law review article - american bar association · 2017-12-23 · american legal practice or...

Manuscript: February 10, 2012

NO CONFLICT

Daniel J. Bussel*

I. THE HISTORY OF THE RULE ......................................................................... 4 II. POLICY ANALYSIS ..................................................................................... 23

A. PERVERSE CONSEQUENCES. ................................................................ 24 1. THE HOT POTATO RULE. .............................................................. 24 2. STRATEGIC DISQUALIFICATION. .................................................... 25 3. LAWYER MOBILITY. ..................................................................... 26 4. OUTSOURCING. ............................................................................. 27 5. ACCESS TO LEGAL SERVICES. ....................................................... 28 6. ADVANCE WAIVERS. .................................................................... 28

B. CHANGES IN THE LEGAL MARKETPLACE AGGRAVATE THESE POLICY CONCERNS. ................................................................. 29

C. DEFENSES OF THE RULE. ..................................................................... 35 D. THE MEANING OF LOYALTY................................................................ 42

CONCLUSION ................................................................................................... 44

* © 2012 by Daniel J. Bussel, Professor of Law, UCLA School of Law. This research was funded by the UCLA School of Law Dean’s Fund. Amy Atchison, one of the marvelous research librarians at the Hugh & Hazel Darling Law Library, assisted in tracking down interdisciplinary and foreign materials. I owe a special acknowledgement to Rachel McCaslin, UCLA School of Law Class of 2012, whose interest in exploring these issues in her Fall 2010 seminar paper inspired this Essay. Hunter Hayes, UCLA School of Law Class of 2013, provided truly exemplary research assistance. Naoko Watanabe, UCLA School of Law LLM Class of 2012 ably translated materials from the Japan Federation of Bar Associations kindly furnished by Professor Atsushi Kinami of Kyoto University Faculty of Law and Hisayuki Miyashita of the Habataki Law Office. I also benefited from the generous and helpful comments of my colleagues Sung Hui Kim and Kenneth N. Klee, Professor John Leubsdorf, and the editors of the Georgetown Journal of Legal Ethics.

First published in 25 Geo. J. Leg. Ethics __ (2012). Copyright Daniel J. Bussel. Reprinted with permission.

For thirty years, American lawyers have labored under an onerous dis-qualification rule precluding them from being “directly adverse” to a client in a matter unrelated to that on which the client has engaged the lawyer. The rule is ahistorical, idiosyncratic, and has led to anomalous and untoward consequences. It derives from a misconception of the lawyer’s role and duty. It should be abrogated. This Essay assesses the rule barring American lawyers from

representing parties directly adverse to an existing client in a matter unrelated to that on which the existing client engaged the lawyer.1

1 The most well-known and widely-adopted statement of the rule is in the American Bar Association’s MODEL RULES OF PROF’L CONDUCT R. 1.7(a)(1) (2009). See infra text accompanying note 4. Thomas Morgan published his seminal critique of the rule fifteen years ago. Thomas D. Morgan, Suing a Current Client, 1 J. INST. FOR STUDY LEGAL ETHICS 87 (1996). Other academic critiques of the rule are found in Nathan M. Crystal, Disqualification of Coun-sel for Unrelated Matter Conflicts of Interest, 4 GEO J. LEGAL ETHICS 273 (1990); Michael J. DiLernia,

Part I

Advance Waivers of Conflicts of Interest in Large Law Firm Practice, 22 GEO J. LEGAL ETHICS 97 (2009); Richard E. Flamm, Looking Ahead to Ethics 2015: Or Why I Still Do Not Get the ABA Model Conflict of Interest Rules, 19 N. ILL. U. L. REV. 273 (1999); Stephen E. Kalish, An Instrumental Interpretation of Model Rule 1.7(a) in the Corporate Family Situation: Unintended Consequences in Pandora’s Box, 30 MCGEORGE L. REV. 37 (1998); Robert P. Lawry, The Meaning of Loyalty, 19 CAP. U. L. REV. 1089 (1990); Jonathan J. Lerner, Honoring Choice by Consenting Adults: Prospective Conflict Waivers as a Mature Solution to Ethical Gamesmanship, 29 HOFSTRA L. REV. 971 (2001); John Leubsdorf, Conflicts of Interest: Slicing the Hot Potato Doctrine, 48 SAN DIEGO L. REV. 251, 274 & n.95 (2011); Paula A. Monopoli, Drafting Attorneys as Fiduciaries: Fashioning an Optimal Ethical Rule for Conflicts of Interest, 66 U. PITT. L. REV. 411 (2005); Lara E. Roman-sic, Stand by Your Client?: Opinion 95-390 and Conflicts of Interest in Corpo-rate Families, 11 GEO J. LEGAL ETHICS 307 (1998); Ronald D. Rotunda, Con-flicts Problems When Representing Members of Corporate Families, 72 NOTRE DAME L. REV. 655 (1997); Gerald K. Smith, Conflicts of Interest in Workouts and Bankruptcy Reorganization Cases, 48 S.C. L. REV. 793 (1997). The rule, however, is not without its defenders in the law reviews. See Lawrence J. Fox, All's OK Between Consenting Adults: Enlightened Rule on Privacy, Obscene Rule on Ethics, 29 HOFSTRA L. REV. 701 (2001); Brian J. Redding, Suing a Current Client: A Response to Professor Morgan, 10 GEO J. LEGAL ETHICS 487 (1997); Gregory Zimmer, Suing a Current Client: Responsibility and Respecta-


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shows that the rule is of recent vintage; is not a rational extension of past American legal practice or conceptions of professional responsibility; and is idiosyncratic from a comparative standpoint with respect to both other jurisdictions and professions.

Part II analyzes the rule from a policy perspective. Parts II.A & B discuss the untoward consequences of the rule, consequences aggravated by developments in the market for legal services over the past thirty years. As law firms have grown in size and reach, and as institutional clients have adopted the practice of engaging lawyers from a variety of firms on a case-by-case rather than general retainer basis, the rule has become increasingly out-of-touch with the realities of modern law prac-tice.2

I conclude by recommending that we abandon the rule. The well-established standard applicable to former client conflicts is perfectly adequate for dealing with concurrent client conflicts, at least in the con-text of the representation of institutional clients in civil litigation and transactional practices. Fundamentally, the concurrent conflict rule misconceives the lawyer-client relationship as extending beyond the bounds of the matter, or matters, on which the lawyer is engaged. In doing so it abandons the traditional conception of the lawyer as an inde-pendent professional.

Part II.C addresses the rationales that have been put forward in support of the rule. Part II.D examines the proper scope of the duty of loyalty, taking into account the foregoing considerations.

3

bility in the Conduct of the Legal Profession, 11 GEO J. LEGAL ETHICS 371 (1998).

By adopting a unitary standard for conflict of

2 See infra notes 70-73, 81-102 and accompanying text. 3 See GEOFFREY C. HAZARD, JR. & ANGELO DONDI, LEGAL ETHICS: A

COMPARATIVE STUDY 146-49 (2004) (discussing ideals of professional inde-pendence from client as well as from the state); GEOFFREY C. HAZARD, JR. & W. WILLIAM HODES, THE LAW OF LAWYERING: A HANDBOOK ON THE MODEL RULES OF PROFESSIONAL CONDUCT § 1.2:302, at 37 (2010) (“[L]awyers are members of society too, and should be given outlets for exercise of their own moral autonomy, lest they become mere legal technicians or automatons.”); COSIMO DE GREGORIO, TREATISE ON ETHICS AT LAW 22 (1948) (“The lawyer must keep within the bounds of his conscience and teach his client that the spirit of the law does not call for a violation of the moral standards of socie-ty.”); see also infra notes 23-35 and accompanying text (discussing historical standards for legal ethics in the United States which, through the early 20th


interest analysis for both present and former clients, lawyers can reclaim a professional independence rooted in the finest tradition of their calling.

I. THE HISTORY OF THE RULE

ABA Model Rule 1.7(a)4

“[A] lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest ex-ists if: (1) the representation of one client will be directly adverse to another client; …”

provides that absent informed consent:

Model Rule 1.7(a)(1) does not limit the prohibition on direct adversi-ty to current clients to the same matter or matters related thereto.5 Al-though the text of the rule might be read as implicitly so limited,6

Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent. Thus, absent consent, a lawyer may not act as an advocate in one matter against a person the lawyer represents in some other matter, even when the matters are wholly unrelated. The client as to whom

the ABA’s accompanying commentary indicates no such limitation was intended. Comment 6 explains:

century, focused less on regulating lawyers and more on assuring their profes-sional independence).

4 Throughout this Essay, “ABA” refers to the American Bar Association and “Model Rule(s)” refers to the ABA MODEL RULES OF PROF’L CONDUCT.

5 “Ambidexterity,” or representing both sides in a dispute or representing one party and then abandoning that client to represent the adverse party in the same matter has been universally condemned as improper since medieval times. See LONDON ORDINANCE OF 1280, reprinted in Jonathan Rose, The Legal Pro-fession in Medieval England: A History of Regulation, 48 SYRACUSE L. REV. 1, 131-32 (1998). Nothing in this Essay is intended to suggest that the prohibition against representing adverse parties (either concurrently or consecutively) in the same matter without, at a minimum, the informed consent of both parties, should be relaxed.

6 See Morgan, supra note 1, at 111-15 (arguing that the “direct adversity” of Rule 1.7(a) does not categorically prohibit concurrent representation of clients who may be in competition or otherwise “generally adverse,” but rather bars only conflicting representations likely to involve a true breach of loyalty or substantially affect professional judgment).


the representation is directly adverse is likely to feel betrayed, and the resulting damage to the client-lawyer relationship is likely to im-pair the lawyer's ability to represent the client effectively. In addi-tion, the client on whose behalf the adverse representation is under-taken reasonably may fear that the lawyer will pursue that client's case less effectively out of deference to the other client, i.e., that the representation may be materially limited by the lawyer's interest in retaining the current client. Similarly, a directly adverse conflict may arise when a lawyer is required to cross-examine a client who appears as a witness in a lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit.7

The rule is now apparently universally construed, in accordance with the comment, as a per se prohibition (absent informed consent) on a law firm representing an adverse party in litigation against an existing client of the firm, even if the two representations are wholly unrelated.

8 This rule is unique to the American legal profession; no other profession imposes a comparable restriction.9

Given the intimacy of the psychotherapist-patient relationship, there is no profession in which maintaining concurrent relationships with clients whose interests conflict in unrelated matters is more likely to implicate questions of undivided professional loyalty than psychothera-

7 MODEL RULES OF PROF’L CONDUCT R. 1.7 cmt. 6 (2009). Although New York’s non-uniform version of Rule 1.7(a) does not prohibit representations “directly adverse” to an existing client, but rather “the representation of differ-ing interests,” New York has also adopted Comment 6 and its prohibition of concurrent representation of clients adverse in unrelated matters. See N.Y. RULES OF PROF’L CONDUCT R. 1.7(a) cmt. 6 (2009).

8 Lerner, supra note 1, at 973 (“Since the Court of Appeals for the Second Circuit decided Cinema 5, Ltd. v. Cinerama, Inc. more than twenty-five years ago, it has become axiomatic that a law firm's representation of a client in a matter adverse to another current client of the firm is almost always improper, even though the two matters are entirely unrelated.”) (footnotes omitted).

9 Susan Shapiro has written at length of the idiosyncratic nature of legal eth-ics in comparison to the ethical standards adopted by other professions. See generally Susan P. Shapiro, Bushwhacking the Ethical High Road: Conflict of Interest in the Practice of Law and Real Life, 28 LAW & SOC. INQUIRY 87 (2003).


py. Nevertheless, the American Psychological Association’s Ethical Principles of Psychologists and Code of Conduct does not contain any blanket informed consent requirement to maintenance of concurrent relationships with patients that are not reasonably expected to impair the therapist’s judgment or risk exploitation or harm to either patient.10

Similarly, neither accountants, nor bankers, nor brokers, nor clergy are precluded from concurrently advising or representing parties in unre-lated matters that are adverse to one another. A rabbi may counsel one congregant about ritual religious matters while also counseling another congregant, who happens to be the first congregant’s business partner, about a dispute involving the two partners without obtaining written

10 The relevant rules from Ethical Principles of Psychologists and Code of Conduct, 2010 Amendments, AM. PSYCHOLOGICAL ASS’N (June 1, 2010), http://www.apa.org/ethics/code/index.aspx are:

3.05 Multiple Relationships (a) A multiple relationship occurs when a psychologist is in a professional

role with a person and . . . (2) at the same time is in a relationship with a person closely associated with or related to the person with whom the psychologist has the professional relationship . . . .

