( March 1990)
(1) Can a law firm simultaneously represent an insurance company (the "Insurer") and other clients (the "Insureds") in different lawsuits which involve environmental insurance coverage issued and in which the same legal question(s) will arise, the resolution of which will be of material significance to both Insureds and Insurer, if the law firm discloses to each client that it represents both the Insurer and the Insureds in law suits involving environmental coverage issues and that in the course of these representations, it may obtain legal rulings adverse to the interests of either the Insurer or the Insureds? This question assumes that (a) the Insureds are not insured by the Insurer (but are instead insured by other insurance companies with policy provisions similar or identical to the policies issued by the Insurer); (b) the Insureds and the Insurer are not adverse in any of the specific lawsuits handled by the law firm; and (c) the clients have consented, in writing, to representation by the law firm, after appropriate disclosure.
(2) Assuming that it is permissible to represent both the Insureds and the Insurer under the circumstances specified above: (a) what terms of disclosure, if any, are required and (b) are there other constraints which would be required, e.g., a Chinese Wall between the lawyers in the firm representing the Insured and the lawyers in the firm representing the Insurers?
Rule 1.7 provides that:
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other clients; and
(2) each client consents after consultation.
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interest, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after full disclosure and consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
The Comment to this Rule provides in part that:
A lawyer may represent parties having antagonistic positions on a legal question that has arisen in different cases, unless representation of either client would be adversely affected. Thus, it is ordinarily not improper to assert such positions in cases pending in different trial courts, but it may be improper to do so in cases pending at the same time in an appellate court.
Rule 1.10(a) provides:
While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2.
Clearly, a lawyer's job is to argue whatever viable interpretation of the law exists to the benefit of his client. Practices throughout the country all have lawyers who go into court on one day and argue an interpretation of the law for custody for a mother and the next day go into a different court in a different case and argue a different interpretation for a father. This is the essence of what a lawyer does. The Comment to Rule 1.7 recognizes this and indicates that legally adverse positions in different cases is permissible provided it is not on the appellate level where the result in one case could negatively impact on the other, and thus pose a conflict of interest for the lawyer.
In the question at hand, therefore, the representations about which you are inquiring would not be permissible on the appellate level without disclosure of your adverse position for another client in a similar case to both clients and consent of both clients as outlined in Rule 1.7. As such, your specific circumstances do trigger a conflict of interest under Rule 1.7(b) which must be disclosed to and consented by both clients.
You must, of course, in the first instance decide if you can reasonably adequately represent both clients (Rule 1.7(b)(1)) prior to addressing the disclosure and consent provisions of 1.7(b)(2).
Your disclosure should indicate to your clients that you are taking a positionally adverse stance in a totally unrelated case for a different client. Who the other client is and what their case is about need not be revealed.
The Committee wishes to stress that the holding in this opinion is based upon the unique circumstance posed by the Inquirer.
Imputed disqualification under Rule 1.10(a) would prohibit any member of your firm from the dual representation if there was a conflict of interest. The use of a "Chinese Wall," as outlined in Rule 1.10(b), is not applicable to this type of conflict situation, nor would it be sufficient to address the conflict present under Rule 1.7.