Conflicts as Risk to Duties

Concurrent Conflicts of Interest

Conflicts as Risk to Duties

Conflicts law asks one question about every representation: does something else pulling on the lawyer create a significant risk that a duty owed to this client will go unperformed? Rule 1.7(a) of the Model Rules is built on that question. Except as paragraph (b) provides, a lawyer may not represent a client if the representation involves a concurrent conflict of interest.¹ The rule then defines the term in two parts. A concurrent conflict exists when the representation of one client will be directly adverse to another client,² or when 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.³ Later sections take up each definition. Both rest on the same idea, and that idea gives you a method for any fact pattern.

The method has two steps. The first is to identify the duties the lawyer owes the client. The most important are confidentiality (keeping the client's secrets and never using confidential information against the client to whom it pertains), competence (using reasonable care to pursue the client's objectives), loyalty (acting first and foremost in the client's interests, uninfluenced by other clients, prospective clients, or the lawyer's own interests), and independence (advising the client based only on considerations that pertain to the client's legal situation).⁴ The second step is to identify everything else that might pull on the lawyer: other client relationships, current or former, the interests of third parties, and the lawyer's own interests.⁵ If any of these creates a significant risk that a first-step duty will go unperformed, a conflict exists, and no actual harm need be shown.

The rule targets risk because the harm from divided loyalty is usually impossible to see afterward. Holloway v. Arkansas illustrates the difficulty. The Court observed that assessing a conflict's effect on the attorney's options, tactics, and decisions in plea negotiations would be virtually impossible, and that a harmless-error inquiry would therefore require, unlike most cases, unguided speculation. It reversed and remanded instead.⁶ What a conflicted lawyer never pursued leaves no record, and no court can measure a negotiation that never took place. If discipline waited for provable harm, conflicts would surface only after clients had been shortchanged in ways no one could prove.

Two consequences follow. First, there is no such thing as a merely “potential” conflict. A situation in which another client relationship or a personal interest of the lawyer risks harm to a client is, by definition, a conflict.⁷ Second, “no harm, no foul” is not a principle of legal ethics. A lawyer may be disciplined for representing conflicting interests even though the client suffered no harm.⁸ Students often err in one of two directions: they label a situation a potential conflict and let the lawyer proceed until trouble appears, or they cite a good outcome as proof that no conflict ever existed. Both moves misread a rule that looks at the risk, not the result.

The risk must be significant, and that qualifier keeps the rule from reaching every lawyer who has more than one client. Far-fetched possibilities of harm do not create conflicts. The working test is whether you can imagine a dishonest, lazy, or careless lawyer failing a duty owed to Client A because of the representation of Client B, the former representation of Client C, the desire to win business from Client D, or a personal interest of the lawyer. If you can, and the picture is realistic rather than strained, there is a conflict.⁹

A takeover illustrates what a realistic picture looks like. Suppose a lawyer represents Company A in confidential planning for a possible takeover bid for Company B, and Company B then asks the same lawyer to act for it. Duties of communication and reasonable care owed to Company B may require the lawyer to pass along information about possible takeover bids, perhaps so that B can prepare takeover defenses. Passing it along would clearly violate the duty of confidentiality owed to A. The lawyer cannot take both engagements without the consent of both clients, a subject for a later section.¹⁰ Nothing has gone wrong yet. But the lawyer cannot honor one client's duties without breaching the other's, and that risk is the conflict.

The two pairs differ on the one fact that matters. In the takeover pair, a specific duty to each client realistically collides with a specific duty to the other. In the bakery pair, the clients' interests meet only through speculation. Finding a conflict is the first step, not the last, because the rule's opening phrase, “except as provided in paragraph (b),” tells us that exceptions exist.¹¹ The section From Conflict to Consent takes them up. Keep that question separate from the threshold one of whether a conflict exists at all.