A psychologist refrains from entering into a multiple relationship if the mul-tiple relationship could reasonably be expected to impair the psychologist's objectivity, competence, or effectiveness in performing his or her functions as a psychologist, or otherwise risks exploitation or harm to the person with whom the professional relationship exists.

Multiple relationships that would not reasonably be expected to cause im-pairment or risk exploitation or harm are not unethical.

(b) If a psychologist finds that, due to unforeseen factors, a potentially harm-ful multiple relationship has arisen, the psychologist takes reasonable steps to resolve it with due regard for the best interests of the affected person and max-imal compliance with the Ethics Code.

3.06 Conflict of Interest Psychologists refrain from taking on a professional role when personal,

scientific, professional, legal, financial, or other interests or relationships could reasonably be expected to (1) impair their objectivity, competence, or effec-tiveness in performing their functions as psychologists or (2) expose the person or organization with whom the professional relationship exists to harm or exploitation.


waivers.11 A real estate broker may represent a buyer in one transaction while representing that buyer’s seller in another.12 An accountant may concurrently serve one client in one corporate transaction as a corporate advisor while rendering unrelated tax advice or providing expert testimo-ny in an unrelated matter on behalf of a competing bidder.13 And bank-ers would be astonished and appalled to hear that, by virtue of financing one firm, the bank was precluded from rendering advice or financing to a competitor in an unrelated transaction in which the first borrower hap-pened to be interested in some way.14

More broadly within the legal profession, the rule does not exist in most other parts of the world. In Europe, the conflict of interest rules governing cross-border practice within the EU provide that a preclusive

11 Rabbinic ethical guidelines emphasize confidentiality and integrity rather than loyalty. Subject to maintaining confidentiality, rabbis may maintain coun-seling relationships with all congregants regardless of relationships between the congregants themselves. See Code of Ethics for Rabbis, CENT. CONF. OF AM. RABBIS (Jan. 22, 2008), http://ccarnet.org/documentsandpositions/ethics/; THE RABBINICAL ASSEMBLY, A CODE OF PROFESSIONAL CONDUCT FOR MEMBERS OF THE RABBINICAL ASSEMBLY (2010), available at http://www. rabbinicalassem-bly.org/sites/default/files/public/Code of conduct-2011.pdf.

12 Brokers may not represent both parties to the same transactions without the consent of the parties, but ethical guidelines are silent on unrelated transac-tions. See 2011 Code of Ethics and Standards of Practice, NAT’L ASS’N OF REALTORS (Jan. 1, 2011), http://www.realtor.org/mempolweb.nsf/pages/code. State law regulating real estate brokers is similarly unconcerned with concurrent representation of adverse parties in unrelated transactions. See, e.g., CAL. BUS. & PROF’L CODE § 10177 (2008) (grounds for revoking real estate license).

13 AM. INST. OF CPAS, CODE OF PROFESSIONAL CONDUCT, at ET § 300 (2010 ed.), available at http://www.aicpa.org/Research/Standards/CodeofConduct /Pages/sec300.aspx (“Responsibilities to Clients”). See also Shapiro, supra note 9, at 176 (noting that accountants as independent professionals may provide services to clients with conflicting interests: “If one audit client aggressively swallows up another, armed with the ‘objective’ financial data sanctified by their mutual auditor, so be it.”).

14 Indeed, banks have been known to provide financing for two or more competing bidders in the same contested transaction. See Report of Kenneth N. Klee, As Examiner, Vol. 1 at 258-365, In re Tribune Company, Case No. 08-13141-KJC, Dkt. No. 5130 (Bankr. D. Del. Jul. 26, 2010) (describing the in-volvement of various banks with multiple bidders for the Tribune Company).


conflict only arises if the lawyer is representing directly adverse clients in the same matter, or if the concurrent representation threatens client con-fidences or will materially limit the lawyer in representing or rendering independent advice to either client.15

15The CODE OF CONDUCT FOR EUROPEAN LAWYERS provides:

Similar rules apply even in coun-

3.2. Conflict of Interest 3.2.1. A lawyer may not advise, represent or act on behalf of two or more

clients in the same matter if there is a conflict, or a significant risk of a con-flict, between the interests of those clients.

3.2.2. A lawyer must cease to act for both or all of the clients concerned when a conflict of interests arises between those clients and also whenever there is a risk of a breach of confidence or where the lawyer’s independence may be impaired.

3.2.3. A lawyer must also refrain from acting for a new client if there is a risk of breach of a confidence entrusted to the lawyer by a former client or if the knowledge which the lawyer possesses of the affairs of the former client would give an undue advantage to the new client.

3.2.4. Where lawyers are practising in association, paragraphs 3.2.1 to 3.2.3 above shall apply to the association and all its members. COUNCIL OF BARS AND LAW SOCIETIES OF EUROPE, CHARTER OF CORE PRINCIPLES OF THE EUROPEAN LEGAL PROFESSION AND CODE OF CONDUCT FOR EUROPEAN LAWYERS 15 (2008). The accompanying Explanatory Me-morandum also focuses on the problem of concurrent representation of clients with conflicting interests in the same matter:

The provisions of Article 3.2.1 do not prevent a lawyer acting for two or more clients in the same matter provided that their interests are not in fact in conflict and that there is no significant risk of such a conflict arising. Where a lawyer is already acting for two or more clients in this way and subse-quently there arises a conflict of interests between those clients or a risk of a breach of confidence or other circumstances where the lawyer’s indepen-dence may be impaired, then the lawyer must cease to act for both or all of them. Id. at 27; see also JOHN LEUBSDORF, MAN IN HIS ORIGINAL DIGNITY: LEGAL

ETHICS IN FRANCE 42-44 (2001) (describing French conflict of interest prin-ciples, derived from the duty of delicacy, as proscribing the representation of conflicting interests in the same matter or when there is a risk to the attorney’s independence). Indeed, the French notary (a neutral legal advisor and custodian of records as opposed to the avocat) is not even prohibited from concurrently representing opposing interests in the same transaction. Id. at 98.


tries that share our common law tradition and adversary system of justice such as Australia16 and the United Kingdom.17 Ten years ago, Canada seemed to be drinking the loyalty Kool-Aid being served up States-side, but the most current Canadian authorities also reject the American ap-proach to unrelated matter conflicts.18

16 YSAIAH ROSS, ETHICS IN LAW: LAWYERS’ RESPONSIBILITY AND ACCOUNTABILITY IN AUSTRALIA § 12.12 at 421-22 (4th ed. 2005) (discussing Australian Liquor Marketers Pty. Ltd. v. Tasman Liquor Traders Pty. Ltd., [2002] VCS 324 (Austl.), and contrasting it with the US and UK positions). Ross reports that at least some Australian commercial clients now demand express “loyalty agreements” in retainers in light of the more liberal approach to conflicts in Australia. Id. at 422 (citing OLSC, Conflicts of Interests: Dis-cussion Paper of the Conflicts of Interests Working Party ¶2.54 (May 2005)).

17 See ANDREW BOON & JENNIFER LEVIN, THE ETHICS AND CONDUCT OF LAWYERS IN ENGLAND AND WALES 271-72 (1999) (no bar on concurrent repre-sentation of clients that are directly adverse in unrelated matters if the solicitor does not have any relevant confidential information, but noting it is “arguable that the above guidance is not strict enough”); ROSS CRANSTON, LEGAL ETHICS AND PROFESSIONAL RESPONSIBILITY 19 (1995) (contrasting the more limited English prohibition on conflicts with the American practice of “senseless dis-qualification” which has led to the tactical use of disqualification motions in civil litigation).

18 For an excellent discussion of the current state of play in Canada, see GAVIN MACKENZIE, LAWYERS AND ETHICS: PROFESSIONAL RESPONSIBILITY AND DISCIPLINE § 5.4, at 5-5 to 5-8.1 (2 ed. 2010) (“Acting Against Current Clients in Unrelated Litigation”). In 2002, the Supreme Court of Canada appeared to adopt a bright-line rule similar to MODEL RULE 1.7(a)(1) prohibiting concurrent representation of clients adverse to one another in unrelated matters. See R. v. Neil, [2002] 3 S.C.R. 631 (Can.) (“[A] lawyer may not represent one client whose interests are directly adverse to the immediate interests of another cur-rent client—even if the two mandates are unrelated . . . .”) (emphasis added). Subsequent lower court cases in British Columbia, Ontario, and Saskatchewan have limited the Supreme Court’s bright-line prohibition to situations in which there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s duties to another current client. See, e.g., Phillips v. Goldson, [2003] 68 O.R. 3d 737 (Can. Ont. C.A.); Ribiero v. Vancouver (City), [2009] 8 B.C.L.R. 4th 207 (C.A.); Wallace v. Canadian Nat’l Ry., [2009] SKQB 369. The Canadian Bar Association task force on conflicts of interest issued its final report in 2008 recommending “substantial risk of material and adverse affect” as the standard for current


Even in the United States, a different rule applies to managing con-flicts of interest involving former clients. Model Rule 1.9 disqualifies the lawyer only from representing an interest adverse to a former client (i) in the same or a substantially related matter (ii) if the lawyer would be materially limited in representing or rendering independent advice to either client, or (iii) to the extent that he is in possession of confidential information of the former client that is material to the new representa-tion.19

client conflicts in unrelated matters, notwithstanding R. v. Neil. CBA TASK FORCE ON CONFLICTS OF INTEREST, CONFLICTS OF INTEREST: FINAL REPORT, RECOMMENDATIONS & TOOLKIT 66 (2008). In 2009, the Canadian Bar Associa-tion officially adopted its task force’s recommendations in full. See MACKENZIE, supra note 18, at 5-8. Japan, on the other hand, at least in its latest codification of its conflict of interest rules, bucked the larger international consensus and adopted the Model Rule 1.7 approach to conflicts involving existing clients in unrelated matters. JAPANESE FEDERATION OF BAR ASSOCIATIONS, BASIC RULES ON THE DUTIES OF PRACTISING ATTORNEYS Art. 27(3)-28(2)&(3) (adopted Nov. 10, 2004) (attorneys may not handle matters adverse to an existing client in unrelated matters absent informed consent). Earlier codifications of the rules in Japan left unclear whether, outside the context of representing an adverse party to an existing client in new unrelated litigation, JAPAN LAWYERS’ CODE (BEN-GOSHI HO) Art. 25(3)(2004), or the representation of adverse parties in the same matter, JAPAN LAWYERS’ CODE (BEN-GOSHI HO) Art. 25(1) (2004), concurrent representation of adverse parties in unrelated matters was possible without obtaining the consent of both parties. The Explanatory Memorandum accompanying the 2004 revision of the rules justified the expansion of the conflict of interest rules to preclude lawyers from accepting cases in which they would be adverse to an existing client being counseled or represented in unrelated matters as necessary to protect the “trust and dignity of lawyers.” Japan Federation of Bar Associations, Explanation of the Basic Rules on the Duties of Practising Attorneys, reprinted in 56 LIBERTY & JUSTICE (JIYU TO SEIGI) 41-51 (Issue No. 6 May 1, 2005).

19 Model Rule 1.9 provides in full: (a) A lawyer who has formerly represented a client in a matter shall not the-

reafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

(b) A lawyer shall not knowingly represent a person in the same or a sub-stantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client


So how did it come to pass that the self-regulating American legal profession20 adopted its confining and idiosyncratic restriction on con-flicts of interest in unrelated matters? Much as Thomas Morgan has recounted it,21 it was almost entirely inadvertent. Until 1964, the general view of the relevant American authorities was that concurrent representa-tion of clients adverse in unrelated matters was both commonplace and proper.22

As early as 1824, Justice Joseph Story stated the conventional posi-tion on the scope of the attorney’s duty of loyalty and the requirement to disclose conflicting interests. That position recognizes that concurrent representation of multiple clients is improper absent disclosure and con-sent if the concurrent representation may affect the attorney’s judgment

(1) whose interests are materially adverse to that person; and (2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter;

unless the former client gives informed consent, confirmed in writing. (c) A lawyer who has formerly represented a client in a matter or whose

present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or (2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.

MODEL RULES OF PROF’L CONDUCT R. 1.9 (2009). 20 See, e.g., Jonathan Macey, Occupation Code 541110: Lawyers, Self-

Regulation, and the Idea of a Profession, 74 FORDHAM. L. REV. 1079, 1081 (2005) (“[T]he practice of law is still self-regulated.”). But see Fred C. Zacha-rias, The Myth of Self-Regulation, 93 MINN. L. REV. 1147 (2009) (describing how the legal profession is in fact subject to heavy external regulation by state courts through professional rules and common law civil liability rules, by administrative agencies, and by federal and state statutes prescribing rules and criminal penalties).

