What is Dual Representation
Dual representation in the context of law firm representation refers to a law firm representing two or more related parties in a single matter that may be adverse to each other. This can arise in a variety of situations. For example, in corporate law, a law firm may represent both the governing body and the individual corporate officer(s) or controlling shareholder(s) who have violated a company rule at a time when matters are likely to become adversarial. A law firm may also represent co‐owners of property that is the subject of a dispute or legal action to divide the property. Although these situations may arise, they are not as frequent as commonly thought in the context of divorce and family law matters.
When dual representation occurs the law firm must be aware of both the ethical and legal implications. On the ethics end, the attorney must be certain that the dual representation does not give rise to a conflict of interest. For example, the New Jersey Rules of Professional Responsibility prohibit an attorney from representing different clients if the representation "involves a concurrent conflict of interest". A conflict of interest is said to exist when: The ideal way to identify a potential conflict is for each client having the same named representation to execute a Waiver. This Waiver is a written document that specifically identifies the parties who are being represented, a statement that the representation may be limited to particular issues related to the overall matter being handled, and a specific statement that each party consents to the representation being done by the attorney or attorneys . When each client has a Waiver in the file it effectively provides you with a defense when later challenged by one of the former clients saying that the Dual Representation was improper. However, see our comments below in regards to representation of family businesses. In that area, further disclosures may be necessary.
As to the legal implications, there are many rules, statutes and court decisions that apply to Dual Representation. For example, with respect to divorce cases, Rule 5:5-7 Makes it very clear that neither party shall be separately or jointly represented by the same attorney. The rationale for that is that an attorney for one party cannot protect the interest of a party subject to an adversary action while representing another party.
With respect to family business representation a firm can represent the business that should not have a conflict as it is the business that is being represented. However, the participation of the individual shareholders, LLC members or the officers of the corporation do have the right to an independent counsel.
Because of these requirements, it is rare to find a single law firm "representing" two clients in a family law or divorce case. More traditional representation is seen when each attorney is from a separate law firm and the case is being handled as to their respective clients.
Rules of Ethics and Conflicts of Interest
In the context of whether a law firm can represent both parties to a transaction, ethical considerations and conflicts of interest are at the forefront. The rules governing the ethical conduct of attorneys provide a framework within which a law firm must operate. The American Bar Association (ABA) Model Rules of Professional Conduct (herein after the "Model Rules") indicates that a lawyer may represent multiple clients if the representation is not adversely affected, and the parties consent after consultation. In fact, the ABA makes clear that someone with an adverse interest is not a per se conflict, but in many cases will be viewed that way.
Under Rule 1.7 of the Model Rules, a law firm may not represent a person in the same or substantially related matter in which that person’s interests are materially adverse to the interests of a former client without informed consent. Part of the reason for this rule is that the attorney has information that may be material in the representation of the new client. When representing a new client, an attorney has a duty of confidentiality to the former client, as explained below. "Substantially related" means that the current matter is "related to" the previous matter "as a whole."
Whether the representation adversely affects the other client is an issue for courts of law to decide. The California State Bar’s Standing Committee on Legal Ethics and Responsibility (hereinafter the "Standing Committee") clarifies that while the law firm has an obligation to avoid placing itself in a position where it will have to choose between its clients’ interests, the actual effect of the conflict may not matter:
The question is not whether [the conflict] would have the effect of preventing [the attorney] from zealously representing either [the client] . . ., but whether [the attorney] could, depending on the issue, zealously represent the interests of one in a way that was not inconsistent with the interests of the other . . . Interactions between the two could be derailed. Issues arising would inevitably square off the clients against each other in an inappropriate fashion. . . . The question of whether there is a significant risk of injury depends not on whether the lawyer has identified the potential conflict and has decided that it is appropriate. The question is whether the conflict is significant enough to materially affect [the client] on behalf of whom [the attorney] ultimately represents.
The above quote highlights the problem with most outside counsel analysis: they do not analyze whether the conflict materially affects the client they intend to represent. Instead, the attorneys look at the deal as a whole. By looking at the entire transaction, an attorney may wrongly conclude that the conflict does not materially affect a client. It does not matter if the conflict is above board when the parties have a dispute regarding the arrangement. The issue arises when one party believes the attorney represented both parties. This is not a mere legal argument by the aggrieved party.
