|Oregon State Bar Bulletin OCTOBER 2006|
By Helen Hierschbiel
The most frequent ethics questions we get in the OSB General Counsel’s Office involve conflicts of interest. Now that the Oregon Rules of Professional Conduct are approaching the two-year anniversary, and the Oregon Formal Ethics Opinions have been revised to conform to and interpret the new rules, it seems like a good time to devote a column or two to the "new" conflict of interest rules, dry as the topic may seem.
Analyzing whether a conflict exists is a very fact-specific inquiry that can quickly become frustrating and bewildering. The keys to the successful analysis of a conflict question are to keep your eye on the rules and remember that those rules are founded on lawyers’ duties of loyalty and confidentiality.
THE WAY WE WERE
Probably the biggest change that came with the Oregon Rules of Professional Conduct was to the conflict of interest rules. At first blush, the former-client conflict rule RPC 1.9 appears to bear little resemblance to its counterpart DR 5-105(C) in the former Code of Professional Responsibility. The two most important differences are the substitution of "substantially related" for "significantly related" and the elimination of the actual/likely conflict paradigm.
Under former DR 5-105(C), a lawyer who had represented a client in a matter was prohibited from representing a new client in the same or a "significantly related matter" when the interests of the former and current client were in actual or likely conflict unless the lawyer obtained consent from both clients after full disclosure. Matters that were significantly related were divided into two categories: matter-specific conflicts and information-specific conflicts.
Matter-specific conflicts were those situations where representation of the new client would or would likely inflict damage on the old client in connection with the matter on which the lawyer had represented the old client. See former DR 5-105(C)(1). Information-specific conflicts were those in which the lawyer had obtained confidences and secrets from the former client, the use of which in the subsequent matter would or would likely inflict damage on the former client. See former DR 5-105(C)(2). See also, In re Brandness, 299 Or 420, 702 P2d 1098 (1985)(explaining the matter-specific and information-specific former-client conflict categories).
THE WAY THINGS ARE
|Oregon RPC 1.9(a) says that a lawyer who has represented a client in a matter is prohibited from representing a new client in the same or a "substantially related matter" where the interests of the current and former client are materially adverse to each other unless the lawyer obtains informed consent, confirmed in writing, from each affected client.
The first step in the conflict analysis under the new rules is still determining whether there truly is a former client. This question involves deciding both whether a relationship was ever established in the first place and, if so, whether the relationship has been terminated. Even if no relationship was established, the lawyer may still have duties to the person as a "prospective client" under RPC 1.18.
Assuming that there was a former lawyer-client relationship, the second step in the conflict analysis is to determine whether the interests of the current and former clients are materially adverse. (While the former-client conflict rule has dispensed with the terms "actual" and "likely" conflict, the definition of an actual conflict survives in RPC 1.7(b).) No guidance is provided either in RPC 1.9 itself or in the comments to the ABA Model Rules regarding what constitutes "material adversity". An evaluation of the case law, however, indicates that the focus of courts’ inquiry in other jurisdictions is the degree to which the current representation may actually result in legal, financial or other identifiable detriment to the client. See ABA/BNA Lawyers’ Manual on Professional Conduct 51:220-221 (2002).
After determining that the interests of the current and former client are materially adverse, the final question under RPC 1.9(a) is whether the matters are the same or "substantially related." The prohibition against "side-switching" in the same matter is intuitive and is the topic of little discussion by commentators. By contrast, the "substantial relationship" test is the most often scrutinized by courts ruling on conflict issues and is more often than not the deciding factor in motions to disqualify. The drafters and others who have studied the rule, including the OSB Legal Ethics Committee, do not believe there is a meaningful distinction between the former Code phrase "significantly related" and the Oregon RPC phrase "substantially related." See, e.g., OSB Formal Op. No. 2005-11. However, unlike its predecessor, RPC 1.9 does not, at the time of this writing, contain a definition of "substantially related." Furthermore, courts in other jurisdictions have not always applied the "substantial relationship" test consistently. See ABA/BNA Lawyers’ Manual on Professional Conduct 5:221-231 (2002).