21 See Morgan, supra note 1, at 95-127 (describing the haphazard develop-ment of conflict of interest rules in American courts before and after adoption of Model Rule 1.7).

22 See infra notes 23-35 and accompanying text.


or devotion to the client with respect “to the cause confided to him.”23 Justice Story made no distinction in the duty owed present and former clients in this respect.24

The precursor to the ABA’s 1908 Canons of Professional Ethics

25 was the Alabama Code, adopted by the State Bar of Alabama in 1887.26 The Alabama Code assumed that causes might arise where existing clients of a lawyer would be adverse to each other and where both sides might wish to retain the lawyer. The Alabama Code, of course, prohi-bited lawyers from representing conflicting interests in the same case.27

23 Williams v. Reed, 29 F. Cas. 1386, 1390 (C.C.D. Me. 1824) (No. 17,733) (“An attorney is bound to disclose to his client every adverse retainer, and even every prior retainer, which may affect the discretion of the latter. No man can be supposed to be indifferent to the knowledge of facts, which work directly on his interests, or bear on the freedom of his choice of counsel. When a client employs an attorney, he has a right to presume, if the latter be silent on the point, that he has no engagements, which interfere, in any degree, with his exclusive devotion to the cause confided to him; that he has no interest, which may betray his judgment, or endanger his fidelity.”) (emphasis added).

But it resolved the dilemma posed by a case in which the lawyer’s exist-ing clients became adverse to one another in an unrelated new matter not by forbidding the lawyer from representing either side, but rather by

24 Id.; see also Lalance & Grosjean Mfg. Co. v. Haberman Mfg. Co., 93 F. 197, 200 (S.D.N.Y 1899) (attorney may represent adversary to former client in unrelated matters: “It is thought that the honorable obligation of a reputable member of the bar is a better assurance that professional secrets will be res-pected than would be an order of this court.”).

25 CANONS OF PROF’L ETHICS (1908). 26 The Alabama Code is reprinted in full in Report of the Committee on Code

of Professional Ethics, 31 ABA REPORTS 676, 685-713 (1907). See also James M. Altman, Considering the A.B.A.’s 1908 Canons of Ethics, 71 FORDHAM L. REV. 2395 (2003) (discussing at length the dominant influence of the Alabama Code in the drafting of the 1908 Canons).

27 Altman, supra note 26, at 2470 (“An attorney can never represent conflict-ing interests in the same suit or transaction, except by express consent of all so concerning, with full knowledge of the facts. Even then such a position is embarrassing, and ought to be avoided.”).


expressly giving the “oldest” client wishing to do so the right to retain the lawyer in the matter in which the interests of the clients conflicted.28

The ABA’s 1908 Canons were conceived in reaction to President Theodore Roosevelt disparaging lawyers as “hired cunning” in his 1905 commencement address at Harvard University.

29 To combat this image of the bar, the Canons rested on and promoted a vision of the lawyer as an independent professional and autonomous moral agent.30

Canon VI. Adverse Influences & Conflicting Interests

Canon VI addressed conflicts of interest:

It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflict-ing interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose . . . .31

Canon VI focuses on the problem of the lawyer who, in the course of the concurrent representations, is himself duty-bound to advocate incon-sistent positions. To advocate inconsistent positions—that is, “contend for that which duty to another client requires him to oppose”—requires both clients’ informed consent.

32 Notably, Canon VI is entirely uncon-cerned with concurrent representation of directly adverse interests in unrelated matters.33

28 Id. at 2471 (“Where an attorney has more than one regular client, the old-est client, in the absence of some agreement, should have the preference of retaining the attorney, as against his other clients in litigation between them.”). This rule was also adopted by the Michigan State Bar Association in its 1897 Code. Id. I assume in this context “oldest” refers to the client with the most longstanding relationship with the lawyer, not the most aged.

29 Id. at 2403-04. 30 Id. at 2441 (“[T]he Canons . . . express a more robust vision of conscien-

tious lawyering that enlarges the authority of, and gives greater support to, the lawyer’s moral autonomy in [the attorney-client] relationship.”).

31 CANONS OF PROF’L ETHICS Canon VI (1908). 32 Id. 33 On the other hand, it arguably sweeps in so-called “issue conflicts” or

“positional conflicts” which are largely unregulated today. Comment 24 to Model Rule 1.7 states:


Prominent treatises on legal ethics until the 1960s likewise exhibited little concern over lawyers concurrently representing adverse parties in unrelated matters.34 Early case law also seemed to assume that representing adverse parties in unrelated matters was permissible.35

Ordinarily a lawyer may take inconsistent legal positions in different tribun-als at different times on behalf of different clients. The mere fact that advo-cating a legal position on behalf of one client might create precedent adverse to the interests of a client represented by the lawyer in an unrelated matter does not create a conflict of interest. A conflict of interest exists, however, if there is a significant risk that a lawyer's action on behalf of one client will materially limit the lawyer's effectiveness in representing another client in a different case; for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client. Factors relevant in determining whether the clients need to be ad-vised of the risk include: where the cases are pending, whether the issue is substantive or procedural, the temporal relationship between the matters, the significance of the issue to the immediate and long-term interests of the clients involved and the clients' reasonable expectations in retaining the lawyer. If there is significant risk of material limitation, then absent in-formed consent of the affected clients, the lawyer must refuse one of the re-presentations or withdraw from one or both matters.

MODEL RULES OF PROF’L CONDUCT R. 1.7 cmt. 24 (2009); see also RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 128 cmt. f (2000) (“A lawyer ordinarily may take inconsistent legal positions in different courts at different times. While each client is entitled to the lawyer's effective advocacy of that client's position, if the rule were otherwise law firms would have to specialize in a single side of legal issues. However, a conflict is presented when there is a substantial risk that a lawyer's action in Case A will materially and adversely affect another of the lawyer's clients in Case B.”). This modern commentary is consistent with how Canon VI was actually applied, notwith-standing its language. See John S. Dzienkowski, Positional Conflicts of Inter-est, 71 TEX. L. REV. 457, 469 (1993) (noting that while the language of Canon VI seems to include an attorney’s making opposing legal arguments for differ-ent clients, there is no evidence that it was ever so interpreted). See generally HAZARD & HODES, supra note 3, at § 1.7:104, at 232.1-232.4 (describing the ABA’s historically more flexible regulation of positional conflicts of interest); DEBORAH L. RHODE & DAVID LUBAN, LEGAL ETHICS 589-92 (4th ed. 2004) (overview of positional conflicts of interest); Shapiro, supra note 9, at 104-106.

34 See RAYMOND WISE, LEGAL ETHICS 272 (2d ed. 1970) ("The situation of-ten arises where a lawyer has an opponent in a litigated matter who desires him to become co-counsel in other matters entirely apart from the pending case.


In the late 1960s, the ABA undertook the project of creating The Model Code of Professional Responsibility (“Model Code”) to replace the Canons.36 The Model Code’s treatment of conflicts of interest was far more detailed than that of the Canons. The move toward more pre-cise and easily enforced rules represented a shift away from the focus on lawyerly independence and moral autonomy animating the Canons. Its detailed rules were clearly intended to limit lawyers’ discretion in apply-ing broad ethical principles to concrete cases. Its ethos was the regula-tion of lawyers rather than the assurance of their independence.37

Ordinarily there is no impropriety in such a situation unless, of course, impro-per motives are involved. But if the association in the second matter has no reference or relation to the first matter, it is proper."); HENRY S. DRINKER, LEGAL ETHICS 107 (1953) (“Where there is no real conflict of interest, the Canon does not apply, as where two matters are wholly unrelated to one anoth-er.”). Most early American casebooks considering conflicts of interest either ignored the problem of concurrent representation of clients adverse in unrelated matters or discussed it briefly and not unfavorably. See, e.g., HERSCHEL WHITFIELD ARANT, CASES AND OTHER MATERIALS ON THE AMERICAN BAR AND ITS ETHICS 516-47 (1933) (omitting discussion of unrelated matters in its dis-cussion on conflicting interests); ELLIOT E. CHEATHAM, CASES AND OTHER MATERIALS ON THE LEGAL PROFESSION 175 (1938) (considering the question of adverse representation in unrelated matters and suggesting that a blanket rule may be too strict).

35 For example, dicta in In re Boone, 83 F. 944, 952 (C.C.D. Cal. 1897), a decision disbarring an attorney for using a former client’s confidential commu-nications in an action against the former client, stated:

Of course, it is conceded that an attorney may represent his client's adver-sary with perfect propriety whenever their interests are not hostile to each other. The test of inconsistency is not whether the attorney has ever ap-peared for the party against whom he now proposes to appear, but it is whether his accepting the new retainer will require him, in forwarding the interests of his new client, to do anything which will injuriously affect his former client in any matter in which he formerly represented him. 36 ABA MODEL CODE OF PROF’L RESPONSIBILITY (1969). 37 See Stephen Lubet, Civility: A Tale of Deconstruction and Constraint,

1992 WIS. L. REV. 157, 160 (“In 1908 the American Bar Association first promulgated its Canons of Professional Ethics, which continued the hortatory approach. Indeed, the 1908 Canons served more as a self-congratulatory com-pact than as a system of disciplinary regulation. Only in 1969 did the American Bar Association adopt the Model Code of Professional Responsibility, which


Notwithstanding this philosophical shift, the 1969 Model Code did not proscribe concurrent representation of clients adverse in unrelated matters. Like the Canons, the Model Code’s regulation of the representa-tion of conflicting interests was initially stated in terms that afforded each lawyer great latitude in assessing whether a disabling conflict existed: “A lawyer shall decline proffered employment if the exercise of his indepen-dent professional judgment in behalf of the client will be or is likely to be adversely affected by the acceptance of the proffered employment . . . .”38 Not until 1974 did the ABA amend the Model Code to prohibit concurrent representation of clients that would “be likely to involve [the lawyer] in representing differing interests.”39 The language of this amendment arguably, but only arguably, barred the door to concurrent representation of clients adverse in unrelated matters absent informed consent of both clients. But the amendment was presented without ex-planation as a “housekeeping amendment” and passed without debate at the February 1974 Midyear Meeting.40 Not until 1982 in Informal Opi-nion 1495 did the ABA explicitly interpret DR 5-105 to bar concurrent representation of clients adverse in unrelated matters.41

for the first time purported to set forth mandatory rules stating the minimum level of conduct below which no lawyer can fall without being subject to dis-cipline.”).

38 MODEL CODE OF PROF’L RESPONSIBILITY DR 5-105(A) (1969). 39 MODEL CODE OF PROF’L RESPONSIBILITY DR 5-105(A) (1974) (“A lawyer

shall decline proffered employment if the exercise of his independent profes-sional judgment in behalf of the client will be or is likely to be adversely af-fected by the acceptance of the proffered employment, or if it would be likely to involve him in representing differing interests.”) (emphasis added). New York has maintained this statement of the applicable standard in its non-uniform version of Model Rule 1.7(a). See N.Y. RULES OF PROF’L CONDUCT R. 1.7(a) cmt. 6 (2009).

40 Comments of Douglas A. Schafer on S7-45-02, Implementation of Stan-dards of Professional Conduct for Attorneys (Dec. 16, 2002), http://www.sec.gov/rules/proposed/s74502/daschafer121602.htm; see also ABA COMM. ON ETHICS AND PROF’L RESPONSIBILITY, HOUSE INFORMATIONAL REPORT 127 (1975).

41 ABA Comm. on Ethics and Prof’l Responsibility, Informal Op. 1495 (1982) (opining that a lawyer may not accept representation adverse to an existing client even in an unrelated matter).


Opinion 1495 found that unrelated matter representation is prohi-bited because the duty of loyalty demands that a lawyer not be influ-enced, “even subconsciously,” by the differing interests of another client.42 The Committee relied on three cases for this proposition: IBM v. Levin,43 Cinema 5,44 and Grievance Committee v. Rottner.45

In the first of these cases, Rottner, decided in 1964, the Connecticut Supreme Court noted that there was virtually no legal authority on the question whether concurrent representation of clients with adverse inter-ests in unrelated matters violated the rules of professional conduct. Im-plausibly, it suggested that the dearth of case law to support its position demonstrated that it was so “universally understood” to be unacceptable for an attorney to concurrently represent adverse parties in unrelated matters that the issue just didn’t come up.