Ethics opinions issued by legal governing bodies such as the ABA, and California State Bar Standing Committee shed light on the issue. In Professional Responsibility and Conflicts of Interest in Estate Planning, a publication released by the Young Lawyers Division of the American Bar Association (hereinafter "Young Lawyers Publication"), the issue of whether a conflict exists with respect to concurrent clients is addressed:
An attorney must disclose the representation and obtain consent if a conflict exists between representing two concurrent clients, one of whom has a materially different economic motivation than the other. . . . If the conflict is imputed to all the attorneys in the firm, it will not be imputed to the incoming attorney, if [their] firm has implemented safeguards sufficient to segregate the work of the firm’s lawyers to prevent accidental access or inadvertent disclosure of confidential information from the files of the conflicted lawyer.
This quote illustrates that in some cases the issue may simply be avoided by using different counsel. On the other hand, where the same counsel represent both parties in the negotiations that form the contractual relationship, a conflict of interest will likely exist, and prudent counsel for each party should look elsewhere.
As in most circumstances, a party may waive any conflicts that arise by consulting and fully informing themselves of the representation beforehand. However, consent by the parties shall not absolve the attorney from liability for malpractice.
When Can You Make Exceptions
Despite the apparent prohibition on representation of multiple clients, there are some circumstances where exceptions may apply. In cases of joint representation, such as a married couple seeking a divorce or both parents engaging in a custody dispute, the alleged conflict can be waived by each client. A law firm may even be permitted to represent both parties after "full disclosure" of the conflict if the clients are able to put their interests aside in favor of the law firm’s interest. The waiver must be fully informed and voluntary, and the ethical brunt of the need to have the conflict waived is steep. When a law firm asks a court to excuse a potential conflict, the court must consider the circumstances and may excuse the conflict "only if" the court determines that the clients’ "interests will not be adversely affected by the proposed representation." One potential exception exists if a court approves prior to a conflict arising, which seems to portend a complex future.
If the court finds that waiving the conflict "would be unreasonable under the circumstances," the law firm may not be able to represent both parties. However, the code also points to the dilemma that the clients must be allowed to choose counsel of their own choice and balance that to the ethical rules that govern conflicts.
But the right to counsel of choice is not absolute, and this article doesn’t address whether the clients are entitled to counsel of choice (for that, see case law on the right to counsel of choice and objections to representation of clients). If a waiver is not permitted by a court, conflict waivers are generally not valid when the lawyer represents a client’s former employer in a matter substantially related to the former client’s matter, the former client’s business rival in a matter substantially related to the former client’s matter, or the law firm represented both parties in a matter involved in an actual conflict (although see the comments to the Unidroit Principles to the doctrinal approach). The code also observes that a lawyer "who has represented more than one party in a matter may participate in the consideration of a matter reviewed by a tribunal in which the lawyer represented one of the parties." In the end, there is no guarantee that other issues that arise as a result of joint representation of both parties to the same matter would be resolvable in favor of the law firm and in accordance with the governing duty of loyalty of the lawyer to both clients.
The Risk of Dual Representation
The potential conflicts of interest and other unintended consequences make joint representation a risky proposition for the law firm.
Risk 1 – Bias: When representing two clients, the lawyer in charge of a case will often feel pressured to favor one client over the other. Without a greater financial reward – or a very close bond with an involving client – lawyers are very unlikely to split their time and attention evenly between two clients. Obviously, this kind of bias affects the defendant when it comes to trial. It also affects the plaintiff, as it limits their ability to navigate specific roadblocks, such as depositions. Furthermore, even if one of the clients is a corporation, the result can easily be a loss of trust in the system. Individuals generally do not have the resources to truly verify whether their lawyer has entirely put them first, and they may be willing to overlook a marginal preference for the other party. However, if the client or a significant contact within the organization suffers from a real or perceived slight in favor of the other party , you risk losing your greatest asset – a satisfied client. The only way to avoid that risk is to view all of your clients’ opinions as equal.
