Ethics Opinion 367
Representation of Client by Lawyer Seeking Employment with Entity or Person Adverse to Client, or Adversary’s Lawyer; Clarification of Opinion 210
When a lawyer is seeking employment with an entity or person adverse to his client,1 or with the adversary's lawyer, a conflict of interest may arise under Rule 1.7(b)(4) if the lawyer’s professional judgment on behalf of the client will be, or reasonably may be, adversely affected by the lawyer’s own financial, business, property, or personal interests (for purposes of this Opinion, a lawyer’s own financial, business, property, or personal interests are collectively referred to as a “personal interest conflict”). Both subjective and objective tests must be applied to determine whether a personal interest conflict exists.
There is no “bright line” test for determining the point during the employment process when a personal interest conflict arises, and that point may vary. There are a number of factors to consider in determining whether a personal interest conflict exists, including whether the individual lawyer is materially and actively involved in representing the client and, if so, whether the lawyer’s interest in the prospective employer is targeted and specific, and/or has been communicated to, and reciprocated by, the prospective employer.
Where the prospective employer is affiliated with, but separate and distinct from, the entity adverse to the job-seeking lawyer's client, there may be no personal interest conflict in the first instance, because the adversary and the prospective employer may be separate entities for conflicts purposes.
If a personal interest conflict arises, there are three possible courses of action that may be available to the individual lawyer, each of which is subject to applicable requirements of the D.C. Rules of Professional Conduct: (a) disclosing to the client the existence and nature of the personal interest conflict and the possible adverse consequences of the lawyer's representation of the client and obtaining the client's informed consent to the representation; (b) withdrawing from the representation; or, (c) discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed.
The personal interest conflict of an individual lawyer in a law firm, nonprofit, or corporate legal department is not imputed to the other lawyers in the law firm, nonprofit, or corporate legal department, so long as the personal interest conflict does not present a significant risk of adversely affecting the representation of the client by such other lawyers. The imputation rule does not apply to a government agency.
A subordinate lawyer who discusses a potential personal interest conflict with his supervisory lawyer, and acts in accordance with the supervisory lawyer's reasonable determination of whether the subordinate lawyer has a personal interest conflict and follows the supervisory lawyer's recommended course of action, will not be held professionally responsible even if it is subsequently determined that the supervisory lawyer's determination of whether there was a personal interest conflict, and/or the recommended course of action, were incorrect under the Rules.
Applicable Rules
- Rule 1.0(c) (Terminology)
- Rule 1.3 (Diligence and Zeal)
- Rule 1.4 (Communication)
- Rule 1.6 (Confidentiality of Information)
- Rule 1.7 (Conflict of Interest: General)
- Rule 1.10 (Imputed Disqualification: General Rule)
- Rule 1.16 (Declining or Terminating Representation)
- Rule 5.1 (Responsibilities of Partners, Managers, and Supervisory Lawyers)
- Rule 5.2 (Subordinate Lawyers)
Inquiries
The Committee has received numerous inquiries with respect to the ethical requirements applicable to a lawyer seeking employment with an entity or person adverse to his client, or with the adversary's lawyer. Prospective employers may include a law firm, a government agency, a nonprofit, or a corporate legal department. Specifically, these inquiries seek guidance on when a personal interest conflict arises in the employment process and, if a personal interest conflict arises, the courses of action available to the lawyer.
Background
In D.C. Legal Ethics Committee Opinion 210 (“Representation of Criminal Defendants by Attorney Seeking Position as Assistant U.S. Attorney”) (1990), the Committee concluded that a lawyer who is primarily employed in criminal defense work against the U.S. Attorney's Office for the District of Columbia ("USAO-DC") may continue to represent criminal defense clients, and accept new criminal defense clients, while seeking a position with the USAO-DC, only if each of her criminal defense clients consents to the representation notwithstanding the conflict of interest with full disclosure of the possible disadvantages that may result if the lawyer must withdraw to start employment with the USAO-DC.2 The Opinion concluded that a lawyer should disclose the prospective employment to the client and obtain the client's consent when the lawyer takes the “first active step” in seeking such employment.3 Opinion 210 states that this "first active step" may occur when the lawyer calls to discuss or inquire about procedures for submitting an application, and certainly occurs when the lawyer submits a resume.4
The Committee affirms Opinion 210 on its particular facts. Since Opinion 210 was issued, however, the legal marketplace has become increasingly mobile, with lawyers at every experience level frequently migrating among government agencies, law firms, nonprofits, and corporate legal departments. Concomitantly, the inquiries the Committee has received in the 24 years since Opinion 210 was issued have presented a variety of factual scenarios not contemplated by Opinion 210. Accordingly, the Committee believes Opinion 210 might be applied in an overly broad manner to factual scenarios that are distinguishable from the scenario presented therein and thus believes that a clarification of Opinion 210 is in order.