46 This suggestion is belied by virtually all the pre-1964 authority that did exist.47

When a client engages the services of a lawyer in a given piece of business he is entitled to feel that, until that business is finally dis-posed of in some manner, he has the undivided loyalty of the one upon whom he looks as his advocate and his champion. If, as in this case, he is sued and his home attached by his own attorney, who is representing him in another matter, all feeling of loyalty is necessari-

It is also belied by the existence of ample authority for the truly universal proscription on con-current representation of adverse parties in the same matter. In any event, the Rottner court upheld the discipline imposed on the lawyers before it, finding their representation of an individual judgment creditor in a small ($200) collection matter precluded them from accepting an unrelated engagement from another suing that same individual judgment creditor for inflicting personal injuries in an unrelated tort case. The court reasoned that the judgment creditor client had the right to expect undivided loyalty of the lawyers representing him in the collection matter and that duty of loyalty precluded the lawyers from representing the plaintiff in the tort suit against him:

42 Id. 43 IBM Corp. v. Levin, 579 F.2d 271 (3d Cir. 1978). 44 Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976). 45 Grievance Comm. of the Bar v. Rottner, 203 A.2d 82 (Conn. 1964). 46 Id. at 85. 47 See supra notes 23-35 and accompanying text.


ly destroyed, and the profession is exposed to the charge that it is in-terested only in money.48

Thus the Rottner court subordinated both the lawyer’s professional independence and the tort victim’s right to retain counsel of his choice to the existing client’s right to demand complete loyalty from his lawyer, even in matters unrelated to the collection of the judgment he engaged the lawyer to pursue. Rottner appears to be the first case, indeed the first legal authority, extending lawyers’ duty of loyalty beyond loyal service with respect to the matter on which the lawyer has been engaged.

The second case, Cinema 5, relies on Rottner and applies its conflict rule to a corporate client.49

In Cinema 5, a lawyer was simultaneously a partner in a New York City law firm, and also a partner with other lawyers in a Buffalo firm—a precursor perhaps to the modern phenomenon of branch offices.

But Cinema 5, while extending the unrelated matter disqualification rule to the corporate context, was more cautious than Rottner in expressing the scope of the disqualification. Cinema 5 stopped short of per se disqualifying a lawyer or law firm from representing a party adverse to an existing client in an unrelated matter.

50

In the district court the disqualification motion focused on whether the two actions (and the two law firms) were sufficiently related to raise a conflict of interest. The district court found that the matters, both involv-ing the application of antitrust law to Cinerama’s market activities, were sufficiently related to raise a question regarding an adverse effect on the Buffalo lawyers’ ability to defend Cinerama in the Western District

The Buffalo firm was defending Cinerama against antitrust claims brought by third party theater operators in the Western District of New York, while the New York City firm was suing Cinerama in the Southern District of New York to prevent Cinerama’s acquisition of the second client, Cine-ma 5, asserting, among other things, that the acquisition would violate the antitrust laws. Cinerama sought to disqualify the New York City firm in the Southern District action.

48 Rottner, 203 A.2d at 84. 49 Cinema 5, 528 F.2d at 1387. 50 See infra notes 92-94 and accompanying text.


action and the protection of Cinerama’s privileged communications.51 In the Second Circuit, the New York City firm challenged that finding.52 Although the Second Circuit was careful not to cast aspersions upon the lawyers’ integrity,53

We do hold, however, that the "substantial relationship" test does not set a sufficiently high standard by which the necessity for disqualifi-cation should be determined. That test may properly be applied only where the representation of a former client has been terminated and the parameters of such relationship have been fixed. Where the rela-tionship is a continuing one, adverse representation is prima facie improper, and the attorney must be prepared to show, at the very least, that there will be no actual or apparent conflict in loyalties or diminution in the vigor of his representation.

it found that the district court did not abuse its dis-cretion in disqualifying the New York City firm in the Southern District action on the basis of the possible harms flowing from concurrent repre-sentation in what were at least not totally unrelated matters. In reaching this conclusion, however, the Second Circuit rejected the substantial relationship test embraced by the district court. It wrote:

54

Thus, while extending the reach of the unrelated matter conflict beyond a case involving an individual client, the Second Circuit in Cine-ma 5 fell short of adopting a per se prohibition against concurrent repre-sentation of adverse clients in unrelated matters.

51 Cinema 5, 528 F.2d at 1385 (“Judge Brieant found that there was suffi-cient relationship between the two law firms and the two controversies to inhi-bit future confidential communications between Cinerama and its attorneys and that disqualification was required to avoid even the appearance of professional impropriety.”).

52 Id. (“Appellant's counsel strongly dispute these findings. They say that they should not be disqualified unless the relationship between the controver-sies is substantial, and they contend there is nothing substantial in the relation-ship between an upstate New York conspiracy to deprive local theater operators of access to films and an attempted corporate take-over in New York City.”).

53 Id. at 1387 (“Nothing that we have heretofore said is intended as criticism of the character and professional integrity of Mr. Fleischmann and his partners. We are convinced that the dual representation came about inadvertently and unknowingly, and we are in complete accord with Judge Brieant's finding that there has been no actual wrongdoing.”).

54 Id. (emphasis in original).


Finally, in Levin,55 Rottner and Cinema 5 become the basis for a per se disqualification rule applicable to individual and corporate representa-tions alike. Levin involved a giant corporate client, IBM, engaging coun-sel on obviously and completely unrelated matters, and yet the court disqualified the lawyers from representing an adverse party in litigation at the corporate client’s (very belated) request. A law firm brought a civil antitrust suit against IBM. Independently, both before and during the litigation, the law firm also intermittently provided advice to IBM in-house lawyers on unrelated labor law issues. There was conflicting evidence about the law firm’s disclosures to, and oral waivers received from, IBM.56 No confidential information from the labor matters was relevant to the antitrust suit. Nevertheless, years later, when the concur-rent representation came to the attention of IBM, IBM successfully moved to disqualify the law firm in the antitrust suit. On appeal, the law firm defended primarily on the ground that IBM had suffered no preju-dice and the Model Code did not purport to require informed waivers in the case of concurrent representation in unrelated matters. The Third Circuit, however, refused to read DR 5-105(A)57

We think, however, that it is likely that some "adverse effect" on an attorney's exercise of his independent judgment on behalf of a client may result from the attorney's adversary posture toward that client in another legal matter. [Cinema 5]; [Rottner]; Advisory Committee on Professional Ethics of the Supreme Court of New Jersey, Opinion No. 282, 97 N.J.L.J. 362 (1974), and Opinion No. 301, 98 N.J.L.J. 209 (1975). For example, a possible effect on the quality of the at-torney's services on behalf of the client being sued may be a diminu-tion in the vigor of his representation of the client in the other matter.

as limited to concurrent representation in the same or related matters. While acknowledging that the rule as then drafted required a showing of “adverse effect” arising out of the conflict, the court reasoned:

55 IBM Corp. v. Levin, 579 F.2d 271 (3d Cir. 1978). 56 A member of the law firm testified that it had given notice of the adverse

representation over the phone to an IBM officer and received its consent; IBM denied it had consented. The Third Circuit found that, even accepting the firm’s version of events, such notice could not constitute the “full and adequate disclosure” required by the Model Code. Id. at 282.

57 See supra notes 38-39 and accompanying text.


[Cinema 5]. A serious effect on the attorney-client relationship may follow if the client discovers from a source other than the attorney that he is being sued in a different matter by the attorney. The fact that a deleterious result cannot be identified subsequently as having actually occurred does not refute the existence of a likelihood of its occurrence, depending upon the facts and circumstances, at the time the decision was made to represent the client without having ob-tained his consent.58

The fact that IBM itself was not only oblivious for four years to the fact that its in-house labor lawyers were regularly consulting with mem-bers of the law firm prosecuting the antitrust claim it was defending, but also could not identify any confidential information that had been com-promised or prejudice suffered, utterly belies the suggestion that the concurrent representations were likely to have an adverse effect on the law firm’s representation of IBM. Accordingly, Levin has been read as laying down a per se rule prohibiting lawyers from representing parties directly adverse to current clients in unrelated matters absent both clients’ informed consent, regardless of a lack of actual prejudice to the non-consenting client.

Ironically, Cinema 5, a seminal federal decision supporting Model Rule 1.7(a)(1), relied on two prominent ethics treatises that expressly approved of concurrent representation of clients adverse in unrelated matters.59

58 Levin, 579 F.2d at 280.

And Rottner, which began all the trouble in 1964, cited only a line of ethics opinions from the New York County Lawyer’s Associa-

59 The Cinema 5 court wrote in support of its holding: “This appears to be the opinion of the foremost writers in the field, see Wise, [Legal Ethics] at 272; Drinker, Legal Ethics 112, 116.” Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1386 (2d Cir. 1976).. But the treatises themselves seem unconcerned with adversity to clients in unrelated matters. WISE, supra note 34, at 272 ("The situation often arises where a lawyer has an opponent in a litigated matter who desires him to become co-counsel in other matters entirely apart from the pending case. Ordinarily there is no impropriety in such a situation unless, of course, improper motives are involved. But if the association in the second matter has no reference or relation to the first matter, it is proper."); DRINKER, supra note 34, at 107 (“Where there is no real conflict of interest, the Canon does not apply, as where two matters are wholly unrelated to one another.”).


tion,60 rooted in a hypothetical case involving a related matter conflict—two matters arising from the same nucleus of fact among an injured party, an insurer and its insured.61

Notwithstanding the novelty and weak reasoning of the three cases it relied upon, Informal Opinion 1495 quickly became the received wis-dom, and its rule was promptly incorporated into the 1983 Model Rules and supporting commentary, then in draft form.

62

60 Grievance Committee of the Bar v. Rottner, 203 A.2d 82, 84 (Conn. 1964); see also Opinion No. 350, in N.Y. COUNTY LAWYERS’ ASS’N, OPINIONS OF THE COMMITTEES ON PROFESSIONAL ETHICS (1980).

Unfortunately, the

61 Id. Dicta in Opinion No. 350, however, was subsequently cited as au-thority for unrelated matter proscriptions. Opinion No. 450, in N.Y. COUNTY LAWYERS’ ASS’N, OPINIONS OF THE COMMITTEES ON PROFESSIONAL ETHICS (1980), held that an attorney could not represent the executor of a deceased client in a wrongful death action against her daughter while at the same time acting as attorney for the daughter in the prosecution of an unrelated personal injury action against a third party because the “maintenance of public confi-dence in the Bar requires an attorney who has accepted representation of a client to decline, while representing such client, any employment from an adverse party in any matter even though wholly unrelated to the original retain-er.”

62 See supra text accompanying note 4; CAL. RULES PROF’L CONDUCT R. 3-310(C)(3) (2008). The 1992 amendments to the California Bar’s Rules of Professional Conduct expanded the realm of impermissible conflicts to include the representation of a client adverse to another client the lawyer represents in an unrelated matter:

(C) A member shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a mat-ter in which the interests of the clients actually conflict; or

(3) Represent a client in a matter and at the same time in a separate mat-ter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.

CAL. RULES PROF’L CONDUCT R. 3-310(C)(3) (1992). Before 1992, the relevant rule had read:

(D) A member shall not accept employment adverse to a client or former client where, by reason of the representation of the client or former client,


proscription of such concurrent employment in the Model Rules, coupled with the ABA’s great success in gaining official sanction for the Model Rules, ensured the quick and thoughtless propagation of the current rule throughout the nation.63

II. POLICY ANALYSIS

A rule may be accidental or “path-dependent”64 but still continue to serve some valid purpose. Unfortunately, the unrelated matter proscrip-tion does not. Even worse, it has spawned strategic behavior that com-promises other important professional values including access to counsel, lawyer mobility, and the interests of justice.65

the member has obtained confidential information material to the employ-ment except with the informed written consent of the client or former client.

Moreover, the rule has grown increasingly out of touch with the realities of practice given changes in the markets for legal services.

CAL. RULES PROF’L CONDUCT R. 3-310(D) (1989). The drafting history of Model Rule 1.7(a)(1) is described at length in Morgan, supra note 1, at 111-16.

63 By 1992, with some local variation, 35 states had adopted the Model Rules; 40 states by 1998; and 48 states by 2010. See STEPHEN GILLERS & ROY D. SIMON, REGULATION OF LAWYERS, STATUTES AND STANDARDS 3 (1992 ed.); STEPHEN GILLERS & ROY D. SIMON, REGULATION OF LAWYERS, STATUTES AND STANDARDS 3 (1998 ed.); STEPHEN GILLERS, ROY D. SIMON & ANDREW M. PERLMAN, REGULATION OF LAWYERS, STATUTES AND STANDARDS 3 (2010 ed.); see also Morgan, supra note 1, at 116-24 (describing cases decided in the immediate wake of the promulgation of MODEL RULE 1.7(a) that adopted or followed it).

