Risk Update

Analysis — Evaluating Law Firm Positional Conflicts, Outside of Litigation

Posted Dan Bressler

Samuel Estreicher, professor, and Samual Ball, second-year JD candidate, at New York University School of Law, present an interesting analysis of: “Positional Conflicts Under ABA and New York Rule 1.7” —

  • “The NYU Center for Labor and Employment Law is in the process of developing initiatives to help address the gap in access to civil counsel for low- and middle-income New Yorkers, particularly those who are ineligible for services through federally funded legal service providers but who still cannot afford to hire an attorney. Through law firm participation in a program providing pro bono representation short of litigation, workers could receive advice, assistance with negotiation, and other services. In conversations with management-side attorneys, as well as some direct services providers, fear of creating positional conflicts among firms representing companies was a reoccurring theme. We believe that it would be highly unlikely that this type of non-litigation representation could create a positional conflict under either the ABA’s Model Rules or New York’s Rules of Professional Conduct.”
  • “In the case of the ABA Model Rules, the prohibition against positional conflicts originates in Model Rule 1.7’s general prohibition of concurrent conflicts of interest: ‘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.’ Ann. Mod. Rules Prof. Cond. Section 1.7. The annotation to Model Rule 1.7 describes a positional conflict as ‘when a lawyer’s successful advocacy of a client’s legal position in one case could be detrimental to the interests of a different client in another case.’ Ann. Mod. Rules Prof. Cond. Section 1.7. “
  • “The ABA elaborated its stance on positional conflicts in Formal Opinion 93-377, where it was asked to opine on positional conflicts in the litigation context. The ABA Committee on Ethics and Professional Responsibility found that:
    • ‘When a lawyer is asked to advocate a position with respect to a substantive legal issue that is directly contrary to the position being urged by the lawyer (or the lawyer’s firm) on behalf of another client in a different and unrelated pending matter which is being litigated in the same jurisdiction, the lawyer, in the absence of consent by both clients after full disclosure, should refuse to accept the second representation if there is a substantial risk that the lawyer’s advocacy on behalf of one client will create a legal precedent which is likely to materially undercut the legal position being urged on behalf of the other client. If the two matters are not being litigated in the same jurisdiction and there is no substantial risk that either representation will be adversely affect by the other, the lawyer may proceed with both representations.’
  • “The Committee emphasized the chance of adverse precedent being created, writing, ‘if the two matters are being litigated in the same jurisdiction, and there is a substantial risk that the law firm’s representation of one client will create a legal precedent, even if not binding, which is likely materially to undercut the legal position being urged on behalf of the other client, the lawyer should either refuse … the second representation or … withdraw, unless both clients consent after full disclosure.'”
  • “The Committee concluded that ‘even though there is a significant potential for the representation of one client to be limited by the representation of the other, the lawyer nonetheless reasonably believes that the determination in one case will not have a significant impact on the determination of that issue in the second case and that continuing to handle both matters will not cause her, or her firm, to ‘soft-pedal’ the issue or to alter any arguments that otherwise would have been made, the lawyer may proceed with both representations, provided that both clients consent after full disclosure has been made to them of the potential ramifications (including the possibility that the law firm’s adversary in one case might become aware, and be able to make advantageous use, of the briefs filed by the law firm in the other case).'”
  • “Even though litigation is the paradigm for thinking through positional conflicts under the ABA and New York rules, other forms of advice, negotiation, and transactional work are not clearly excluded. ABA Model Rule 1.7 highlights this when casting the issue as one where ‘successful advocacy’ (rather than litigation, or formation of precedent) on behalf of one client is potentially detrimental to another client’s interests.”
  • “Turning towards the initiatives envisioned by the NYU Center for Labor and Employment Law, the pro bono work, at the initial stage, would not involve litigation. Participating management-side firms would be involved in screening clients, offering advice, and transactional work, but any litigation would be referred out to plaintiff’s attorneys or other organizations. This eliminates the largest risk of a positional conflict, as mentioned by New York and the ABA, both of which focus on the possibility of adverse precedent: (‘Is the issue one of such importance that its determination is likely to affect the ultimate outcome of at least one of the cases?’ [Formal Op. 93-377]).”
  • Nor would giving advice pose an issue of a positional conflict. It would be unlikely that ‘a reasonable lawyer would conclude’ (the standard for New York’s Rule 1.7, 22 N.Y.C.R.R Section 1200.7) that the representation of either a pro bono employee or a billed employer would be materially limited by giving advice on an unrelated employment matter.”
  • Positional conflicts can be a major barrier to firms participation in pro bono work involving direct delivery of services, but the barrier is one rooted more in perception rather than legal analysis of ethics rules. As noted by the California Bar’s Standing Committee on Professional Responsibility and Conduct, when broadly defined, positional conflicts are ‘prolific in our adversarial system’ and often unnecessarily diminish ‘the pool of available attorneys.'”
  • The California Bar’s Committee found: ‘While the facts here are extreme, to find a conflict employing a test which could be imposed uniformly to ‘issues conflicts’ of all stripes threatens the ability of attorneys to carry out their roles in the legal system. In practice areas like family law and in small communities, the practical problems stemming from such an expansive rule would be insurmountable. Indeed, every time an attorney argues a point of law it is probable that other clients will then or later be adversely affected. In accepting an engagement, would the attorney be required to advise the client and seek consent every time an issue arises where the attorney has taken the other side?'”
  • When we examine the risks alongside the current legal standards, we see that concerns about many positional conflicts are conjectural at best, keeping firms from helping broaden access to civil justice for low-income and middle-class people in our community.”