Analysis
In clarifying Opinion 210, a number of questions arise:
(1) When does a personal interest conflict arise for an individual lawyer seeking employment with an entity or person adverse to the lawyer’s client, or with the adversary's lawyer?
(2) If the prospective employer is affiliated with or related to, but separate and distinct from, the entity adverse to the lawyer's client, is there a personal interest conflict?
(3) If a personal interest conflict arises, what are the lawyer's possible courses of action?
(4) If an individual lawyer has a personal interest conflict, is that personal interest conflict imputed to the other lawyers in his law firm, government agency, nonprofit, or corporate legal department?
(5) What are the ethical duties of a subordinate lawyer and a supervisory lawyer in a law firm, nonprofit, corporate legal department, or government agency when the subordinate lawyer has a potential personal interest conflict?
We emphasize that this Opinion addresses only the potential conflicts that arise during the period of time while the lawyer remains in his current employment and is pursuing possible new employment. Additional considerations need to be addressed to determine whether the individual lawyer may accept the new employment and begin work at the new employer; in some cases the lawyer may be precluded from doing so if the lawyer cannot obtain consents from the affected clients. See, e.g., Rules 1.6, 1.9, 1.10(b), 1.11; Opinions 273, 312.
Discussion
(1) When Does a Personal Interest Conflict Arise During the Employment Process?
Rule 1.7(b)(4) provides that a personal interest conflict arises when:
the lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer’s responsibilities to or interest in a third party or the lawyer’s own financial, business, property, or professional interest. [Emphasis supplied.]
The disjunctive phrase emphasized above suggests that a personal interest conflict arises even if the lawyer’s judgment will not be adversely affected, if the lawyer's judgment reasonably may be adversely affected. Comment [11] to Rule 1.7 cites Opinion 210 and states “when a lawyer has discussions concerning possible employment with an opponent of the lawyer’s client, or with a law firm representing the opponent, such discussion could5 adversely affect the lawyer’s representation of the client.” [Emphasis supplied.]
There are two tests under Rule 1.7(b)(4) for determining whether the lawyer’s professional judgment might reasonably be adversely affected in the context of a lawyer’s seeking employment with an entity or person adverse to the lawyer’s client, or the adversary's lawyer: (a) the lawyer’s subjective perception of whether a conflict of interest may exist, and (b) an objective observer's perception of whether a conflict of interest may exist.
(a) Subjective Test
Opinion 210 states that the lawyer’s own subjective perception of the relationship between his personal interest and the client’s interest determines whether a personal interest conflict exists. The lawyer must ask himself a number of questions. Would he be tempted to “pull punches” in representing the client to enhance his prospects with, or at least not jeopardize his chances with, the prospective employer? Would the lawyer's actions in the matter have an impact on the prospective employer's decision to hire him? Would the outcome of the matter have an effect on any compensation or other benefits the lawyer would receive from the prospective employer? The lawyer might ask himself these and any number of other questions, depending upon the facts of the particular search for employment. If the answer to any of these questions is "yes," the lawyer’s subjective determination that his professional judgment on behalf of the client will be, or reasonably may be, adversely affected, gives rise to a personal interest conflict.
(b) Objective Test
In addition to the subjective test, Rule 1.7(b)(4) contains an objective test: whether the lawyer's professional judgment on behalf of the client "reasonably may be adversely affected" by the lawyer's personal interest. Comment [7] to Rule 1.7 provides that, even if the lawyer believes that the representation can be wholeheartedly and zealously undertaken, if an objective observer would have reasonable doubt on that issue, the client has a right to disclosure of all relevant considerations and the opportunity to be the judge of its own interests. The underlying premise is that if there is reason to doubt the lawyer's ability to provide the client with wholehearted and zealous representation, the lawyer must disclose the possible conflict to his client and obtain the client's informed consent to the lawyer's representation notwithstanding the conflict of interest. Thus, even if the lawyer determines that his own personal interests in obtaining employment will not impair his zealous representation of the client, if an objective observer reasonably would doubt that determination, then the lawyer must disclose the possible conflict to the client [Opinion 210] and obtain the client's consent to the continued representation notwithstanding the personal interest conflict.
(c) Existence of Personal Interest Conflict
Whether a personal interest conflict exists typically will depend upon the specific facts. A lawyer may be actively involved in a matter and interact regularly with the adversary or the adversary's lawyer, or the lawyer may work behind the scenes and have no contact with the adversary or the adversary's lawyer. A lawyer may make cold calls to multiple prospective employers, or blanket multiple prospective employers with form letters and resumes, without a specific target in mind. The lawyer may consult a legal recruiting firm that takes similar action. These prospective employers may or may not include an entity adverse to the lawyer's client, or the adversary's lawyer. The prospective employers, including the adverse entity or its lawyer, may or may not respond, or may respond that they are not interested in pursuing employment with the lawyer. Conversely, a prospective employer, including the adverse entity or its lawyer, may seek out the lawyer, and the lawyer may or may not respond, or may respond that he is not interested in pursuing employment with the prospective employer. The lawyer's resume may be sent to government agencies, corporate legal departments, or nonprofits that are affiliated with, but separate and distinct from, the client’s adversary.
