from a former client, noting that who or what the lawyer formerly represented is important in this analysis.
- Attacking lawyer’s own prior work – The Opinion indicates that when a lawyer represents a current client challenging the lawyer’s own prior work done for a former client on the same or substantially related matter, the situation creates a materially adverse conflict.
- Examples included that:
- a lawyer cannot challenge a patent that the lawyer previously obtained for a former client.
- a lawyer may not challenge a real estate restrictive covenant for a new client that the lawyer previously drafted for the prior seller of the land.
- Examples included that:
- Examining a former client – The Opinion says that if a lawyer must use information relating to the former representation to the disadvantage of a former client to competently examine the former client, the lawyer has a conflict, unless that information has become “generally known.” See Rule 1.9(c)(1).
Then the Opinion addressed waiver of materially adverse conflicts. A lawyer may still represent a current client, if a reasonable lawyer reviewing the situation would conclude that the representation of a current client is “materially adverse” to a former client, even if the current and prior matters are “substantially related,” if the lawyer obtains the informed consent of the former client pursuant to Rule 1.9(a) or prospective client, pursuant to Rule 1.18(d)(1), to waive the potential conflict of interest and that consent is confirmed in writing. Examples included a lawyer is hired to:
- sue a former client on behalf of a current client;
- negotiate against a former client;
- take the deposition of a former client on a substantially related matter.
The Opinion noted that Informed consent to waive a conflict under Rule 1.9(a) will not waive the lawyer’s obligation to maintain the confidentiality of all information learned during the prior representation protected by Rule 1.6. The former client also must provide informed consent pursuant to Rule 1.6(a) to allow disclosure of that protected information.
To answer when the interests of a current client are “materially adverse” to those of a former or prospective client, which neither Rule 1.9 or Rule 1.18 specifies, the Opinion concludes that “material adverseness” under Rule 1.9(a) and Rule 1.18(c) exists where a lawyer is negotiating or litigating against a former or prospective client or attacking the work done for the former client on behalf of a current client in the same or a substantially related matter.
“Material adverseness” also exists in many but not all instances, where a lawyer is cross-examining a former or prospective client. It may exist when the former client is not a party or a witness in the current matter if the former client can identify some specific material, legal, financial, or other identifiable concrete detriment that would be caused by the current representation.
This Opinion is helpful in analyzing potential conflict situations involving “material adverseness” to enable the lawyer to take appropriate steps regarding the representation. If you have any questions about conflicts of interest, please contact me at OBLIC. We’re here to help!
Gretchen Mote, Esq.
Director of Loss Prevention
- Maintain a data base to check for conflicts of interest
- Always complete conflicts check
- Evaluate potential conflicts
- When in doubt – seek ethics advice