64 See Mark J. Roe, Chaos and Evolution in Law and Economics, 109 HARV. L. REV. 641, 643-644 (1996) (describing path dependence in the following evocative way: “We are on a road and wonder why it winds and goes here instead of there, when a straight road would be a much easier drive. Today's road depends on what path was taken before. Decades ago, a fur trader cut a path through the woods, and the trader, bent on avoiding a wolves' den and other dangerous sites, took a winding indirect route. The fur trader's path— chosen to avoid danger spots—is the original condition for chaos theory; nei-ther fur trading nor wolf hunting is important today, but where we drive today is still affected by the original fur trader's decision.”).



A. PERVERSE CONSEQUENCES.

1. THE HOT POTATO RULE.

The discontinuity between the scope of the loyalty obligation owed present and former clients creates a perverse incentive. Conflicts can be “cured” by converting one of the clients (generally the less wealthy and more vulnerable one) into a former client by withdrawing from the repre-sentation. Dropping a client to “cure” a conflict is, at a minimum, un-seemly. Although the “hot potato rule” forbids the practice in many circumstances,66

66 John Leubsdorf, Conflicts of Interest: Slicing the Hot Potato Doctrine, 48 SAN DIEGO L. REV. 251 (2011), is the definitive work on the sources, scope, limitations, inconsistencies, and rationales of the “hot potato doctrine.” See also STEPHEN GILLERS, REGULATION OF THE LEGAL PROFESSION 183-84 (2009) (overview of the hot potato rule); Santacroce v. Neff, 134 F. Supp. 2d 366, 367 (D.N.J. 2001) (“The ‘Hot Potato Doctrine’ has evolved to prevent attorneys from dropping one client like a ‘hot potato’ to avoid a conflict with another, more remunerative client.”); In re Wingspread Corp., 152 B.R. 861, 864 (S.D.N.Y. 1993) (ruling against disqualification, but discussing rule); Hartford Accident and Indem. Co. v. RJR Nabisco, Inc., 721 F. Supp. 534, 540 (S.D.N.Y. 1989) (finding against disqualification, but discussing rule: "Clearly, no court should condone such conduct [dropping the disfavored client in at-tempt to avoid disqualification motion]; it smacks of disloyalty where loyalty is owed, and notwithstanding the apparent elimination of the conflict, there re-mains the possibility that former client confidences will be abused."); AmSouth Bank, N.A. v. Drummond Co., 589 So. 2d 715, 721-722 (Ala. 1991) (finding against disqualification, but discussing rule: "A law firm should not be allowed to abandon its absolute duty of loyalty to one of its clients so that it can benefit from a conflict of interest that it has created"). But see Ass’n of the Bar of the City of New York, Formal Op. 2005-05, 61 THE RECORD 102, 110 (2006) (“The ‘hot potato’ rule prohibiting the abandonment of a current client to take on a more lucrative representation is a salutary one, but it is not commanded by the text of the Code or the ABA Model Rules and should not apply to situations where its underlying rationale would not be served. The rule condemns affir-mative self-interested acts of disloyalty by an attorney to an existing client in order to switch allegiance to a new one. In circumstances where an attorney is representing two clients, and an unforeseeable conflict between the two arises during the ongoing representation of both, concerns about opportunistic attor-ney activity are less evident: by definition, the problem was ‘thrust upon’ the lawyer.”). The moniker “hot potato” apparently stems from Picker Int’l, Inc. v.

the issue can be mooted entirely by assimilating the


conflict standards for present and former clients. One of the adverse consequences of the heightened standard for concurrent conflict of inter-est is it creates a need for the hot potato rule, which then requires that that rule be interpreted, limited, monitored, and enforced.67

2. STRATEGIC DISQUALIFICATION.

The existence of the concurrent conflict rule empowers institutions that are heavy users of legal services over other litigants. These institu-tions, by employing dozens of law firms, can disqualify many thousands of lawyers from representing parties that are directly adverse to them. In certain submarkets where the number of qualified lawyers is small, stra-tegic disqualification can confer a significant advantage on institutional litigants over smaller adversaries.68

Varian Assoc., 670 F. Supp. 1363, 1365 (N.D. Ohio 1987), aff’d, 869 F.2d 578 (Fed.Cir. 1989) (“A firm may not drop a client like a hot potato, especially if it is in order to keep happy a far more lucrative client.”).

There is no question that corporate law departments are fully aware of the power manipulation of the conflict

67 See generally Leubsdorf, supra note 66, at 283 (“[P]robing deeper we find a large and mushy core, in which courts frequently let the [hot potato] doctrine remain unenforced by exercising their discretion to deny disqualification in the light of many more or less relevant factors. Here, the various problems and concerns that the doctrine was supposed to resolve reappear in the form of arguments for or against disqualification”).

68 See CHARLES W. WOLFRAM, MODERN LEGAL ETHICS 318 (1986) (“Broad conflict rules create the danger that they will be manipulated by giant corporate clients to create conflicts of interest among all of the best available lawyers, thus blockading legal talent from potential adversaries. . . . Overly restrictive conflict rules [in small communities] might mean that only the most substantial of small community clients would have effective freedom in choosing coun-sel.”); Manning v. Waring, 849 F.2d 222, 225 (6th Cir. 1988) (“[L]awyers seem to be moving more freely from one association to another, and law firm mer-gers have become commonplace. At the same time that the potential for con-flicts of interest has increased as the result of these phenomena, the availability of competent legal specialists has been concentrated under fewer roofs.”); HAZARD & DONDI, supra note 3, at 180 (describing the advantage enjoyed by institutional litigants in niche markets where there are few highly-qualified attorneys, because conflict rules can turn representation in these markets into a “first come, first served” game).


rules gives them and strategically refuse to waive conflicts to deny ad-verse parties their choice of counsel.69

3. LAWYER MOBILITY.

The labor market for lawyers has evolved long past the 1960s model of lifetime employment with a single firm. In that bygone era, lawyers commonly became partners in the firms they joined upon graduating from law school, and lateral partner moves among law firms were rare.70 Now lawyers’ livelihoods depend on their ability to market themselves in a highly competitive labor market where lateral changes in mid-career are the norm.71

69Manning, 849 F.2d at 224-225 (“Unquestionably, the ability to deny one's opponent the services of capable counsel, is a potent weapon.”); Mark F. An-derson, Motions to Disqualify Opposing Counsel, 30 WASHBURN L.J. 238, 239 (1991) (noting increased frequency of tactical disqualification motions); John Lande, Using Dispute System Design Methods to Promote Good-Faith Partici-pation in Court-Connected Mediation Programs, 50 UCLA L. REV. 69, 122 (2002) (“In recent decades, lawyers have used any available litigation proce-dure to pressure the other side into a favorable settlement. These ‘Rambo tactics’ include motions to disqualify attorneys for conflicts of interest . . . .”) (footnotes omitted); Linda Ann Winslow, Comment,

The rule burdens this labor market for lawyers. Other-

Federal Courts and Attor-ney Disqualification Motions: A Realistic Approach to Conflicts of Interest, 62 WASH. L. REV. 863, 878 (1987) (“Denial of third party standing would limit unmerited strategic disqualification motions without permitting violations by attorneys to go unchecked.”). But cf. Ronald D. Rotunda, Resolving Client Conflicts by Hiring “Conflicts Counsel,” 62 HASTINGS L.J. 677, 678 n.2 (2011) (arguing that all trial motions are strategic, and judges ought to rule on the merits of attorney disqualification motions without regard to the trial strategy of the movant).

70 See MILTON C. REGAN, JR., EAT WHAT YOU KILL 20-42 (2004) (describing the growth of large law firms, and the development in the early 20th century of the “Cravath model” and the subsequent evolution in law firm culture from “nobody starves” to “eat what you kill”); Robert W. Gordon, The Independence of Lawyers, 68 B.U. L. REV. 1, 60 (1988) (noting changes in law firm structure in the 1980s has reduced the prospects of partnership for young lawyers em-ployed as associates in large law firms).

71 See Matthew Lenhardt, Ethical Screens in the Modern Age, 50 SANTA CLARA L. REV. 1345, 1345-46 (2010) (arguing that lateral movement of attor-neys between firms is on the rise, especially since the financial crisis of 2009


http://web2.westlaw.com/find/default.wl?referencepositiontype=S&serialnum=0101495388&referenceposition=878&rp=%2ffind%2fdefault.wl&sv=Split&rs=WLW11.04&db=1281&tf=-1&findtype=Y&fn=_top&mt=208&vr=2.0&pbc=FA036A4F&tc=-1&ordoc=0361294955�



wise efficient lateral moves may be precluded because of unrelated mat-ter conflicts.

4. OUTSOURCING.

The market for legal services now is also rapidly evolving. Law firms now “outsource” many of the more routinized elements of even very sophisticated litigation and transactional law practices to “contract attorneys” who are neither partners nor regular full-time employees of the law firm furnishing their services to its clients, and outside vendors employing legally trained persons residing in foreign jurisdictions, most notably India.72 These new arrangements promise to deliver significant cost savings and efficiencies to both law firms and their clients.73

saw many firms downsizing and forced huge numbers of laid-off attorneys back into the job market); Leigh Jones, ABA May Amend Ethics Rules on Conflicts, LAW.COM (Feb. 2, 2009), http://www.law.com/jsp/article.jsp?id=1202427915603 (noting that the lateral moves of 2,423 partners in or out of the two hundred highest-revenue American law firms in 2007, up 12.5 percent from the prior year); Jon Lindsey & Chuck Fanning, After the Handshake, THE AM. LAWYER, Feb. 1, 2007, at S8 (“The dramatic increase in lateral movement of partners between law firms is one of the most profound changes in the legal profession in the past 20 years.”).

Be-cause it is unclear the extent to which conflicts of “outsource” lawyers are imputed to the lawyers engaging them, the operation of the concur-rent client conflict rule in this arena is uncertain. Both the rule and the

72 RICHARD SUSSKIND, THE END OF LAWYERS 42-52 (2008) (describing the “commoditization” of legal services through structural changes in the industry, including outsourcing, relocating, computerizing, and rendering services through non-attorneys or contract attorneys); Jayanth K. Krishnan, Outsourcing and the Globalizing Legal Profession, 48 WM. & MARY L. REV. 2189, 2201-06 (2006) (describing the drastically reduced cost of legal services in India and the increased willingness of firms and their clients to rely on these foreign work-ers); Milton C. Regan, Jr. & Palmer T. Heenan, Supply Chains and Porous Boundaries: The Disaggregation of Legal Services, 78 FORDHAM L. REV. 2137, 2139 (2010) (noting that corporate clients are increasingly pressing law firms toward more efficient and less costly provision of legal services, leading to increased delegation of legal work to non-employee “contract attorneys” and outsourcing to foreign, particularly Indian, lawyers).

73 SUSSKIND, supra note 72, at 33-36 (discussing client demands for fixed fees and efficient production of legal services, which in turn increase pressure on law firms to cut costs and become more efficient).


uncertainty impede the full development of these alternative ways of providing legal services.

5. ACCESS TO LEGAL SERVICES.

By expanding the number of disqualified lawyers to include all those who represent the adverse party in any capacity, and all lawyers who practice in the same firms as those lawyers,74 the rule can operate to seriously limit the adverse party’s access to counsel particularly in small niche markets (whether defined by geography or specialty) dominated by a relatively few elite practitioners.75 Moreover, potential “hot potatoes,” small or pro bono clients whose interests in unrelated matters are not unlikely to be directly adverse to those of powerful and wealthy institu-tions,76

6. ADVANCE WAIVERS.

may find it very difficult to retain counsel. Although the firm is not permitted to drop the hot potato, nothing requires it to pick it up in the first place, and many firms are rationally and understandably wary of doing so.

Given the anomalous and highly burdensome nature of the concur-rent conflicts rule, the rise of a flourishing practice of lawyers demanding advance waivers of presently unknown future conflicts in unrelated mat-ters is unsurprising.77 Although case authority supporting the practice is sparse, the general consensus of the commentators and the bar seems to be that such waivers are binding on clients, at least sophisticated clients, that execute them.78


But while anyone who supports (as I do) repealing

75 See supra note 68 and accompanying text. 76 See supra note 66 and accompanying text. 77 See Lerner, supra note 1, at 972-73 (advocating enforcement of prospec-

tive waivers to protect clients’ choice of counsel). Compare such waivers with the Australian courts’ permissive approach to conflicts of interests, which has led clients to seek “loyalty agreements” from their solicitors. ROSS, supra note 16, at 422.