Accordingly, the Committee believes that a nuanced test for determining the existence of a personal interest conflict is appropriate. Although we appreciate the desirability of a “bright line” test for determining the existence of a personal interest conflict, no such test can adequately accommodate all of the scenarios that might arise. The key question is whether the lawyer's professional judgment on behalf of the client will be, or reasonably may be, adversely affected. We set forth below two criteria to consider in determining whether a personal interest conflict exists when a lawyer is seeking employment with an entity or person adverse to his client, or the adversary's lawyer. If the first criterion (material and active role in representing the client) is met, then the lawyer should consider the second criterion (targeted, communicated and reciprocated interest) as well.
(i) The Lawyer's Role in Representing the Client
The first criterion in determining whether a lawyer has a personal interest conflict in seeking employment with an entity or person adverse to his client, or the adversary's lawyer, is whether the lawyer has a material and active role in representing the client.
Factors to consider in determining whether the lawyer has a "material" role in the matter include whether the lawyer has contact with the client regarding the matter, has contact with the adversary or the adversary's lawyer in the course of representing the client in the matter, and/or is working on the substance of the matter. If none of these factors is present, the lawyer's role in the matter would likely not be material, and his professional judgment on behalf of the client would likely not be adversely affected such that a personal interest conflict would arise. In that case, the lawyer would not have to consider the extent to which his interest in the adversary or the adversary's lawyer is targeted, communicated and/or reciprocated under (ii), below, because his non-material role in the matter would not give rise to a personal interest conflict.
If any of these factors is present, the lawyer's role in the matter would likely be material, and his professional judgment on behalf of the client would likely be adversely affected such that a personal interest conflict likely would arise, if the lawyer continues to have an active role in the matter. In that case, the lawyer would have to consider the extent to which his interest in the adversary or the adversary's lawyer is targeted, communicated and/or reciprocated under (ii), below, because his material role in the matter likely would give rise to a personal interest conflict.
For purposes of this analysis, a lawyer should generally be considered to have an active role in a matter if the matter remains pending and the lawyer is either currently working on the matter or expects to be undertaking work on the matter in the future. If a matter has concluded and has been closed by the firm with notice to the client, then no firm lawyer who worked on the matter would be considered to have an active role at that time. In addition, a lawyer who worked on a discrete part of a matter that remains pending, but whose work is concluded with no expectation of future work on the matter, would no longer be considered to have an active role. For example, the lawyer may have had a limited role in one part of a transaction, which part is now concluded, although other lawyers in the firm are continuing to represent the client in other parts of the transaction.
On the other hand, if a pending matter is currently dormant, a lawyer who expects to work on the matter when action is required in the future would likely be considered to have an active role in the matter. For example, a case may have been fully litigated and awaiting the decision of the trial court; although there is no current action to be taken in the matter, a lawyer would nonetheless likely be considered to have a current active role in the case if the lawyer expects to be involved in action to be taken in the future, such as a possible appeal of the court's decision. Under such circumstances, in our view the lawyer's professional judgment on behalf of the client could be, both subjectively and objectively judged,6 adversely affected by the pursuit of employment with an adversary or the adversary's counsel. This is particularly so where the lawyer has no control over the timing of events (such as a trial court decision) that may require the lawyer's immediate attention when they occur.
In that regard, we differ with Formal Opinion 96-400 (1996) ("Job Negotiations with Adverse Firm or Party") ("ABA Opinion 96-400"),7 in which the American Bar Association Standing Committee on Ethics and Professional Responsibility (the "ABA Committee") considered the nature and extent of the lawyer's role in representing the client. The ABA Committee concluded that if a case has been fully litigated, and the lawyer is just awaiting the decision of the appellate court and presently has no action to take or consider, there would be no personal interest conflict unless and until a point comes when the lawyer should consider some further action on the client's behalf. We depart from ABA Opinion 96-400 in concluding that a lawyer's involvement in a pending but currently dormant matter may give rise to a personal interest conflict. Again, the situations in which a lawyer may have a personal interest conflict in seeking employment with an adversary or an adversary's lawyer are not amenable to a "bright line" test.
