Risk Update

Ethics Insight — Understanding the “Least-Known” Ethics Rules and Its New Client Conflicts/Screening/Intake Implications

Posted Dan Bressler

Lucian Pera writes: “Explaining the Least-Known Ethics Rule” —

  • “But even three years ago in 2021, 19 years after the ABA’s adoption, I published an article in this space on ABA Model Rule 1.18. I called it ‘The Least-Known Ethics Rule’ (March/April 2021). I observed then that it might be the most useful ethics rule you’ve never heard of.”
  • “Even in 2021, with some 46 jurisdictions having a version on their books, we ethics lawyers continued to get calls from lawyer clients that demonstrated that lawyers had no idea the law touched by this Rule had changed. Remarkably, those calls continue today.”
  • “And today, 22 years after the Rule’s adoption, the ABA Standing Committee on Ethics and Professional Responsibility has offered fresh guidance on this useful Rule in its new ABA Formal Opinion 510, Avoiding the Imputation of a Conflict of Interest When a Law Firm is Adverse to One of its Lawyer’s Prospective Clients (March 20, 2024).”
  • “Prior to 2002, the law was simple: if a lawyer received any confidential information from a prospective client—one that consulted, but never hired, the lawyer—then that lawyer and her law firm were disqualified from representing any new client adverse to that prospective client on any matter related to the same subject.”
  • “Now, under Rule 1.18, a lawyer who is consulted by, but not retained by, a possible client is only personally disqualified from being adverse to that person in a new matter where: 1. the new matter is the same or a substantially related matter (e.g., the prospective client consults the lawyer about a divorce, and the new matter would be to represent the prospective client’s spouse in that divorce), and 2. the lawyer received from the prospective client ‘disqualifying information’ (i.e., information that could be ‘significantly harmful’ to the prospective client in the matter).”
  • “Note that the information the lawyer had received could well be confidential, but if it was not ‘significantly harmful,’ the same lawyer is permitted to take the new matter, and act directly adversely to the prospective client. That alone was an epic change in the law.”
  • “For a nice primer on what ‘significantly harmful’ means, see ABA Formal Opinion 492, Obligations to Prospective Clients: Confidentiality, Conflicts and ‘Significantly Harmful’ Information (June 9, 2020). The Opinion, quoting a New Jersey opinion, said the question is ‘exquisitely fact-sensitive and -specific.’ Indeed.”
  • “More importantly, Rule 1.18 significantly limits the imputation of any conflict to the lawyer’s firm in this situation—that is the Rule changes when the individual consulted the lawyer’s conflict; if the lawyer is disqualified, it means that the lawyer’s whole firm is also disqualified.”
  • “It works this way. If the individual consulted lawyer is disqualified because she heard something ‘significantly harmful,’ the law firm may take on the new matter adverse to the prospective client if 1. the lawyer “took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client,” and if 2. the firm screens the individual consulted lawyer and gives notice to the prospective client. “
  • “Second, the hard part. And this is where the Opinion breaks a little new ground.”
  • “To avoid imputation and allow the individual consulted lawyer’s firm to later take on the new matter, the information sought must be ‘reasonably necessary’ to allow the consulted lawyer to make that original determination. It’s very clear that the Committee thinks this is a quite different, and tougher, determination.”

Definitely worth reading Lucian’s analysis in full.

And for those looking for the deeper dive, see more detail on and analysis of the opinion he noted: “ABA Formal Opinion 492” —

  • “The use of the phrase significantly harmful distinguishes the duties owed to prospective clients from those duties owed to current and former clients.”
  • “Information viewed as significantly harmful typically includes information about settlement issues, personal accounts of relevant events, the prospective client’s thoughts about how to manage the matter, and discussions in which the lawyer outlined potential claims and addressed potential settlement options. Significantly harmful information is not information that is simply detrimental to the formerly prospective client; to give rise to a potential conflict of interest, the information must be ‘prejudicial to the former prospective client within the confines of the specific matter in which disqualification is sought.” O Builders Assocs., Inc. v. Yuna Corp. of N.J., 19 A.3d 966, 978 (N.J. 2011) (citations omitted).'”
  • “Comparing the conflict-of-interest protections afforded to current and former clients under Model Rule 1.9 with those owed to a prospective client under Model Rule 1.18 demonstrates an important distinction between the impact on the lawyer’s current/former work and the impact on the lawyer’s future work.”
  • “When the basic facts of a consultation are contested, a review by the court or disciplinary authority may help to determine the credibility of the person invoking Model Rule 1.18. However, such review may not be necessary; if conducted, though, it should avoid having the prospective client reveal confidential information.”
  • “Evidence that the prospective client communicated information that could be significantly harmful does not require disclosure of the prospective client’s confidential information or the substance of the conversation. Rather, the evidence required is described as similar to a privilege log, including the date, duration, and manner of communication and a high-level description of the topics discussed. Fed. R. Civ. P. 26(b)(5) (requiring that privilege logs ‘describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim [of privilege or other protection]’).”
  • “A lawyer may avoid receiving significantly harmful information from a prospective client by warning prospective clients against disclosing detailed information. The caution to the prospective client is not meant to discourage lawyers from having a thorough discussion during the consultation; rather, it serves as a reminder that the more information disclosed to the lawyer while consulting with a prospective client, the more likely that the lawyer may be precluded from representation of other parties in a substantially related matter.”
  • “There remains the possibility, as noted above, that the prospective client may give informed consent that no information disclosed during the consultation prohibits representation of a different client in the matter. Alternatively, the lawyer and prospective client can come to an agreement that ‘expressly so provides’ that the lawyer can subsequently use information received from the prospective client.”
  • “Informed consent under Rule 1.18 may occur in different contexts. For example, informed consent may be obtained at the outset of a consultation via a condition that any information provided by the prospective client will not be disqualifying. Model Rules of Pro. Conduct r. 1.18 cmt. 5. Informed consent may allow a lawyer who has received significantly harmful information from a prospective client to represent an adverse party pursuant to Model Rule 1.18(d). (For the requirements of informed consent, see Model Rules of Pro. Conduct r. 1.0(e); Model Rules of Pro. Conduct r. 1.0 cmts. 6, 7.)”