This article provides a brief overview of Rule 1.7 of the California Rules of Professional Conduct (CRPC), and a checklist for lawyers to review when addressing conflict of interest. Unlike former CRPC 3-310(c)(1), CRPC 1.7 does not contain the words “potential conflict” and thus, lawyers no longer need to consider “potential” conflicts of interest when deciding whether informed written consent is required before representing a client. However, other considerations, as discussed below, may still require such consent.
CRPC 1.7(a) provides: “A lawyer shall not, without informed written consent from each client and compliance with paragraph (d) represent a client if the representation is directly adverse to another client in the same or a separate matter.” This seems pretty straight forward. Consent is required if an attorney and/or his law firm are on both sides of the same matter or if the matter is directly adverse to an existing client. The rule does not define “directly adverse”. However, Comment [1] to CRPC 1.7 provides that directly adverse means there is an “actual conflict” or the representation in the first matter is directly adverse to the client in an unrelated matter, or the client is an opposing party in another matter. Adverse has been defined as “one that is hostile, opposed, antagonistic, detrimental, unfavorable to one’s own interest.” (Ames. v. State Bar (1973) 8Cal.3d 910, 917)
If there is no conflict of interest under CRPC 1.7 (a), the lawyer must next determine if there are relationships or obligations that will limit accepting the client. CRPC 1.7(b) provides: “A lawyer shall not, without informed written consent from each affected client and compliance with paragraph (d), represent a client if there is a significant risk the lawyer’s representation of the client 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.” This rule intersects other duties that attorneys have to clients, including the duty of undivided loyalty, the duty to exercise independent judgment, the duty of confidentiality, the duty to provide competent representation, and the duty to communicate with client. (Rutter: California Practice Guide, Professional Responsibility & Liability (Chapter 4, Section 4.2.11)).
If a lawyer determines that neither CRPC 1.7(a) nor CRPC 1.7(b) applies, the lawyer must determine if a written disclosure is required under CRPC 1.7(c). CRPC 1.7(c) states that, even when the conditions of CRPC 1.7(b) are not present, the lawyer shall not represent a client without “written disclosure of the relationship to the client” where:
“(1) the lawyer has or knows that another lawyer in the lawyer’s firm has a legal, business, financial, professional, or personal relationship with or responsibility to a party or witness in the same matter, or
- the lawyer 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.”
Written disclosure is required based on the relationship that the lawyer has with others involved in the matter or if a lawyer or any lawyer at the firm has a legal and/or financial relationship with the client or a party or witness (e.g., legal engagement letter, business investment). The lawyer must be diligent in determining if a written disclosure is required.
Finally, if CRPC 1.7(a), CRPC 1.7(b) or CRPC 1.7(c) is applicable, the lawyer still must comply with CRPC 1.7(d) before agreeing to the representation. Under CRPC 1.7(d), the lawyer can only agree to such representation only if: the lawyer reasonably believes that the lawyer can competently and diligently represent each client, “the representation is not prohibited by law,” and “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 takeaway here is that lawyers must continuously monitor conflict of interests when clients are involved in other matters or have relationships with lawyers. Potential conflicts of interest no longer require written consent. However, the lawyer’s duties to one client still may prevent the lawyer from representing another client if such representation would cause the lawyer to violate those duties.
By: Dianne Jackson McLean, a member and former chair of BASF Legal Ethics Committee, a partner at Goldfarb & Lipman LLP, who practices in the areas of affordable housing, community economic development, municipal law and ethics.