(ii) Extent to which Lawyer's Interest in Adversary or Adversary's Lawyer is Targeted, Communicated and/or Reciprocated
Assuming a lawyer has a material and active role in a matter, the second criterion in determining whether a lawyer has a personal interest conflict in seeking employment with an entity or person adverse to his client, or the adversary's lawyer, is the extent to which the lawyer's interest in the prospective employer is targeted, communicated and/or reciprocated. See ABA Opinion 96-400 (opining that one of the factors in determining whether a personal interest conflict exists is the extent to which the lawyer's interest in the prospective employer is concrete, and has been communicated and reciprocated).
In Formal Opinion 1991-1 (1991) ("Refusing Employment When the Interests of the Lawyer may Impair Independent Professional Judgment") ("NYCBA Opinion 1991-1") the New York City Bar Association Committee on Professional and Judicial Ethics (the "NYCBA Committee") focused on these criteria in considering when a personal interest conflict exists when a lawyer is seeking employment with an entity or person adverse to his client or the adversary's lawyer. The NYCBA Committee concluded that this would occur—
in any case no later than when an offer of conflicting employment is extended to the lawyer, which offer is not promptly declined. Therefore, disclosure would always be necessary at least where an offer of future employment is outstanding and being considered (or has been accepted). This rule, however, is not sufficient. Although disclosure at the point an offer is extended would protect against certain of the types of conflicts identified above, it is not sufficient as to others. In particular, it does not deal at all with the potential conflicting influences that may arise in connection with the process of securing the offer of employment. Therefore, the Committee notes that, in many cases, the disclosure obligations may arise as soon as the lawyer either (i) has taken clear affirmative steps to seek to obtain specific conflicting employment (e.g., applied for such a position) or (ii) is seriously considering the pursuit of such employment in response to some expression of interest by the potential employer.
The NYCBA Committee was not prepared, however, to opine that in all cases a personal interest conflict would arise at these earlier identified points in the process. Neither is this Committee.
In our view, a personal interest conflict may arise at various points during the employment process. Assuming a lawyer has a material and active role in a matter, a personal interest conflict may arise when the lawyer’s interest in the prospective employer, both subjectively and objectively judged,8 is targeted and specific, and has been communicated to the prospective employer, such as when a lawyer sends a targeted resume directly to an entity or person adverse to his client or the adversary's lawyer.9 In another situation, where a lawyer sends blanket form letters and resumes to multiple potential employers, a personal interest may not arise until a potential employer expresses specific interest in the lawyer. If in response to such blanket form letters and resumes, the employer sends a non-targeted and general response (e.g., a notification that the application has been received and nothing more), a personal interest conflict may not arise at that time. Assuming a lawyer has a material and active role in a matter, a personal interest conflict arises if the lawyer participates in substantive discussion of his experience, clients, or business potential, or the terms of employment, with the prospective employer. A personal interest conflict is clearly present where there is an outstanding offer of employment that the lawyer is considering or has accepted.
At bottom, the lawyer must examine each situation carefully to determine whether, given all of the facts subjectively and objectively judged, the lawyer's professional judgment on behalf of the client will be or reasonably may be adversely affected by his interest in potential employment with the adversary or the adversary's lawyer.
(iii) Opinion 210
Opinion 210 provides an example of how an application of these criteria could give rise to a personal interest conflict. The attorney who submitted the inquiry in Opinion 210 was a sole practitioner who primarily represented criminal defendants in the Superior Court of the District of Columbia against the USAO-DC and was applying to the USAO-DC for employment. As a sole practitioner she would have had primary responsibility for all of her cases and would have had direct personal interactions with the lawyers in the Office to which she was applying. Therefore, submitting a resume was sufficient to give rise to a personal interest conflict. This is quite different from an employment search where a transactional lawyer who is not materially and actively involved in a transaction submits broadcast resumes to many potential employers, who happen to include an adversary in a transaction, or that adversary's counsel.
(2) Prospective Employer Affiliated with, or Related to, but Separate and Distinct from, Entity or Person Adverse to the Lawyer's Client
If a lawyer is seeking employment with a nonprofit, corporate legal department, or government agency, that entity may be affiliated with, but separate and distinct from, the entity that is adverse to his client. For example, a nonprofit or corporation may be a subsidiary or affiliate of a parent corporation, but the subsidiary or affiliate may not be wholly owned by the parent, the two companies may have separate legal departments, and the two companies may have separate officers, directors, offices, and business activities. A government agency may have separate bureaus, offices, or components all within the same agency. The two entities may conduct separate hiring processes.
More specifically, Rule 1.6(k) provides that the client of a government lawyer is the agency that employs the lawyer, unless expressly provided to the contrary by appropriate law, regulation, or order. Comment [38] to Rule 1.6 provides that the term “agency” includes, inter alia, executive and independent departments and agencies, special commissions, committees of the legislature, agencies of the legislative branch such as the Government Accountability Office, and the courts to the extent that they employ lawyers (e.g., staff counsel) to counsel them. The employing agency has been designated the “client” under this Rule to provide a commonly understood and easily determinable point for identifying the government “client.” Thus, to determine when a personal interest conflict may arise in seeking employment with a government entity it is necessary to examine a government agency's particular rules, regulations, and orders.
