Your Business Deserves To Thrive

The Dangers of Joint Representation Part 3

On Behalf of | Aug 24, 2017 | Business Management, Legal Ethics, Multiple Owners

In today’s blog, we will address conflict of interest in a joint representation.

If you and your business partner still plan on hiring the services of one lawyer, you will be pleased to know that the existence of a conflict of interest does not necessarily disqualify a lawyer from representing more than one client in the same transaction.  But it is something that needs to be addressed by considering all the facts and circumstances.

# 1 The lawyer needs to determine whether a conflict of interest exists and, if so, whether it can be waived by the clients’ informed consent.  There are some conflicts that consent unable to be waived, either because the representation is prohibited by applicable law (e.g., representation of more than one defendant in a capital case) [1] or because it involves the assertion of a claim by one client against another in the same litigation or proceeding. [2] However, common representation is allowed when the clients are generally aligned in interest, even when there is some difference in interest among them. [3]  Organizing a business for two or more entrepreneurs or working out the financial reorganization of an entity in which two or more clients have an interest would likely fall into this category, depending on the facts and applicable law.[4]

# 2 The lawyer needs to consult with the clients and obtain their informed consent, confirmed in writing. [5]  The lawyer needs to talk with the clients to explain the risks and advantages, if any, of such representation, as well as reasonably available alternatives, and to afford the clients a reasonable opportunity to consider the risks and alternatives and to raise questions and concerns.[6]  Informed consent requires that each affected client be aware of the relevant circumstances and of the material and reasonably foreseeable ways that the conflict could have adverse effects on the interests of that client.[7] The information required depends on the nature of the conflict and the risks involved, but typically includes the implications of the common representation, including possible effects on loyalty, confidentiality, the attorney-client privilege, and the advantages and risks involved. [8] Importantly, a client who has given consent to a conflict may revoke the consent and, like any other client, terminate the lawyer’s representation at any time, if the client changes his or her mind. [9] In this case, though, the lawyer would be unable to continue work in the matter and the client would need to retain another lawyer, which means there will likely be additional work and costs, which is more reason to be mindful of potential conflicts and plan ahead.

This post was a part of a multi-post blog series on joint representation, conflict of interest, and the need to obtain independent legal counsel.  You can find the other posts by searching our blogs.  If you have any questions about the content of this blog series or other issues not discussed here, please contact us.

] Id. at cmt. 16.

[2] ABA, Model Rules of Professional Conduct, Rule 1.7(b), cmt. 28.

[3] Id. at cmt. 28.

[4] Id.

[5] ABA, Model Rules of Professional Conduct, Rule 1.7(b)(4).

[6] Id. at cmt. 20.

[7] Id. at cmt. 18.

[8] Id.

[9] Id. at cmt. 21.

This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity. Andy Stafiniak.

About the Author

Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride or call 407-517-0064.

Check us out on the web.

Add us on Twitter: @rsmlawpllc

Like us on Facebook.

Make sure you download our free reports on how to build your company the right way.