Oregon State Bar Bulletin DECEMBER 2009 |
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The October 2009 Bar Counsel column explored conflicts of interest between current clients under Oregon RPC 1.7. This column focuses on the duties a lawyer owes to former clients under RPC 1.9.
As with Rule 1.7, the underlying premise of Rule 1.9 is the duty of loyalty that lawyers owe to their clients. Rule 1.9 is concerned with the obligations that continue after the representation ends.1 The principal difference between Rule 1.7 and Rule 1.9 is that the conflict rules for current clients are stricter and apply in more situations. The limitations of Rule 1.9, by contrast, generally apply when a lawyer undertakes a representation adverse to a former client when the matter involved in the prior representation is the same or substantially related to the new matter. Lawyers are not barred absolutely or in perpetuity from representing interests adverse to those of their former clients. Former clients have less “veto-power” over a lawyer’s other clients and work than do current clients.
Perhaps the most important thing to remember about former client conflicts, or the thing that will reduce anxiety the most, is that any kind of conflict with a former client can be resolved through informed consent, confirmed in writing. Former client conflicts are always “waivable,” regardless of the degree of adversity between current and former client, provided, of course, that all affected clients give their informed consent, confirmed in writing.
The basic former client conflict prohibition is found in Rule 1.9(a). It prohibits a lawyer who has previously represented a client in a matter from thereafter representing another person in the same or a substantially related matter where the interests of the current and former client are adverse, unless all affected clients give their informed consent, confirmed in writing. In attempting to determine whether representation in a new matter will conflict with obligations to a former client, it helps to break the analysis into steps.
The first step is to confirm that the current representation is adverse to someone who is actually a former client. That is a two-part inquiry, looking first at whether the lawyer ever had a lawyer-client relationship with the adverse person or entity. See, generally, Chapter 5, The Ethical Oregon Lawyer (OSB 2006). Spouses, children and parents of individual clients; constituents of entity clients; and persons to whom a fiduciary client owes duties are not themselves, without more, clients. It is also important to confirm that the lawyer-client relationship has ended. “If a lawyer’s employment is limited to a specific matter, the relationship terminates when the matter has been resolved. If a lawyer has served a client over a substantial period in a variety of matters, the client sometimes may assume that the lawyer will continue to serve on a continuing basis unless the lawyer gives notice of withdrawal. Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client’s affairs when the lawyer has ceased to do so.” ABA Model Rule 1.3, Comment [4].
The second phase of the analysis is to determine whether the interests of the current and former clients are “materially2 adverse.” Where the current and former clients are opposing parties in litigation or in a transaction, the adversity of their interests is obvious. More difficult are situations where the former client is not an adverse party, but could suffer a serious legal, financial or other identifiable detriment as a result of the lawyer’s work for the new client. A fairly common example is the former client who will be an adverse witness in the new client’s legal matter. See OSB Formal Op. No. 2005-110; see also In re Marshall, 17 DB Rptr 265 (2003) (lawyer stipulated to having a conflict when, after drafting client’s will designating two individuals as co-personal representatives, she represented one of the individuals in challenging the qualifications of the other individual).
The next analytical step is determining whether the current and former matters are “the same” or “substantially related.” “Matter” is defined in Rule 1.0(i) to include any “proceeding, application…contract, claim, controversy, investigation, charge, accusation, arrest or other particular matter involving a specific party or parties.” For purposes of determining whether the current and former matters are “the same,” the scope of a matter is fact-specific and a question of degree. A lawyer who has been directly involved in a specific transaction or dispute is clearly prohibited from subsequent representation of other clients with materially adverse interests in that transaction or dispute. On the other hand, a lawyer who has handled several matters of a particular type for a former client is not barred from later representing another client in a factually distinct matter of the same type even though the subsequent representation involves taking a position adverse to the former client. In other words, a matter of the same type as a former client matter, but otherwise factually distinct, is not the “same” matter for purposes of RPC 1.9(a). “The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be
justly regarded as a changing of sides in the matter in question.” ABA Model Rule 1.9, Comment [2].
The much more difficult question (and one that is typically dispositive) is whether matters are “substantially related” within the meaning of the Rule. Because Oregon has not adopted official comments, our version of RPC 1.9 includes a definition of “substantially related” that was drawn in part from the Comment to ABA Model Rule 1.9 and in part from former DR 5-105. As so defined, matters can be substantially related in either of two ways: 1) the lawyer’s representation of the current client will injure or damage the former client in connection with the same transaction or dispute that was the subject of the former representation; or 2) there is a substantial risk that confidential factual information as would normally have been obtained in the representation of the former client would materially advance the current client’s position in the new matter.
The substantial relationship test of RPC 1.9 serves the dual purpose of ensuring at least some degree of loyalty to former clients and safeguarding against misuse of a former client’s confidential information.3 The first part of Oregon’s definition addresses the first purpose, by disallowing a representation that will injure or prejudice the former client “in connection with” what was done for that client in the prior representation. Similar to the prohibition against side-switching, this aspect of the substantial relationship test prohibits a lawyer from attacking her own earlier work,4 even if there is no risk that the former client’s confidentiality will be breached. For example, a lawyer who drafts a contract for one client cannot thereafter challenge its validity on behalf of another client. Likewise, a lawyer who does estate planning for one client is prohibited from later representing a disgruntled heir seeking to overturn the former client’s will. See, e.g., In re Bowker, 20 DB Rptr 16, (2006) (lawyer disciplined for representing bank to collect on a loan after having represented borrower to acquire the loan); and In re DeZell, 9 DB Rptr 143 (1995) (“matter-specific” conflict existed under former DR 5-105 when lawyer represented husband in defense of domestic abuse charges after having assisted wife in obtaining a family abuse prevention restraining order against husband).