If the employer is separate and distinct, the lawyer would likely not have a personal interest conflict in seeking employment unless the lawyer believes he could not provide competent and diligent representation to the affected client. For example, in Opinion 210 we considered whether a lawyer could continue to seek and accept new clients whom the District of Columbia Corporation Counsel’s Office10 was prosecuting while her application for employment with the USAO-DC was pending. We concluded that this question did not present a situation in which there is or may be a conflict of interest between the lawyer’s interests and her client’s interests. The lawyer could not reasonably be concerned about jeopardizing her employment prospects with the USAO-DC's Office, which is part of the Department of Justice, a federal Executive Branch agency, while zealously defending a criminal client prosecuted by the District of Columbia Corporation Counsel’s Office, a District of Columbia agency. Therefore, DR 5-101, the predecessor to Rule 1.7(b)(4), did not apply. Although a client in a criminal matter may prefer that his lawyer be completely “defense oriented” and not consider becoming a prosecutor with any employer while defending him, this preference does not mean that a personal interest conflict exists.
As discussed below, there may be factual scenarios, however, where there might be a personal interest conflict even if the prospective employer is separate and distinct from the client's adversary.
(a) District of Columbia Government Agencies
In D.C. Bar Opinion 268 (1996) (“Conflict of Interest Where Private Lawyers Provide Volunteer Legal Assistance to the D.C. Corporation Counsel; Reconsideration of Opinion 92”), the Committee concluded that a lawyer may give volunteer legal assistance to the D.C. Corporation counsel and simultaneously continue to represent private clients against the City and its agencies. We recognized that the City government client is not always the City as a whole, but may be more narrowly defined as one of the City’s constituent agencies. Therefore, a personal interest conflict does not arise where the lawyer is not opposing his own City government client, but some other agency of the City. Although Opinion 268 did not address the issue of a lawyer seeking employment with a City agency that is adverse to his client, it provides some guidance concerning when a lawyer may have a personal interest conflict in seeking employment with the D.C. government. If the lawyer is litigating against one agency of the D.C. government, but applies to another section of the D.C. government, he may not have a personal interest conflict because the agency and the other section are not the same adversary for conflict of interest purposes.
(b) Federal Government Agencies
Federal statutory and regulatory provisions that apply to lawyers (among others) who are employed by federal agencies may provide some guidance as to when a federal government entity with which a lawyer is seeking employment may be considered to be separate and distinct from another such entity that is adverse to the lawyer's client in a pending matter. Although the Committee does not opine on legal matters, these federal statutes and regulations may assist lawyers in determining whether they have a personal interest conflict when seeking employment with the federal government.11
18 U.S.C. § 207 contains the seven federal statutory restrictions that may limit lawyers' activities after they leave federal government service (or after they leave certain senior positions in the federal government). The U.S. Office of Government Ethics ("OGE") has published guidance, at 5 C.F.R. pt. 2641, concerning all seven of the restrictions in § 207, as well as all the exceptions in the statute. 5 C.F.R. § 2641.302, entitled "Separate Agency Components," provides that, for purposes of 18 U.S.C. § 207(c) only (senior employees), the Director of OGE may designate agency “components” that are distinct and separate from the “parent” agency and from each other. Absent such designation, the representational bar of § 207(c) extends to the whole of the agency in which the senior employee served. The list of designated components is published and periodically updated.12
Although these statutory and regulatory provisions do not apply to lawyers seeking federal government employment, they may provide some guidance concerning when a lawyer may have a personal interest conflict under Rule 1.7(b)(4) in seeking employment with a particular federal government agency or component thereof. The lawyer seeking employment with a federal government agency may consider whether one component of a federal government agency is expressly designated by OGE as separate from another component of that federal government agency, and, even if it is not so designated, may consider as guidance the enumerated criteria in determining whether he may have a personal interest conflict under Rule 1.7(b)(4). If the different components of the federal government agency are separate and distinct entities under the statutes and regulations for conflict of interest purposes, the lawyer may not have a personal interest conflict under Rule 1.7(b)(4).