Risk 2 – Confidentiality: When two or more clients are involved in the same case, they must fully disclose all relevant information to each other. This means the lawyer cannot use any confidential information from his or her client when it comes to strategy. Confidentiality is a hallmark of the attorney-client relationship which is generally protected by law. The fact that this obligation must be suspended undermines the trust of the client in the lawyer’s ability to go to bat for him or her and damages the integrity of the attorney-client relationship itself.
Risk 3 – Litigation: A common risk in joint representation is exactly how the outcome of one party’s case may affect the other. In the ideal scenario where there are no biases, each side wants to win and is willing to sacrifice for the sake of their case. However, should one client’s interests win out over the other’s, the losing party will harbor resentment towards the lawyer they hired. If the case moves into an appeals court, this potential for disgruntlement becomes more significant as the losing party will have one last chance to fight for their cause.
Examples of Dual Representation
In John F. O’Hara, Inc., et al. v. Paint Tech, Inc., No. 17-13252, 2018 WL 1976443 (E.D. Mich. Apr. 25, 2018), the court found that counsel’s concurrent representation of the plaintiffs was not a violation of the Michigan state rule against concurrent representation, triggered by a conflict of interest. Id. *1-2. Three construction companies filed suit regarding the improper application of a floor coating product. The law firm represented two of the plaintiff companies in the past and then began to represent the third of the three suing. Defendants moved to disqualify the law firm based on the dual representation that created a conflict of interest. Applying Michigan law, the court granted the motion for disqualification.
In In re Henkel Corp., 2006 WL 3031647 (N.D. Ill. Oct. 20, 2006), the court disqualified a law firm from representing a client that was suing Gerber baby food after representing a Gerber baby. The court found the "fundamental question" was whether the interests of Gerber as a party were sufficiently adverse to its interests in defending itself against the allegations of the plaintiffs. Id. at 5. The court found that a reasonable lawyer would foresee that the defense of Gerber of the allegations would necessarily include a defense and repudiation of the basis for the lawsuit. Id.
In In re Future of Large-Scale Renewable Power Systems, 5 F. Supp. 2d 238, (D.D.C. 1998), a law firm initially represented one client in negotiations with a power company regarding the purchase of an interest in an electrical grid project and then switched clients to the power company and represented both clients in litigation with the client that the law firm had originally represented. The court found that the law firm violated the rules of professional conduct as the claims of the clients were "directly adverse" to each other. Id. at 239-40.
In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 2014 WL 3397210 (N.D. Ill. July 11, 2014), the court found no grounds for disqualification, noting that a conflict of interest would be resolved by the application of the PCAR due to the conflict of interest being imputed within a firm. Therefore, it is unnecessary to establish whether the "appearance of impropriety" rule would create a conflict given the visual/functional separation of the lawyers in the firm.
What To Do If You Are Facing Dual Representation
Information on what to do if you are in a situation where your divorce attorney also represents your ex spouse is relatively limited. In fact, it is so low that I could not find anything online that was written by another attorney or law firm. The information below is based on my experience in litigating this issue with the Illinois Supreme Court.
Unfortunately, you cannot just go out and retain another lawyer to represent you in your case if your former law firm now represents your ex spouse. In Illinois, that’s considered "concurrent representation." When that’s the case, you need to hire a law firm who will file a motion to bring your case in front of a circuit court judge. In that motion you will explain to the judge why you can’t have the attorney represent both you and your ex. If the circuit judge hears you and agrees, you will then be allowed to retain a new attorney. If the circuit judge disagrees , you can’t simply choose another attorney, you must get permission directly from the Illinois Supreme Court. If the Illinois Supreme Court agrees that your lawyer can’t represent both you and your ex, they will pass down an order to the circuit court judge and that law firm will be forced to choose which party they will represent. What happens next depends upon the Illinois Supreme Court’s order. If they find that you were right and your former law firm can’t represent both you and your ex, the judge will order the other party to retain their own lawyer, at which point you can hire the law firm of your choice. Unfortunately, there is no guarantee that the circuit judge will agree with you (or the Supreme Court) and the former law firm will continue to represent both you and your ex until they make a decision. That is why it’s important to make sure you have a competent attorney by your side.