The second part of the “substantial relationship” definition focuses on the protection of confidential information. Analysis under this aspect asks whether the lawyer would have learned confidential information in the former representation that would be of significance in the subsequent representation. This requires consideration of the kind of information that normally would have been available to a lawyer during the former representation, and whether the information presumed to be in the lawyer’s possession is relevant to the new (adverse) matter so as to give the lawyer and the current client an advantage. The rule establishes a presumption that all information as normally would have been obtained in the prior representation was in fact learned, thus sparing the former client who objects to an adverse representation from having to disclose the very information that is sought to be protected. As expressed by one authority, “It is also awkward, unseemly and destructive of public faith in the integrity of the system for a lawyer and a former client to argue in public over just how much the lawyer could really be trusted to maintain confidentiality.”5
On the other hand it is unfair both to the lawyer and the lawyer’s new client if a former client’s overly broad or vague picture of the former representation is accepted without contradiction. Thus, a lawyer may challenge a former client’s objections by describing the general categories of information that normally would have been available or which were actually learned in the former matter, but the lawyer cannot reveal the specifics of information actually learned.
It is also worth noting that the definition in RPC 1.9(d)(2) refers to “confidential factual information” that would have been learned in the representation. This language comes from Comment [3] to ABA Model Rule 1.9, which also says that “general knowledge of a client’s policies and practices ordinarily will not preclude a subsequent representation.” This suggests that possession of so-called “playbook” information is insufficient to disqualify a lawyer from a representation adverse to a former client. There is certainly an argument that a lawyer has an improper advantage if allowed to use general tactical information and psychological insights about a former client – such as the client’s negotiating style, aversion to risk and ability to handle the stress. Taken too far, however, disqualification on that basis alone would be a permanent bar against opposing a former client in any new matter regardless of whether there is any meaningful relationship between the former and current matters. The language in RPC 1.9(d) is a compromise that disqualifies a lawyer from an adverse representation only when he has concrete factual information, rather than only intangible insights, about the former client that are either directly in issue or of significant value in the new matter.
A lawyer’s duties to a former client are significantly less broad when the lawyer’s relationship to the client was through association in a former law firm. RPC 1.9(b) disqualifies a lawyer from representations adverse to a client of a former law firm only if the current and former matters are substantially related and the individual lawyer actually acquired information protected by RPC 1.6 that is material to the new matter. This is, in essence, the flip side of the “firm unit” rule under which every member of a firm is disqualified if any one of them is. See RPC 1.10(a). In other words, once a lawyer leaves a law firm, she may undertake a representation adverse to a person represented by her former law firm unless while at the firm she acquired material, confidential factual information about the firm’s client.
RPC 1.9(c) imposes a slightly different obligation to former clients. Unlike RPC 1.9(a) and (b), which address a lawyer’s duties in a representation adverse to a former client, RPC 1.9(c) prohibits a lawyer from using or revealing information relating to the representation of a former clients, even where the lawyer has not undertaken a representation adverse to the former client.
The prohibition against disclosure of a former client’s information is broad and the only exception is where the disclosure would be permitted or required by “these Rules.” 6 By contrast, using information relating to the representation of a former client is prohibited only where it will be used to the client’s disadvantage and if the information has not become “generally known.”
There is no clear definition of what “generally known” means, as used in RPC 1.9(c). Comment [3] to ABA Model Rule 1.9 suggests that a lawyer will not be disqualified from a subsequent adverse representation if information obtained from the former client has been disclosed to the public or to other parties. Whether information in the public record is entitled to protection is an open question in Oregon. In In re A., 276 Or 225, 554 479 (1976) a lawyer was disciplined for revealing information contained in the public record about a current client. Whether the rule of that case would be applied in to information about a former client remains to be seen, although the plain language of RPC 1.9(c) gives less protection to the public record information of a former client. In the absence of any guidance from the court on that point, cautious lawyers will use information of former clients only if it has been widely and very publicly distributed (such as on the front page of the local newspaper).
Endnotes
1. This article deals with former private practice clients. With the exception of RPC 1.9(c), the duties owed to clients by current and former government lawyers are governed by RPC 1.11.
2. To a significant extent or degree; substantially. (The American Heritage® Dictionary of the English Language, 4th Edition, Copyright © 2009 by Houghton Mifflin Company.)
3. Under former DR 4-101, “confidences” was defined as information protected by the applicable attorney-client privilege, as contrasted with “secrets,” which encompassed unprivileged information learned in the course of the representation that the client asked be “held inviolate” or which would be embarrassing or detrimental to the client if disclosed. By contrast, RPC 1.6 prohibits lawyers from revealing “information relating to the representation of a client.” That phrase, in turn, is defined in RPC 1.0 to include both types of information described in formerDR 4-101. As used here and generally in connection with the RPCs, “confidential information” means information entitled to protection under RPC 1.6.
4. Under former DR 5-105(C)(1), this was referred to as a “matter-specific conflict.”
5. §13.5, Hazard, G. & Hodes, W., The Law of Lawyering, 3d Edition, (Aspen Publishing 2004), p. 13-14.
6. Using or revealing information of a former client is permitted by RPC 1.9(c) where “these rules would permit or require.” In Oregon, RPC 1.6 is the only rule that permits, but does not require, the disclosure of a client’s protected information and even then only in limited circumstances.
ABOUT THE AUTHOR
Sylvia Stevens is 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. 359, or by e-mail at sstevens@osbar.org.
Ethics opinions are published and updated on the bar’s website here.
An archive of Bar Counsel articles is available here.
© 2009 Sylvia Stevens