(c) Corporate or Nonprofit Legal Department
With respect to corporate or nonprofit clients, Comment [21] to Rule 1.7 recognizes the presumption that the lawyer who represents a corporation, partnership, trade association, or other organization-type client is deemed to represent the specific entity and not its subsidiaries, affiliates, or “other constituents.”13
Thus, when a lawyer seeks employment with the legal department of a corporation that is a subsidiary or an affiliate of a corporation that is adverse to his client, and the adverse corporation has its own separate legal department and is otherwise separate from the subsidiary or affiliate, as a general rule, and absent other circumstances, the two entities usually would not be considered the same entity for conflicts purposes, and the lawyer likely would not have a personal interest conflict in seeking employment with a subsidiary or affiliate of a corporation that is adverse to the lawyer's client. This conclusion is consistent with Opinion 268 and Opinion 210 because the lawyer's client is not adverse to his prospective employer, but to a separate and distinct subsidiary or affiliate of his prospective employer.
(3) Three Possible Courses of Action to Resolve a Personal Interest Conflict
There are three possible courses of action available to a lawyer with a personal interest conflict: (a) disclosing to the client the existence and nature of the personal interest conflict and the possible adverse consequences of the lawyer's representation of the client and obtaining the client's informed consent to the representation notwithstanding the personal interest conflict under Rule 1.7(c)(1), provided Rule 1.7(c)(2) permits this course of action; (b) withdrawing from the representation under Rule 1.16(a) or Rule 1.16(b), if applicable; or, (c) discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed.
(a) Disclosure of Personal Interest Conflict to Client and Client Consent to Representation
Rule 1.7(c)(1) allows a lawyer who has a personal interest conflict arising out of his seeking employment with an entity or person adverse to his client, or with the adversary's lawyer, to represent the client notwithstanding the personal interest conflict if the client provides informed consent to such continued representation after full disclosure of the existence and nature of the conflict and the possible adverse consequences of such representation.
However, as is the case with Rule 1.7(b)(4), Rule 1.7(c)(2) applies both a subjective test and an objective test before the personal interest conflict can be waived: "the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client." Thus, disclosing the conflict to the client and obtaining the client's consent are not options under Rule 1.7(c)(1) unless, both subjectively and objectively judged, the lawyer can provide competent and diligent representation to the client notwithstanding the personal interest conflict.14
If the lawyer already has been representing the client while operating under a personal interest conflict because he is seeking prospective employment with a person or entity adverse to his client, or the adversary's lawyer, he may ask the client for retroactive consent to his representation under Rule 1.7(c) notwithstanding his personal interest conflict.15
Although Rule 1.7(c)(1) does not require that the client's consent be memorialized in writing, it would be prudent to obtain either current or retroactive consent in writing from the client.
(b) Withdrawal from Representation of Client
In some circumstances, the individual lawyer may resolve a personal interest conflict by withdrawing from the representation of the client under Rule 1.16(a)(1), which requires a lawyer to withdraw from representation of the client if the representation will result in a violation of the Rules of Professional Conduct.
Alternatively, even if the Rules of Professional Conduct would not be violated, withdrawal could be made under Rule 1.16(b) if withdrawal can be accomplished without material adverse effect on the interests of the client.16
If the rules of the cognizant tribunal so require, under Rule 1.16(c), the lawyer must obtain the permission of the tribunal to withdraw and, if ordered by the tribunal, must continue the representation notwithstanding good cause for withdrawal.
(c) Discontinuation of the Prospective Employment Process
The third course of action is discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed. Even after he stops seeking this potential new employment, the lawyer still will need to consider whether the lawyer has an ongoing interest in pursuing such employment in the future that is of such a nature that it will, or reasonably may, adversely affect the lawyer's professional judgment on behalf of the client.
(4) Imputation of Personal Interest Conflict
D.C. Rule 1.10(a)(1) provides that an individual lawyer's conflict of interest under Rule 1.7(b)(4) is not imputed to other lawyers in his current "firm" if that personal interest conflict does not present a significant risk of adversely affecting the representation of the client by the remaining lawyers in the firm.17 Accordingly, a personal interest conflict of a lawyer in a firm who is seeking employment with an entity that is adverse to one of the firm's clients, or the adversary's lawyer, is not imputed to other lawyers in the firm, assuming his personal interest conflict will not adversely affect the representation of the client by the other lawyers in the firm.
For purposes of imputation of conflicts, Rule 1.0(c) and Rule 1.10 define the term "firm" to include law firms, nonprofits, and corporate legal departments, but not government agencies. Thus, even in those limited situations where a Rule 1.7(b)(4) personal interest conflict may be imputable to a "firm," there would be no such imputation if the conflict involves a lawyer employed by a government agency.