78 GILLERS, supra note 66, at 218 (“Almost any current client conflict and any former client conflict can be waived with informed client consent . . . .”); Lerner, supra note 1, at 973 (arguing that sophisticated clients and their counsel are bound by conflicts waivers they execute). The ABA, citing the increase in


the concurrent conflict rule naturally supports enforcement of such waiv-ers, the nature and amount of disclosure necessary to make the waiver informed create unnecessary uncertainty. In the words of the Restate-ment (Third) of the Law Governing Lawyers: “[i]nformed consent re-quires that the client . . . have reasonably adequate information about the material risks” involved in accepting representation.79 Since the object of waiver is to permit the lawyer to be adverse to the consenting party in an unrelated matter, it is hard to fathom what “adequate information” about the material risks involved would entail. Indeed, so long as the waiver language is unambiguous, a consenting party should have all the information reasonably needed to assess the material risks involved: namely, that the lawyer being retained may represent a party adverse to the client in another matter. Nevertheless, this structure, a general rule subject to waiver following disclosure of “reasonably adequate informa-tion about the material risks,” may invite fruitless arguments about the scope of disclosure necessary to support the prospective waiver of future conflicts in unrelated matters.80

B. CHANGES IN THE LEGAL MARKETPLACE AGGRAVATE THESE POLICY CONCERNS.

In 1963, just before the Connecticut Supreme Court decided Rottner, Shearman & Sterling of New York City, the largest law firm in the Unit-

size of firms and corporate clients and the complexity of the legal matters they manage, recognized the importance of conflicts waivers and stated that prospec-tive waivers will usually be binding. See ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 372 (1993). The New York authorities discuss the practice of advance waivers in the commentary to N.Y. RULES OF PROF’L CONDUCT R. 1.7 cmts. 22, 22A (2009). But cf. Fox, supra note 1, at 704 (ques-tioning the validity of advance waivers lawyers receive from clients).

79 RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 122 (2000). Comment (c)(i) adds: “the information normally should address the interest giving rise to the conflict; contingent, optional, and tactical considerations and alternatives that would be foreclosed; the effect upon confidential information of the client and the consequences of a future withdrawal of consent by any client . . . .” Id. at § 122 cmt. (c)(i).

80 Compare Lerner, supra note 1, at 996-98 (lauding the ABA’s effort to simplify the standard of disclosure required to solicit informed consent of a client), with Fox, supra note 1, at 717-19.


ed States, employed 135 lawyers.81 In Chicago and Los Angeles, no law firm employed more than 85 lawyers.82 Cummings & Lockwood, the largest firm in Connecticut, had 30 lawyers.83 None of these firms had significant branch office networks.84 Moreover, even the largest institu-tional clients (which themselves were much smaller than they are to-day)85 relied almost exclusively on a single outside law firm.86

81 II MARTINDALE-HUBBELL LAW DIRECTORY 4699-4702 (1964).

82 I MARTINDALE-HUBBELL LAW DIRECTORY 482-88 (1964) (O’Melveny & Myers: 84 lawyers); id. at 2022-25 (Kirkland, Ellis, Hodson, Chaffetz & Mas-ters: 85 lawyers).

83 Id. at 1088-90. 84 Shearman & Sterling had just opened its first branch office in Paris,

France in 1963, staffed with two American lawyers. II MARTINDALE-HUBBELL LAW DIRECTORY 4701 (1964). In 1965, O’Melveny & Myers also had an associate stationed in Paris. I MARTINDALE-HUBBELL LAW DIRECTORY 561B, 567B (1966).

85 As the population and economy have grown over the last thirty years, the aggregate size of financial and other markets has more than doubled in real terms. After accounting for inflation, U.S. gross domestic product grew from $3.6 trillion in 1965, to $5.8 trillion in 1980, to $13.2 trillion in 2010. Econom-ic Report of the President, BUREAU OF ECON. ANALYSIS, http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1 (last visited January 30, 2012) (all figures are stated in 2005 dollars). Moreover, in most markets, because of increasing concentration, that larger pie is also cut into far fewer, and therefore much larger, pieces today. For example, in 1980, the ten largest banks in the United States held 21.5 percent of the nation’s banking assets. See FED. RES., ANNUAL STATISTICAL DIGEST 185 (1980), available at http://fraser.stlouisfed.org/publications/astatdig/page/1283/109/download/1283.pdf. In 2011, the ten largest banks were reported to hold an astonishing 77 percent of the nation’s banking assets. Cady North, Too Big to Fail?, BLOOMBERG GOV’T, March 18, 2011, http://about.bgov.com/2011/03/18/too-big-to-fail/; see also H.P. Janicki & E.S. Prescott, Changes in the Size Distribu-tion of US Banks: 1960-2005, 92 FED. RES. BANK RICHMOND ECON. Q. 291, 293 (2006) (showing share of U.S. banking assets held by ten largest U.S. commer-cial banks increasing from 21 percent to almost 60 percent from 1960 to 2005).

86 REGAN, supra note 70, at 24 (noting that before the mid-1980s institutional clients were generally highly satisfied with “their” law firm, and rarely moni-tored the cost of their legal services or switched to different firms, even when their preferred attorneys changed firms).


By 1978, when Levin was decided, Shearman & Sterling, still the largest firm in New York, had 244 lawyers and no firm in Los Angeles or Chicago had as many as 200 lawyers.87 A few firms had one or two branch offices, generally a small pied la terre in Europe or Washington DC, or in the headquarters city of a particularly important institutional client.88 Stable lawyer-institutional client relationships, while perhaps under stress, largely remained in the traditional model.89 Outsourcing of legal work by law firms (as opposed to traditional referral or co-counsel relationships) was unknown, and lateral partner movement among firms rare.90

The legal marketplace of 2012 is vastly different.

91 Many law firms today employ hundreds or thousands of lawyers located in offices throughout the world, many of whom barely (if at all) know one another, engaged in all sorts of diverse practices. In 2011, the largest law firm in the American Lawyer’s AMLAW 100 was Baker & McKenzie, with $2.27 billion in annual revenue and 3,800 attorneys practicing in seventy offices located in forty-two countries on every continent save Antarcti-ca.92

87 National Law Firm Survey, NAT’L L. J., Sept. 18, 1978, at 14-17.

The smallest AMLAW 100 firm was McKenna Long & Aldridge,

88 O’Melveny & Myers, for example, opened its first office outside Los An-geles in Washington, DC in 1976. In 1978, eleven lawyers were assigned to that office including three non-resident partners from Los Angeles. II MARTINDALE-HUBBELL LAW DIRECTORY 516B-517B (1979).

89 REGAN, supra note 70, at 31-37 (describing Wall Street law practice circa late 1970s).

90 See id. at 24 (stating that in the mid-twentieth century, law firms adhered strictly to the unwritten rule preventing firms from recruiting other firms’ lawyers); James W. Jones, Foreword, Symposium on Lawyer and Law Firm Disputes: Problems and Prevention, 43 TEX. TECH L. REV. 445, 446 (2011) (“In 1970, . . . lawyers and their law firms typically ‘mated for life.’ . . . Lateral movement of lawyers (especially partners) from one firm to another was rare and regarded as slightly scandalous when it occurred.”).

91 For a comprehensive, if slightly dated, empirical overview, see CLARA N. CARSON, THE LAWYER STATISTICAL REPORT: THE U.S. LEGAL PROFESSION IN 2000 (2004).

92 The AMLAW 100 2011, THE AM. LAWYER, May 2011, at 121-24; see also BAKER & MCKENZIE, http://www.bakermckenzie.com/firmfacts/ (last visited Jan. 11, 2012).


with $276.5 million in annual revenue and 425 lawyers located in nine United States offices and one in Europe.93 At No. 31 on the list, still-proud Shearman & Sterling is now far from being the largest firm in New York (indeed both Kirkland and O’Melveny are now larger), but in 2011, it earned $737 million in revenue and employed 796 lawyers in twenty offices in North America, Europe, Asia, and South America.94 Such firms naturally represent thousands of clients at any one time. Lawyers at all levels from senior partner to junior partner to associate change firms regularly.95 The anomaly today is the lawyer who, having joined a firm as an associate upon graduation from law school and become a partner in that firm, retires from that same firm forty or fifty years later.96 Huge international firms with diverse practices also commonly merge.97

Moreover, the stability and exclusivity that characterized most law-yer-institutional client relationships in the past

98

93 The AMLAW 100, THE AM. LAWYER, May 2011, at 121-24; see also MCKENNA LONG & ALDRIDGE, http://www.mckennalong.com/about-locations.html (last visited Jan. 12, 2012).

has been greatly eroded.

94 The AMLAW 100, THE AM. LAWYER, May 2011, at 121-24; see also SHEARMAN & STERLING, http://www.shearman.com/offices/ (last visited Jan. 12, 2012).

95 AM. BAR FOUND., AFTER THE JD II: SECOND RESULTS FROM A NATIONAL STUDY OF LEGAL CAREERS 54-56 (2009) (discussing lawyer mobility, which begins very early in lawyers’ careers; over the four year course of the survey, 62.2% of respondents had switched jobs).

96 Id. 97 A recent example is the May 2010 merger of Washington-based Hogan &

Hartson, LLP and London-based Lovells to form Hogan Lovells, with 2,363 combined lawyers in forty-three offices stretching across the alphabet from Abu Dhabi to Zagreb. See Drew Combs, Side by Side, THE AM. LAWYER, May 2011, at 98-102 (describing the firms’ merger and subsequent consolidation). There is some debate over when conflicts of interest survive law firm mergers to prevent the merged firm’s representation of its predecessors’ clients, and what can be done to avoid these conflicts. See, e.g., Jay M. Levin & Jennifer A. Ziznewski, Law Firm and Client Mergers: How to Comply with Ethical Re-quirements During a Transition, 40 A.B.A. WINTER BRIEF 24, 25-30 (2011).

98 See, e.g., REGAN, supra note 70, at 24 (describing the tendency of large institutional clients before the mid-1980s to use a single law firm for all of its


In-house legal staffs have increased in size and status,99 and the practice in engaging outside counsel now is to “spread it around,” engaging the best lawyers for the particular matter based on a network of relationships with individual and often mobile partners at multiple firms.100 Institu-tional clients today at any one moment may be actively working with dozens of law firms on a large variety of matters. Every large institu-tional client is highly likely to find itself adverse in some context or other to other clients of one or another of the major law firms that it uses. As the law firms and their clients have grown, and as the market for legal services has become more specialized and fragmented, the traditional rules imputing conflicts across lawyers practicing within a firm101 have become increasingly burdensome and divorced from reality.102

outside counsel needs over long periods even as the individual lawyers assigned to their matters changed over time).

99 See Susan Hackett, Inside Out: An Examination of Demographic Trends in the In-House Profession, 44 ARIZ. L. REV. 609, 609-15 (2002) (noting changes in in-house counsel demography, and arguing that although the ratio of in-house counsel to the size of the bar has remained steady at approximately 10% since the 1980s, their role in the corporations has grown increasingly critical and managerial); Sung Hui Kim, The Banality of Fraud: Re-Situating the Inside Counsel as Gatekeeper, 74 FORDHAM L. REV. 983, 998-1001 (2005) (discussing the “increasing domination” of inside counsel, who often sit at the very top of corporate structures); Steven L. Schwarcz, To Make or to Buy: In-House Lawyering and Value Creation, 33 IOWA J. CORP. L. 497, 527-29 (2008) (arguing that in-house staffs of lawyers are growing and may continue to grow, as companies begin to regard in-house legal work as of equal quality and often greater value as outside work).

100 Beardslee, Destefano, Coates, Nanda & Wilkins, Hiring Teams from Ri-vals: Theory and Evidence on the Evolving Relationship in the Corporate Legal Market, at 11 (Feb. 21, 2010), available at http://papers.ssrn. com/sol3/papers.cfm?abstract id=1442066 (last visited Jan. 12, 2012) (large corporations tend to seek out the most skilled lawyers without regard for their firm affiliation); Shapiro, supra note 9, at 110.

