Conflict of Interest: The ABA’s Guidelines and What They Mean

John Gomis — Tue, 23 Sep 2014 21:00:44 +0000

Image courtesy of [Clyde Robinson via Flickr]

Conflicts of interest are a tough field for law firms and individual lawyers to navigate. In order to help with these tricky situations, the American Bar Association has created a set of guidelines to prevent conflicts of interest. But whether or not they’re effective and prudent is a constant topic of argument. Read on to learn about the ABA’s rules, and the arguments for and against them.

What is a conflict of interest?

A conflict of interest occurs when an individual or firm represents multiple clients whose goals or requests conflict with one another. For example, a conflict of interest would occur if a law firm represented both a company and an individual suing that company.

What are the ABA’s rules about conflict of interest?

The ABA Model Rules of Professional Conduct, Rule 1.7 states:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

Simplified, this rule prohibits lawyers from representing the interests of anyone whose interests are directly against any of his or her current clients, or taking on any representation that creates a meaningful chance that representing the new client will significantly lower the lawyer’s ability to help the current client.

However, there are exceptions within this rule. A lawyer can accept the representation if he reasonably believes that he can provide “competent and diligent” services to each affected client, the representation is not otherwise illegal, the lawyer isn’t representing two clients against each other in the same suit and each affected client gives informed, written consent.

Ideas about conflict of interest don’t just include a given lawyer’s particular firm, but also the relationships that they have with other lawyers, family members, and the like. In essence, any way that they can be influenced by conflicting parties can raise conflict of interest concerns.

What are the reasons to support these rules?

Proponents of the sufficiency of ABA conflict of interest rules base their arguments on the comments to Rule 1.7. Prohibiting the representation of directly adverse clients (even if the lawyer is representing them in unrelated cases) is proper for multiple reasons. The client against whom the adverse representation is undertaken may feel betrayed and that feeling of betrayal may interfere with the lawyer’s ability to effectively represent the client’s interests. Also, the client who is receiving the adverse representation may be concerned that the lawyer is not zealously performing the representation out of loyalty to the first client. The import of these fears is magnified if the lawyer is forced to cross-examine his client in an unrelated case. This can cause severe distrust and animosity between the lawyer and the client.

What are the reasons to disagree with the ABA rules?

Opponents of the sufficiency of ABA conflict rules argue that if the clients’ opposing interests are purely economic such as if a lawyer is representing two competing corporations in unrelated cases, then consent may not be required. This situation allows lawyers to represent corporations that are indirectly adverse against each other. Serving a corporate client’s interests that are indirectly adverse to another corporate client can still be harmful to the latter corporate client. This means that a lawyer can conceivably charge money to a client that she is indirectly harming.

Case Study: Covington & Burlington, LLP and 3M

A judge ruled in 2012 that Minnesota law firm Covington & Burlington LLP couldn’t represent the state in a suit against manufacturing conglomerate 3M because it had previously represented 3M itself. The suit involved chemicals used by 3M that were dumped into landfills in the area, and then caused health problems in approximately 60,000 residents. Despite the fact that Covington traditionally represented the state when it came to environmental issues, the judge ruled it a conflict of interest because Covington had previously represented 3M in arguments involving those exact same chemicals.

Conclusion

Conflicts of interest are difficult to navigate, even for the most professional lawyers. The ABA has attempted to create guidelines to avoid conflicts of interest. While the guidelines receive some negative feedback, they are in place for a reason and most likely will not be going away anytime soon.