(5) Duties of Subordinate and Supervisory Lawyers When Subordinate Has a Personal Interest Conflict
(a) Subordinate Lawyer
If the lawyer seeking employment with an entity or person adverse to his client, or the adversary's lawyer, is a "subordinate lawyer" within the meaning of Rule 5.2(b), and is supervised by a "supervisory lawyer" within the meaning of Rule 5.1 (see below), the supervisory lawyer may attempt to determine whether the subordinate lawyer has a personal interest conflict and, if so, what the appropriate course of action is for the subordinate lawyer. Under Rule 5.2(a), generally a lawyer violates the Rules of Professional Conduct even if he acts at the direction of another person. However, under Rule 5.2(b), a subordinate lawyer is not responsible for a violation of Rule 1.7(b)(4) if he acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty. Accordingly, if a subordinate lawyer discusses a potential personal interest conflict with his supervisory lawyer, and acts in accordance with the supervisory lawyer's reasonable determination of whether the subordinate lawyer has a personal interest conflict and follows the supervisory lawyer's recommended course of action, the subordinate lawyer will not be held professionally responsible even if it is subsequently determined that the supervisory lawyer's determination of whether there was a personal interest conflict, and/or the recommended course of action, were incorrect under the Rules.
(b) Supervisory Lawyer
Rule 5.1(a) provides that a partner in a “firm” or “law firm,” and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm or government agency, shall make reasonable efforts to ensure that the firm or government agency has in effect measures providing reasonable assurance that all lawyers in the firm or government agency conform to the Rules of Professional Conduct.
Rule 5.1(b) provides that a lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct. Comment [1] to Rule 5.1 states that both Rule 5.1(a) and Rule 5.1(b) apply to members of a law firm, lawyers having comparable managerial authority in a nonprofit, corporate legal department, or government agency, and to lawyers who have intermediate managerial responsibilities in those entities.
Rule 5.1(c)(2) sets forth general principles for the imputation to a supervisory lawyer of liability for a subordinate lawyer's violation of the Rules of Professional Conduct. If the supervisory lawyer knows or reasonably should know of the violation at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action, the subordinate lawyer's violation is imputed to the supervisory lawyer. Thus, if the supervisory lawyer knows or reasonably should know that the subordinate lawyer has a personal interest conflict and fails to take appropriate action, the supervisory lawyer may be responsible for the subordinate lawyer's violation of Rule 1.7(b)(4).
A supervisory lawyer may take a variety of actions where a subordinate lawyer is seeking employment with an adversary or an adversary's lawyer. Depending upon the facts, a supervisory lawyer might reasonably determine that there is a personal interest conflict and disclose the subordinate lawyer's prospective employment to the client and seek the client's consent to the subordinate lawyer's continued representation of the client notwithstanding the personal interest conflict. A supervisory lawyer might choose to relieve the subordinate lawyer of any responsibility for working on that client's matter and have other lawyers in the law firm, nonprofit, corporate legal department, or government agency continue to represent the client.18 Under a different set of facts, a supervisory lawyer might reasonably determine that the subordinate lawyer does not have a personal interest conflict, and thus the supervisory lawyer would not be required to disclose the subordinate lawyer's prospective employment to the client and obtain the client's consent. The supervisory lawyer, nevertheless, may still decide to relieve the subordinate lawyer of any responsibility for working on that client's matter to avoid the possibility that the subordinate lawyer's role in the matter will develop into one that would give rise to a personal interest conflict.
Conclusion
When a lawyer is seeking employment with a person or entity adverse to his client, or the adversary's lawyer, the existence of a personal interest conflict under Rule 1.7(b)(4) is not susceptible to a "bright line" test. The lawyer must determine, using both subjective and objective tests, whether the lawyer’s professional judgment on behalf of the client will, or reasonably may, be adversely affected. Factors to consider include whether the lawyer is materially and actively involved in representing the client and, if so, whether the lawyer’s interest in the prospective employer is targeted and specific and/or whether the prospective employer has reciprocated the lawyer's interest. If the lawyer has a personal interest conflict there are three courses of action that may be available, each of which is subject to the applicable requirements of the Rules: disclosing the personal interest conflict and obtaining the client's consent to continued representation; withdrawing from the representation, if possible; or, discontinuing seeking employment with the client's adversary or the adversary's lawyer until all pending matters relating to that potential new employment have been completed.
Published: July 2014
1. The terms "adverse" and "adversary" are not intended to be limiting. A personal interest conflict could arise even if the prospective employer is not "adverse" in the strict legal sense. In other words, a lawyer seeking employment with a co-plaintiff or co-defendant, or any entity in a similar position in a transactional matter, or with a lawyer representing such co-plaintiff, co-defendant or entity may have a personal interest conflict.
2. Opinion 210 was decided under DR 5-101(A), whose substance now is contained in Rule 1.7, and DR 7-101(A), whose substance now is contained in Rule 1.3.
3. The conflict of interest issues discussed in Opinion 210 also raise issues regarding the constitutional right of a defendant to the effective assistance of counsel. Those issues, however, are beyond the scope of this Opinion.
4. Four members of the Committee concurred in Opinion 210, but emphasized the narrow reach of the Opinion and stated that in other circumstances the lawyer should withhold or delay the employment application altogether until the conflict is removed.
