Inevitably, there comes a time in a lawyer-and-client relationship when a lawyer must decline representation due to a conflict of interest. There is typically no discretion on the part of the attorney, as conflict rules are often absolute. Thus, a general understanding of these rules may help in the event that such a circumstance arises.
The General Rule: No Adverse Representation
The most basic conflict-of-interest rule prohibits an attorney from representing a client if he or she may be unable to provide that client with unlimited representation. This rule disallows representation of a client when that representation will be adverse to another client. An exception to this rule exists when the attorney reasonably believes the representation will not adversely affect the relationship with the other client, and the client consents after disclosure. If the attorney is representing multiple clients in a single matter, disclosure must be made to all clients, and it must include an explanation of the implications of the common representation and the advantages and risks involved.
Business or Financial Relationship
Attorneys must also take special care when entering into a business relationship with a client. Entering into a business transaction with a client is prohibited if the attorney knows or reasonably should know that the attorney and client may have conflicting interests, or if the client expects the attorney to act in a manner that protects the client’s interests. In addition, unless an attorney and client are related, an attorney is prohibited from preparing a document for a client which gives the attorney or his family a substantial gift. An attorney also cannot limit his liability to his client unless the agreement is permitted by law and the client is independently represented by separate counsel in making the agreement. As a result, both attorneys and clients should take caution when entering into any relationship. In most circumstances, the client should be advised to seek separate representation to ensure that no conflict of interest exists.
Another potential conflict often encountered is the representation of a client who plans on filing suit against another client or former client. In Illinois, an attorney who formerly represented a client in a matter must not represent another person in the same or a substantially similar matter if the client is materially adverse to the former client, unless the former client consents after full disclosure. The rules prohibit the attorney from using information relating to one client against the former client unless it has become generally known or does not violate the Illinois Professional Rules of Conduct. Therefore, representation of one client against another client or former client almost always creates a conflict of interest. Moreover, the attorney-client privilege may very well prohibit the attorney from discussing the nature of the conflict with either client. Consequently, attorneys must take extreme caution when determining whether to bring suit against a current or former client.
An attorney is prohibited from representing a client when another attorney in the same firm would be disqualified from representing that same client. This type of disqualification is known as “imputed disqualification,” and often becomes increasingly problematic when an attorney joins a new law firm and the attorney joining the firm has a conflict of interest with current clients of the firm. Under these circumstances, the firm that the attorney has joined may not represent a person in a matter that is the same or substantially related to a matter in which the attorney’s previous firm represented an adverse client. It should be noted that this rule does not apply where the new attorney has no confidential information of the client at issue, or if the attorney is screened from participating in the matter.
Imputed disqualification can also apply when an attorney terminates his association with a firm. When an attorney leaves a firm, the firm can represent a person with interests materially adverse to those of a client formerly represented by the attorney and not currently represented by the firm only if: (i) the matter is not the same or substantially related to the matter in which the lawyer represented the client; and (ii) no lawyer at the firm has confidential information pertaining to the matter. Consequently, upon an attorney’s departure, a firm is advised to determine which attorneys, if any, have confidential information related to any client of the former attorney so that a determination can be made as to whether it can represent another adverse client. An imputed disqualification can be waived after full disclosure and consent by the conflicted client, if the client agrees.
Screening from Participation
Under certain circumstances, a law firm can create a “Chinese wall” to ensure compliance with Illinois’ conflict rules. The term is a fictional device used as a screening procedure which permits an attorney involved in an earlier adverse matter with a client to be “screened” from other attorneys in the firm, allowing the firm to represent the client. In order to create an effective Chinese wall, the law firm generally must take the following steps: (i) isolate the attorney from confidential information concerning the matter; (ii) isolate the attorney from the client and all the client’s agents, officers, employees and witnesses; and (iii) preclude the attorney and the firm from discussing the matter with each other. The goal of this process is to prohibit the attorney in question from any involvement with the case. It effectively prevents disqualification of an entire law firm simply because one member of that firm previously represented a client who is now in an adversarial position with a current client. It must be noted that some Illinois courts have refused to recognize Chinese walls in smaller law firms, due to the presumption of information sharing and the difficulties with prohibiting an attorney in a small firm from having contact with all files and cases.
Under most circumstances, clients are free to select the attorney of their choice to represent them in any given matter. Occasionally, however, a potential client will contact their legal counsel of choice only to learn that the attorney is unable to assist due to a conflict of interest. Even more perplexing is that often when a conflict arises, the attorney-client privilege prohibits a meaningful explanation for the predicament. These situations are unfortunate, but an understanding of the conflict rules may help to provide guidance as to when and why an attorney must decline representation. iBi