101 Model Rule 1.10 provides: Imputation Of Conflicts Of Interest: General Rule (a) While lawyers are associated in a firm, none of them shall knowingly

represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless


(1) the prohibition is based on a personal interest of the disqualified law-yer and does not present a significant risk of materially limiting the repre-sentation of the client by the remaining lawyers in the firm; or (2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of the disqualified lawyer’s association with a prior firm, and

(i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; (ii) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening proce-dures employed; a statement of the firm's and of the screened lawyer's compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures; and (iii) certifications of compliance with these Rules and with the screen-ing procedures are provided to the former client by the screened law-yer and by a partner of the firm, at reasonable intervals upon the for-mer client's written request and upon termination of the screening procedures.

(b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially ad-verse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:

(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and (2) any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(c) that is material to the matter.

(c) A disqualification prescribed by this rule may be waived by the affected client under the conditions stated in Rule 1.7.

(d) The disqualification of lawyers associated in a firm with former or cur-rent government lawyers is governed by Rule 1.11. MODEL RULES OF PROF’L CONDUCT R. 1.11 (2009). For the most recent au-thoritative judicial discussion of California’s imputation rules, see Kirk v. First Am. Title Ins. Co., 108 Cal. Rptr. 3d 620, 631-38 , review denied, 2010 Cal. LEXIS 5771 (2010).

102 Id. at 638-39. See also GILLERS, supra note 66, at 144 (describing how imputation rules “exponentially magnif[y]” conflicts of interest given the struc-ture of modern law practice); Christopher J. Dunnigan, The Art Formerly


C. DEFENSES OF THE RULE.

Absent informed consent, and, in some circumstances, perhaps even with informed consent, it is axiomatic that a lawyer may not represent adverse parties in the same matter,103 or in substantially related mat-ters,104 take on any representation if there is a significant risk that confi-dential information may be used against a client or disclosed to an adver-sary,105 or take on a representation in which his efforts may be materially limited by personal or professional obligations to a third party.106 These prohibitions operate equally in favor of present and former clients and are essential features of the attorney-client relationship.107

Known as the Chinese Wall: Screening in Law Firms: Why, When, Where, and How, 11 GEO. J. LEGAL ETHICS 291, 294 (1998) (describing a “new breed of temporary lawyer” for whom conflict rules operate capriciously).

103 See supra note 5. 104 See WOLFRAM, supra note 68, at 350-51 (showing that issues surrounding

conflicts of interest, including confidentiality and client expectations of loyalty, are just as pronounced in related litigation as in the same matter); MODEL RULES OF PROF’L CONDUCT R. 1.7, 1.9 (2009).

105 See MODEL RULES OF PROF’L CONDUCT R. 1.6 (2009); CAL. BUS. & PROF’L. CODE § 6068(e)(1) (West 2008) (an attorney’s duty is to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client”); see also WOLFRAM, supra note 67, at 317 (“Any representation or other action of a lawyer that gives rise to a substantial threat that a current or former client’s confidences may be revealed or employed against the interests of the client entails a potential threat to the principle of confidentiality and thus can raise a serious conflict of interest problem.”); MONROE H. FREEDMAN & ABBE SMITH, UNDERSTANDING LAWYERS’ ETHICS 275-76 (3d ed. 2004) (arguing that modern conflict of interest rules are not framed in response to actual harm, but prophylactically against perceived risks, such as breach of confidentiality).

106 See MODEL RULES OF PROF’L CONDUCT R. 1.7(a)(2) (2009); FREEDMAN & SMITH, supra note 105, at 273 (giving examples of conflicts arising from law-yers’ obligations to non-client third parties); see also In re American Printers & Lithographers, Inc., 148 B.R. 862, 865-66 (Bankr. N.D. Ill. 1992) (disqualify-ing debtor’s counsel in light of its ongoing representation of the primary se-cured creditor in unrelated matters, and the importance of that relationship to the law firm).

107 See MODEL RULES OF PROF’L CONDUCT R. 1.6, 1.7, 1.9 (2009); FREEDMAN & SMITH, supra note 105, at 294-95 (describing the similarities


I also take as axiomatic that the client is in control of any current re-presentation,108 it may discharge its counsel at will (subject to only very limited exceptions),109 and if counsel cannot in good conscience follow client directives his proper recourse is to withdraw.110

among current- and former-client conflict issues); WOLFRAM, supra note 68, at 147-48 (noting fiduciary nature of the lawyer-client relationship).

Certainly a client may, without showing any cause, discharge a lawyer who accepts an adverse representation in an unrelated matter, or choose not to retain that lawyer in the future. And certainly many lawyers, fearful that that un-questioned right may be exercised, will not, as a business matter, take on representations adverse to the interests of (or otherwise obnoxious to)

108 See MODEL RULES OF PROF’L CONDUCT R. 1.2(a) (2009) (“[A] lawyer shall abide by a client's decisions concerning the objectives of representation and . . . shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be en-tered, whether to waive jury trial and whether the client will testify.”); HAZARD & DONDI, supra note 3, at 178-79.

109 See MODEL RULES OF PROF’L CONDUCT R. 1.16(a)(3) & cmt. 4 (2009) (“A client has a right to discharge a lawyer at any time, with or without cause . . . .”); see also WOLFRAM, supra note 68, at 545-46 (discussing rules governing discharge of counsel by clients: “It is now uniformly recognized that the client-lawyer contract is terminable at will by the client.”). However, in litigated matters, presiding judges may prohibit discharge of counsel where it would be unduly disruptive. See, e.g., United States ex rel. Maldonado v. Denno, 348 F.2d 12, 15 (2d Cir. 1965).

110 See WOLFRAM, supra note 68, at 551-52 (rules governing mandatory withdrawal of counsel). In the context of counsel for organizational clients, “report up” and “report out” rules define lawyers’ ethical responsibility to report illegal or unethical behavior occurring within the organization. See generally GILLERS, supra note 66, at 291-96; Sung Hui Kim, Gatekeepers Inside Out, 21 GEO. J. LEGAL ETHICS 411 (2008); cf. Sung Hui Kim, Naked Self-Interest? Why the Legal Profession Resists Gatekeeping, 63 FLA. L. REV. 129 (2011) (describing the economic and psychological motivations that define the allegiance of in-house lawyers to their corporations, and arguing that in-house lawyers are becoming increasingly unwilling to act as gatekeepers to check corporate behavior).


important or powerful clients, or former clients, or even persons that they might wish would become clients in the future.111

But per se disqualification in unrelated matters is not logically im-plied by any of these axioms. The concurrent conflict rule grants the current client a right not only to control the representation on which he has engaged the lawyer, but also the right to control unrelated activities of the lawyers—activities that by hypothesis do not threaten to materially limit the lawyer in pursuing the client’s objectives in the matter for which the lawyer has been retained, or to compromise any client confidence. Five rationales have been put forward in defense of this expanded duty of loyalty.

1. Protecting Confidentiality.112

2. The Public Image of the Bar.

Representing adverse interests in unrelated matters may compromise privileged and confidential information.

113

111 “Issue” or “positional” conflicts are generally dealt with on this level. The rules of professional responsibility generally do not prohibit a lawyer from advocating different positions for different clients in different cases in which their interests are not directly adverse. See supra note 33. Nevertheless, law firms whose practices depend heavily on institutional clients with a powerful economic interest on one or another side of a contestable legal issue, sometimes decline representations that would require them to argue against those clients’ economic interest even if the clients themselves are not parties to the litigation.

The practice of accepting di-rectly adverse representations in unrelated matters casts the legal

112 See, e.g., MODEL RULES OF PROF’L CONDUCT R. 1.7 cmts. 11, 30-31 (2009); FREEDMAN & SMITH, supra note 105, at 275-76 (discussing preventa-tive rationale); Fox, supra note 1, at 724; Zimmer, supra note 1, at 379 (“The strength of the confidential relationship [between lawyers and clients] is the basis of our legal system”).

113 See, e.g., Grievance Committee of the Bar v. Rottner, 203 A.2d 82, 84 (Conn. 1964) (where a client is sued by his own attorney, “the profession is exposed to the charge that it is interested only in money”); ABA Comm. on Ethics and Prof’l Responsibility, Informal Op. 1495 (1982); Opinion No. 350, supra note 60 (“[M]aintenance of public confidence in the Bar requires an attorney who has accepted representation of a client to decline, while representing such client, any employment from an adverse party”); Zimmer, supra note 1, at 382-84 (“[T]he appearance of impropriety must be evaluated


profession in a negative light. It suggests lawyers will do any-thing for a buck.

3. Maintaining Integrity of the Trial Process—Cross-Examination.114

4. Ensuring Zeal.

The trial process demands direct confrontation, in particular public cross-examination of witnesses. Cross-examining a current client is distasteful, awkward and the cur-rent lawyer-client relationship between the witness and the ex-aminer may either give the examiner an unfair advantage in ex-posing bias or equivocation, or give the examiner an incentive to “go easy” and compromise his duties to the other client.

115

5. Betrayal.

Lawyers will “take a dive” when facing a cur-rent client in litigation—that is, fail to prosecute claims or de-fenses with the requisite vigor.

116

from the perspective of the public, not the attorney, and . . . a failure to preserve both the reality and the appearance of propriety will injure the profession.”).

Clients reasonably expect personal loyalty from their attorneys, and representing an adverse party constitutes a betrayal that may poison the attorney-client relationship.

114 See, e.g., MODEL RULES OF PROF’L CONDUCT R. 1.7 cmt. 6 (2009); Zim-mer, supra note 1, at 374-75 (arguing that attorneys may sacrifice “formulation of a sound trial strategy” when simultaneously representing adverse parties, even in unrelated matters).

115 See, e.g., IBM Corp. v. Levin, 579 F.2d 271, 280 (3d Cir. 1978) (“[A] possible effect on the quality of the attorney’s services on behalf of the client being sued may be a diminution in the vigor of his representation of the client in the other matter.”); Zimmer, supra note 1, at 374-75.

116 See, e.g., Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1386 (2d Cir. 1976); Rottner, 203 A.2d at 84 (“[The client] has the undivided loyalty of the one upon whom he looks as his advocate and champion.”); Jeffry v. Pounds, 136 Cal. Rptr. 373, 376-77 (Ct. App. 1977) (“A lay client is likely to doubt the loyalty of a lawyer who undertakes to oppose him in an unrelated matter. . . . [The b]asis of the condemnation is the client’s loss of confidence, not the attor-ney’s inner conflicts.”); MODEL RULES OF PROF’L CONDUCT R. 1.7 cmt. 6 (2009); ABA Comm. on Ethics and Prof’l Responsibility, Informal Op. 1495 (1982); Fox, supra note 1, at 718-22 (discussing the bonds of trust and loyalty felt between lawyers and even large corporate clients); Zimmer, supra note 1, at 378-79 (loss of trust and confidence irreparably destroys attorney-client rela-tionships).


None of these considerations justifies a per se rule prohibiting con-current conflicts in unrelated matters based on direct adversity.

Protecting confidentiality is a makeweight. The former client has the same interest in protecting its client confidences as the current client: Both are equally sacrosanct. All agree that confidences of both present and former clients must be protected. All agree that, in the case of for-mer clients, it is at least possible to identify unrelated matters in which such confidences are not in such jeopardy that a per se rule is justified. There is no reason the same analysis does not apply with equal force in the case of current clients.

Enhancing the public image of the bar is also a makeweight. No ex-planation is offered as to why those who practice law, among all occupa-tions, must be specially protected from any suggestion that they can sell their services (rendered lawfully, ethically, and competently) in the mar-ketplace to whomsoever they please, including the highest bidder. Noth-ing in current mores is opposed to such market behavior by even the most elite lawyers, and it is difficult to imagine that the public expects (or that the bar promises to deliver) anything different.

The third set of justifications cannot be dismissed so easily. Cross-examination is certainly confrontational, and its scope can be wide-ranging, particularly in impeachment. A present attorney-client relation-ship between cross-examiner and witness can certainly affect the inter-personal dynamic between them and skew the process. Any lawyer would have to think long and hard about accepting any assignment that might require publicly cross-examining a material witness with whom the lawyer had an existing client relationship, albeit in unrelated matters and without access to relevant confidential information. Any judge would be rightly skeptical of a lawyer who purported to be able to navi-gate those shoals. Rottner involved an individual client who, as the putative tortfeasor, was certainly high on the list of witnesses to be ex-amined by the same individual lawyers representing him in the otherwise unrelated matter.117

But institutions are not witnesses; people are. And law firms don’t cross-examine witnesses; lawyers do. It is entirely conceivable, indeed it

One suspects that much of what was bothering the Connecticut Supreme Court and the local bar authorities in that case stemmed from these sorts of concerns.