Some guidance may be found in Comment (3) to the ABA Model Rule 1.9 which says:
Matters are ‘substantially related’ for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.
This language suggests that the principal focus in the former client conflict prohibition is the use of information learned in the prior representation. A secondary focus of the substantial relationship test derives from the duty of client loyalty and ensures that lawyers do not turn on their clients after a representation ends. The duty of loyalty to former clients is not unlimited, however, and RPC 1.9 prohibits a new representation only if it will involve the lawyer attacking or undercutting her own work for the former client, regardless of whether there will be any use of the former client’s confidential information. Any worthwhile evaluation must look to the specific facts, circumstances, legal theories, strategies, and nature and scope of the lawyers’ involvement in the former representation.1
Interestingly, this definition reflects the strictures of RPC 1.7(a)(2), which also must be considered in evaluating a former-client conflict. That rule provides in relevant part that a conflict of interest exists if "there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to … a former client…." As stated at the outset of this article, lawyers’ responsibilities to former clients include the duty of confidentiality, which means guarding their confidences and secrets.2 The responsibilities to current clients include zealously advancing their objectives. Thus, if disclosing the former client’s confidences is necessary to properly advance the new client’s objectives, a conflict would exist under this rule.
THE WAY OUT
Despite the analytical hurdles they pose, former-client conflicts are never an absolute bar to a subsequent representation; they can always be waived with informed consent, confirmed in writing, of the affected parties. Informed consent is defined under Oregon RPC 1.0(g) as "the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct." This rule is a bit more explicit than the old rule regarding the explanation that needs to be given to the parties. If consent needs to be confirmed in writing, then the writing must include a recommendation that the client seek independent legal advice to determine whether consent should be given. See also, Peter R. Jarvis, Mark J. Fucile & Bradley F. Tellam, "Waiving Discipline Away: The Effective Use of Disclosure and Consent Letters," 62 OSB Bulletin 69 (June 2002).
BACK TO THE FUTURE
On recommendation of the Legal Ethics Committee, the Oregon State Bar Board of Governors has proposed, and the House of Delegates has approved, a definition of "substantially related" that essentially combines the language of former DR 5-105(C)(1) and language from Comment (3) to ABA Model Rule 1.9. The proposal will be submitted to the Supreme Court for adoption. Regardless of whether a definition of "substantially related" is ultimately adopted, existing ethics opinions and case law in other jurisdictions offer helpful guidance. In the end, they all come to the same result as was reached under the old disciplinary rules.
1. To see how the OSB Legal Ethics Committee has applied RPC 1.9, see OSB Formal Ethics Op Nos 2005-17 (former client conflict use of confidential information), 2005-62 (representation of original and successor personal representatives), 2005-110 (former client as adverse witness in current litigation), 2005-120 (former client conflicts when lawyer is former prosecutor or judge), 2005-128 (former client conflict when lawyer changes firms), 2005-148 (former client conflict in representing one spouse in dissolution after joint estate planning), and 2005-174 (former client conflict in public defender organization).
2. While RPC 1.6 refers to protecting "information relating to the representation," that phrase is defined in RPC 1.0(f) the same as were "confidences" and "secrets" under former DR 4-101.
3. The proposed RPC 1.9(d) reads: "For purposes of this rule, matters are "substantially related" if (1) the lawyer’s representation of the current client will injure or damage the former client in connection with the same transaction or legal dispute in which the lawyer previously represented the former client; or (2) there is a substantial risk that confidential factual information as would normally have been obtained in the prior representation of the former client would materially advance the current client’s position in the subsequent matter."
ABOUT THE AUTHOR
Helen Hierschbiel is deputy general counsel for the Oregon State Bar. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 361, or by e-mail at firstname.lastname@example.org.
© 2006 Helen Hierschbiel