Risk Update

Multi-party Representation Risk — Navigating Lawyer Conflicts Concerns Across Clients

Posted Dan Bressler

Excellent analysis by Mark Hinderks, head of Stinson LLP’s legal ethics & professional responsibility practice: “Dear Ethics Lawyer: Representing Multiple Clients in Claims Against One Defendant” —

  • “This column, written by Mark Hinderks, of Stinson LLP, focuses on ethics questions… Question: As a law firm partner, my largest client is Railroad, but I also represent three trucking companies. A prominent shipper uses all of them but has fallen on hard times and owes varying substantial amounts to each. Railroad and the three trucking companies have each asked me to represent them in filing suit for unpaid amounts. I’d like to represent all of them, as it will be more efficient and potentially less expensive for them and prevent any of them from seeking other counsel. Are there any ethical issues here?”
  • “As a threshold matter, you should consider and address the potential conflicts of interest. For example, facts concerning the size or validity of the respective claims (or defenses to them) of the various transportation companies either known now or discovered during the course of the case, could put you in a conflict situation.”
  • “As a threshold matter, you should consider and address the potential conflicts of interest. For example, facts concerning the size or validity of the respective claims (or defenses to them) of the various transportation companies either known now or discovered during the course of the case, could put you in a conflict situation.”
  • “A conflict could also arise in the event of a dispute among your clients about strategy, costs, or other matters. It is prudent to discuss these possibilities with each client and provide in the engagement letter for what happens in case of a conflict, e.g., any consent to withdraw from representing one or more clients and continue representing others, if otherwise permissible under the circumstances.”
  • “On a related note, you should also discuss what can and cannot be disclosed to each client concerning the claims of others and provide in the engagement letter for any agreement about that subject. This is particularly relevant in a ‘zero-sum’ situation, when seeking relief for multiple clients from an adverse party whose resources may not be able to satisfy all claims.”
  • “Remember the significance of Model Rule 1.6—your possession of confidential information of one client that is relevant to another in assessing the relative validity or amount of claims could give rise to a conflict if you have not secured an agreement about whether, how and when information may be shared.”
  • “It is also imperative to work out an agreement concerning how any recovered funds will be divided (timing and amount) among the clients in order to avoid a conflict in a ‘zero-sum’ outcome. This should include how your fees and expenses are going to be shared.”
  • “In addition, examine your relationships with all of these clients (particularly with your largest client Railroad) to determine whether there is or could be a ‘material limitation conflict,’… For example, are there circumstances, including your own personal interest in the continued origination of business from your largest client, Railroad, that create a significant risk that you would favor the interests of Railroad over other clients in making strategic decisions or allocating resources?”

“Trump Lawyers Rotate Among Inner Circle as Legal Woes Mount” —

  • “As the legal risks facing Donald Trump and his inner circle continue to expand, the former president and key allies have been playing round robin with a small pool of defense lawyers.”
  • “Trump’s legal matters are multiplying — the FBI searched his Mar-a-Lago estate Monday as part of an investigation into whether presidential records, including classified material, were mishandled — and he’s pulling from a cadre of lawyers in his orbit with proven conservative bona fides or a track record of representing people loyal to him.”
  • “Corcoran is fresh off longtime Trump adviser Steve Bannon’s contempt of Congress conviction by a federal jury in Washington. Rowley is representing former Trump trade adviser Peter Navarro in his pending contempt case, and has counseled Trump allies Stephen Miller and Cleta Mitchell in trying to fend off their own Jan. 6 committee subpoenas. Rowley has also represented Republican Representative Scott Perry, who rebuffed a Jan. 6 committee subpoena and who released a statement on Tuesday saying the FBI had seized his cell phone.”
  • “Lawyers can represent multiple clients in related cases or even those facing shared criminal charges, but they have to follow ethics rules enforced by state bars. They have an obligation to make sure clients understand any conflicts of interest.”
  • “A client can waive those conflicts, but prosecutors can later raise a flag and judges can step in if they think that diverging interests are too deep to ensure that each person gets appropriate legal representation — if one person wants to plead guilty and cooperate with the government against the other, for instance, said Kathleen Clark, a legal ethics expert who practices in Washington and is a professor at Washington University in St. Louis School of Law.”
  • “If Navarro had a change of heart and decided to cut a deal with prosecutors and cooperate against Trump, that could pose a conflict problem for Rowley, Clark said. She said there could be other conflicts if lawyers handling Jan. 6-related matters had some other connection to Trump — if they were being paid by someone on his behalf or from funds he controlled, for instance.”