5. We reject the view that any step towards changing employment by a lawyer ipso facto adversely affects the client. For example, simply contemplating alternative employment would not constitute a personal interest conflict.
6. We reiterate that both the subjective and objective tests under Rule 1.7(b)(4)discussed above apply to these determinations.
7. In its July 2011 newsletter, the ABA noted that ABA Opinion 96-400 was issued prior to the 2002 amendments to the Model Rules, including Rule 1.7 and Rule 1.10. Comment [10] to Model Rule 1.7, one of the 2002 amendments, is in effect a codification of ABA Opinion 96-400.
8. We reiterate that both the subjective and objective tests under Rule 1.7(b)(4)discussed above apply to these determinations.
9. Because there is no "bright line" test, there conceivably may be factual scenarios where a personal interest conflict could exist without the lawyer communicating his interest in employment to the prospective employer.
10. This office is now the District of Columbia Office of the Attorney General.
11. Moreover, a federal government lawyer seeking employment with a person or entity adverse to the federal government, or the adversary's lawyer, is subject to conflict of interest provisions under federal statutes and regulations (e.g., 18 U.S.C. §§ 207, 208 and 5 C.F.R. pt. 2635, Subpart F) in addition to Rule 1.7(b)(4). As noted, the Committee does not opine on legal matters. Accordingly, the applicability of, and compliance with, these federal statutes and regulations are beyond the scope of this Opinion. Government lawyers seeking new employment, however, are alerted to the fact that they must consider both sets of conflict of interest provisions.
12. 5 C.F.R. § 2641.302 sets forth the following criteria for designating an agency component to be "separate": (1) the component is created by statute or a statutory reference indicating that it exercises functions which are distinct and separate; (2) the component exercises distinct and separate subject matter or geographical jurisdiction; (3) the degree of supervision exercised by the parent over the component is minimal; (4) the component exercises responsibilities that cut across organizational lines within the parent; (5) the size of the component in absolute terms is significant; and (6) the size of the component in relation to other agencies or bureaus within the parent is significant.
13. This presumption can be rebutted under Comment [23] if the organizational affiliates are deemed to be "alter egos" by analyzing a number of factors. For example, if the affiliates have a unified corporate legal department, they may be considered the same entity for conflicts purposes. For purposes of this Opinion, we assume that the presumption is not rebutted.
14. In addition to the requirements of Rule 1.7(c)(2), a lawyer considering this issue should examine his obligations under Rule 1.3(a) (Diligence and Zeal) and Rule 1.4(a) (Communication) and Comment [5] under the Scope section of the Rules. Ultimately, however, the rule of interpretation expressed in Comment [5] and Rule 1.3 and Rule 1.4 do not supplant, amend, enlarge or extend the requirements of Rule1.7(c)(2).
15. See, e.g., Interstate Properties v. Pyramid Company of Utica, 547 F. Supp. 178 (S.D.N.Y 1982); In re Evans, 902 A.2d 56 (D.C. 2006); Griva v. Davidson, 637 A.2d 830 (D.C. 1994); Jesse v. Danforth, 486 N.W.2d 63 (Wis. 1992). As a general proposition, the Restatement (2d) of the Law Governing Lawyers § 21(4) states: "A client may ratify an act of a lawyer that was not previously authorized."
16. If the lawyer withdraws from the representation, he must comply with the requirements of Rule 1.16(d) to protect the client's interests. After withdrawal, he must also consider his ethical duties under Rule 1.6 (Confidentiality of Information), Rule 1.9(Conflict of Interest; Former Client) and Rule 1.11 (Successive Government and Private or Other Employment).
17. Comment [8] to D.C. Rule 1.10 differs from its ABA Model Rule 1.10 counterpart (comment [3] to ABA Model Rule 1.10) in that the D.C. Comment [8] expressly states (referring to Opinion 210), "nor would representation by the firm be precluded merely because one of its lawyers is seeking possible employment with an opponent (e.g. U.S. Attorney's Office) or with a law firm representing the opponent of a firm client." There is no similar language in its ABA Model Rule 1.10 counterpart (comment [3] to ABA Model Rule 1.10).
18. The Committee recognizes the difficult position created for the subordinate lawyer who has a personal interest conflict and is faced with the choice of informing the supervisory lawyer of possible alternative employment, and risking negative internal consequences with the current employer, or improperly not disclosing the personal interest conflict. The Committee is sensitive to the difficult position created for the subordinate lawyer by this decision but is unable to propose a "safe harbor" for the subordinate lawyer. The Rules of Professional Conduct Review Committee is alerted to the need to consider a viable means for subordinate lawyers to address the personal interest conflict issue without jeopardizing continued satisfactory employment with the current employer.
