WHAT IF MY ATTORNEY APPEARS TO HAVE A CONFLICT OF INTEREST?

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Loyalty is a fundamental element in an attorney-client relationship.  In an increasingly changing and interconnected society, however, it may prove challenging for clients to know whether an attorney’s personal or professional responsibilities or interests may be at odds with their own.  Importantly, attorneys are prohibited from undertaking representation directly adverse to a current client without obtaining client consent and must follow appropriate procedures concerning other potential conflicts of interest.

California’s attorneys have long been required to adhere to the duty of undivided loyalty to their clients.  Indeed, in 1930 the California Supreme Court held that it is “an attorney’s duty to protect [their] client in every possible way, and it is a violation of that duty for [them] to assume a position adverse or antagonistic to [their] client without knowledge of all the facts and circumstances.”  Anderson v. Eaton, 211 Cal. 113, 116 (1930).  As a result, “an attorney is precluded from assuming any relation which would prevent [them] from devoting [their] entire energies to [their] client’s interests.” 

Today, the duty of undivided loyalty is covered in California’s Rules of Professional Conduct.  Specifically, Rule 1.7 provides a set of procedures that attorneys must follow in disclosing conflicts of interests in three relevant circumstances. 

The first circumstance set out in Rule 1.7(a) involves a situation where the client’s interests are “directly adverse to another client in the same or a separate matter.”  In this event, the attorney must obtain the client’s “informed written consent.”  Informed written consent requires written agreement to the representation following written disclosure of the circumstances and consequences.  Specifically, the attorney must disclose in writing “the relevant circumstances” and “the material risks, including any actual and reasonably foreseeable adverse consequences of the proposed course of conduct” and then obtain the client’s agreement in writing to that course of conduct. 

In addition, the attorney must consider the requirements of Rule 1.7(d), which provides that representation is only permitted if:

(1)   the lawyer believes that [they] will be able to provide competent and diligent representation to each affected client;

(2)   the representation is not prohibited by law; and

(3)   the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal. 

The second circumstance set out in Rule 1.7(b) involves a situation where “there is a significant risk the lawyer’s representation . . . will be materially limited by the lawyer’s responsibilities to or relationships with another client, a former client or a third person, or by the lawyer’s own interests.”  If any representation raises such a significant risk, the attorney must also obtain the client’s “informed written consent” and meet the requirements set out in Rule 1.7(d).

The third circumstance set out in Rule 1.7(c) concerns situations where a lawyer has or knows about specific types of relationships, even if there is not a significant risk the relationship will materially limit the attorney’s representation of the client.  This provision covers situations where the attorney has, or knows that an attorney in their firm has, a “legal, business, financial, professional, or personal relationship with a responsibility to a party or witness in the same matter.”  It also covers situations where the attorney knows or reasonably should know that “another party’s lawyer is a spouse, parent, child, or sibling of the lawyer, lives with the lawyer, is a client of the lawyer or another lawyer in the lawyer’s firm, or has an intimate personal relationship with the lawyer.”  In these circumstances, the attorney must provide the client with “written disclosure of the relationship” and comply with the requirements in Rule 1.7(d).  But, if the situation presents a significant risk the relationship will materially limit the attorney’s representation of the client, the attorney must instead obtain the client’s informed written consent.

In the event that an attorney fails to adequately comply with these procedures, a client may consider pursuing appropriate recourse.  The California Supreme Court has invalidated contracts where attorneys have breached their ethical duties.  For example, in Sheppard, Mullin, Richter & Hampton, LLC v. J-M Mfg. Co., 6 Cal. 5th 59, 87 (2018), a law firm agreed to represent a client without obtaining effective consent.  In that case, the client had signed a broad conflict waiver that asked the client to waive current and future conflicts, but the law firm failed to disclose that it was currently providing legal services in an unrelated matter to another client that was a rival company.  Ultimately, the California Supreme Court determined that an engagement agreement was unenforceable because the “transaction was entered under terms that undermined an ethical rule for the protection of the client as well as for the preservation of public confidence in the legal profession.” 

A client’s right to loyalty is one of many client rights underlying an attorney’s duties under the Rules of Professional Conduct.  In the event a client feels that their attorney has breached their obligations, they have the right to withdraw from the attorney-client relationship.  The right to withdrawal may be subject to court approval in some matters and the attorney may have a claim for the value of services rendered to the point of discharge. Any individual considering legal recourse should consult a qualified attorney who can evaluate the applicable laws, relevant legal developments, and specific facts of a given case.

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