117 Rottner, 203 A.2d 82.


is a commonplace, that institutional clients may engage and direct law-yers in unrelated matters through individuals that have nothing to do with the litigation at issue; and those individuals involved on the client side of the unrelated matter have no reasonable prospect of being called as ma-terial witnesses in the litigation. And in today’s heavily specialized market for legal services, it is highly unlikely that the trial lawyer doing the cross-examining will have anything to do with rendering advice or representing the institutional client in the unrelated matter.118

Ensuring that no material limitation operates on the trial lawyer and no unfairness occurs with respect to the witness is important. Lawyers must undertake this analysis now with former clients. They are capable of doing so with current clients as well—indeed, one suspects they will be even more scrupulous of current than former clients in determining the bounds of propriety in this area. The problem is real, but it is likely to occur in only a small subset of cases. It can be managed without resort-ing to a per se rule that prohibits a wide assortment of representations where the problem clearly does not exist.

The final two justifications for the rule hypothesize diametrically opposed concerns about the client harm raised by concurrent conflicts. Concern that zeal is compromised by concurrent representation reflects a concern for the interest in competent representation of the client represented in the matter in which the clients’ interests are directly ad-verse. The betrayal concern focuses on the feelings of the original client who is being sued in the unrelated matter.

The zeal concern is greatly overblown. The client who engages a lawyer in the subsequent litigation is almost never the party asserting disabling conflict, and generally the first to waive the conflict. Given

118 Even solo practitioners today are unlikely at once to provide non-litigation advice to institutional clients and serve as trial counsel against that institution. Given today’s highly specialized market for legal services, the concurrent conflict rule is of little moment practically for solo practitioners. In the rare case in which the unrelated matter conflict occurs for such a lawyer, its existence may in fact materially limit the lawyer’s ability to effectively represent his client. For large firms, however, the unrelated matter conflict is a commonplace, not a rarity. As noted in the text, however, if the lawyers are practicing in large firms, the existence of that “conflict” will not generally operate to materially limit the individual lawyers’ ability to effectively represent their respective clients in the unrelated matters.


that the unrelated litigation raising “direct adversity” is by definition the second matter, and given that the adversity to the preexisting client is apparent at the time of engagement, the second client effectively consents to the concurrent representation at the commencement of his matter and that consent is typically fully informed—after all, the second client should already know that the lawyer has appeared for its adversary in the first case.119 Certainly lawyers, notwithstanding disclosure and waiver, have a duty to zealously represent their client in each matter in which they are engaged. There is no evidence that the American legal system wants for attorney zeal, or that clients lack the tools to monitor and en-force that duty. If the lawyer fails to adequately represent the client’s interests, the injured client has ample tools to protect itself, including both discharging the lawyer120 and asserting a malpractice claim.121

And so the case for the rule ultimately turns on the betrayal concern. Should the rules of professional responsibility foster and protect a con-ception of loyalty so far-reaching that it brooks no adversity to the client in any matter, related or not, absent informed consent? Should the law-yer’s duty of loyalty to the client be defined by the scope of the matter on which he is engaged, or is it all-encompassing?

119 See supra note 79 and accompanying text. The law firm’s continuing re-presentation of the first client in unrelated matters would ordinarily be disclosed to the second client when it engages the law firm. Failure to make this disclo-sure could be damaging to the law firm were a dispute subsequently to arise between the law firm and the second client over the second representation. Of course, the fact that the existence of a current relationship with a prospective client’s adversary should not be disqualifying, does not mean it should not be disclosed. If full disclosure of an otherwise nondisqualifying current client relationship with an adversary would violate duties of confidentiality owed the first client, and the lawyer nevertheless chooses to go forward with the second representation while making less than full disclosure to the second client, the law firm is in a delicate position and must exercise care to avoid exposing itself to liability if matters turn out poorly for the second client.

120 MODEL RULES OF PROF’L CONDUCT R. 1.2 (2009). 121 See, e.g., GILLERS, supra note 66, at 367-381 (2009); Ray Ryden Ander-

son & Walter W. Steele, Jr., Fiduciary Duty, Tort and Contract: A Primer on the Legal Malpractice Puzzle, 47 SMU L. REV. 235 (1994).


D. THE MEANING OF LOYALTY.

The most famous anecdote illustrating the scope and depth of com-mitment of the lawyer’s professional obligation of zeal and loyalty in his client’s cause is that of Lord Brougham’s defense of Queen Caroline against the charge of adultery brought by King George IV. The story is recounted in many places.122

[A]n advocate, by the sacred duty which he owes his client, knows, in the discharge of that office, but one person in the world, THAT CLIENT AND NONE OTHER. To save that client by all expedient means—to protect that client at all hazards and costs to all others, and among others to himself—is the highest and most un-questioned of his duties; and he must not regard the alarm, the suf-fering, the torment, the destruction, which he may bring upon any other. Nay, separating even the duties of a patriot from those of an advocate, and casting them, if need be, to the wind, he must go on reckless of the consequences, if his fate it should unhappily be, to in-volve his country in confusion for his client’s protection!

Brougham threatened, in a time of signifi-cant civil unrest, to expose a prior marriage of the King to a Roman Catholic in violation of the Act of Succession, a violation that at least arguably would cause the King to forfeit the throne. The King knuckled under; the charge of adultery against the Queen was dropped. Brougham famously expressed professional pride, and no remorse, in bringing about this result even at the risk of civil war:

123

So in pursuing the cause of his client, the Queen, Lord Brougham was not only privileged, but obligated, to use all lawful means, not ex-cluding impeaching the title of his sovereign, the King of England, even at the risk of embroiling the nation and its empire in civil war. But even Lord Brougham, the iconic zealous advocate, never suggested—nor can his actions or his words be construed as suggesting—that outside the bounds of the matter on which he had been retained that his duty to his client the Queen required him to betray his King. He subordinated his

122 See, e.g., 2 CAUSES CÉLÈBRES: THE TRIAL OF QUEEN CAROLINE (Frederick D. Linn & Co. 1879) (1820); FLORA FRASER, THE UNRULY QUEEN 413-44 (1996); Monroe Freedman, Henry Lord Brougham and Zeal, 34 HOFSTRA L. REV. 1319 (2006), and sources cited therein.

123 2 HENRY LORD BROUGHAM, THE LIFE AND TIMES OF HENRY LORD BROUGHAM 404 n.* (1871).


duties to King and country “in the discharge of that office,”124 to wit, the office of a lawyer defending the Queen against the charge of adultery; but no further. The attorney’s duty of loyalty is to competently, and loyally, and zealously advance the client’s interests in the matter for which the attorney has been engaged.125

People sometimes wish to obtain and exert greater control over oth-ers than the law entitles them to. Especially if they are clever or rich or powerful, they often succeed in this by offering inducements, or denying benefits, or otherwise exerting physical or political or economic power over other persons. Clients are people too. Some clients do want more control over their attorneys and their practices than they are entitled to. At least some wealthy and powerful clients will be able, as a business matter, to demand a kind of exclusivity from the firms they engage, even as to the representation of others in unrelated matters.

Clients are entitled to this, and to the protection of their confidences. They are not entitled to otherwise control their attorney’s behavior, cut him off from undertaking or honor-ing personal and professional obligations to others, or to limit his prac-tice, or to deny adverse parties in unrelated matters access to counsel of their choice.

Lawyers may, again as a business matter, accede to these demands, and decline representations that offend such clients. But they have no professional obligation to do so, should not be encouraged to do so, and should not be subject to discipline or disqualification by asserting their right to accept an adversary in an unrelated matter as a client. Indeed, it is more in keeping with the professional ideal of independence that law-yers resist these efforts to extend duties beyond ordinary professional bounds. Nor is it desirable from a systemic or policy point of view to encourage powerful clients to think that they not only engage attorneys, but in some sense hold a proprietary interest in them that extends to

124 Id. (emphasis added). 125 See JOHN R. DOS PASSOS, THE AMERICAN LAWYER: AS HE WAS—AS HE

IS—AS HE CAN BE 121 (Fred B. Rothman & Co. 1986) (1907) (“The one saving attribute for the lawyer, and through him of society, is fidelity to the client. Fidelity is the saving salt of human nature, and ennobles whatever it touches. . . . It is not the exception, but the rule, for the lawyer to surrender his whole mental, intellectual, and physical power to his client’s cause. There are no sacrifices which he will not make, and no dangers that he will not incur, to advance the success of his employment.”) (emphasis added).


precluding “their” law firm from working for an adversary in an unre-lated matter, even though no confidences are threatened and attorney competence or material limitation of either representation is not reasona-bly in question. An attorney, in the best traditions of the legal profession, is not merely a creature of the client, or wholly subordinate to its will. He is an independent professional, whose obligation of loyalty to the client is fixed by the scope of his retainer, the law, and professional norms.126

CONCLUSION

This Essay suggests that the bar on concurrent representation of ad-verse parties in unrelated matters has, from its beginnings in the 1970s, been a mistake grounded in an overweening conception of the scope of the duty of loyalty exceeding the bounds of the attorney’s employment. It has generated perverse consequences that are only getting worse as the structure of the legal profession and the marketplace for legal services evolves. The rule should be abandoned and the conflict standard appli-cable to current clients assimilated to that applicable to former clients. The question that remains, however, is how to get there.

For the last twenty years, commentators and practitioners in my field of specialization, bankruptcy law, have, in our customary fashion,127 tried to deal with the problem by arguing for “bankruptcy exceptionalism.”128

126 HAZARD & DONDI, supra note 3, at 158-59 (arguing that independence from the client is not only desirable but necessary to effective legal counsel, because “[t]he highest form of loyalty to a client can be giving unwelcome advice”). French avocats hold independence from clients as one of the primary defining characteristics of their profession: “[T]he avocat assists the client, but does not represent him.” LEUBSDORF, supra note 15, at 14.

127 See, e.g., Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 375-78 (2006). Compare Daniel J. Bussel, Creditors’ Committees as Estate Representatives in Bankruptcy Litigation, 10 STAN. J.L. BUS. & FIN. 28, 34 (2004) (noting the “bankruptcy uber alles tendencies of many bankruptcy specialists”).

128 See, e.g., Harvey R. Miller & Michele J. Meises, Disinterestedness—The Chapter 11 Paradigm!, 7 J. BANKR. L. & PRAC. 359, 378-79 (1998) (noting conflict between objectives of the Model Rules and the Bankruptcy Code); Nancy B. Rapoport, The Intractable Problem of Bankruptcy Ethics: Square


The attempt to carve out a bankruptcy exception to the concurrent con-flict rule has failed because the problem is not that bankruptcy is funda-mentally different, but that the general rule is fundamentally mistaken.

Another route would be for courts and bar disciplinary authorities to read Model Rule 1.7 narrowly and ignore or impose some sort of gloss on the ABA’s Comment 6.129 Thomas Morgan suggested this approach, to deafening silence, fifteen years ago.130 Rejecting the existing consen-sus view of concurrent client conflicts jurisdiction-by-jurisdiction, through case-by-case adjudication or bar association rulings, will require decades to move us towards a clear, uniform, and appropriate standard; and it flies in the face of the quite sensible movement toward greater uniformity in the regulation of the legal profession as the relevant market for more and more legal services has grown from a local, to a national, to a global, marketplace.131

Realistically, then, to effect reform, Model Rule 1.7 itself should be removed from the ABA Model Rules, and the existing standard of Model

Peg, Round Hole, 30 HOFSTRA L. REV. 977, 977-82 (2002); Nancy B. Rapoport, Turning and Turning in the Widening Gyre: The Problem of Potential Conflicts of Interest in Bankruptcy, 26 CONN. L. REV. 913, 916 (1994) (“[P]otential conflicts of interest in bankruptcy are different from conflicts of interest that arise in other areas of representation and . . . therefore, they should be treated differently from those other areas.”); Gerald K. Smith, Conflicts of Interest in Workouts and Bankruptcy Reorganization Cases, 48 S.C. L. REV. 793 (1997); Matthew L. Warren, The Continuing Lack of Guidance on Professional Reten-tion in Bankruptcy and Its Potential Impact on Corporate Debtors’ Retention of Adequate Legal Counsel, 53 ARIZ. L. REV. 533 (2011) (analyzing the erratic effects of unclear conflict rules on the ability of large corporate bankruptcy debtors to retain adequate counsel); Charles W. Wolfram, The Boiling Pot of Lawyer Conflicts in Bankruptcy, 18 MISS. C. L. REV. 383, 397-98 (1998) (ar-guing that the RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS, supra note 33, fails to adequately deal with the unique problems posed by conflict rules in the bankruptcy context). But see G. Ray Warner, Of Grinches, Alchemy and Disinterestedness: The Commission’s Magically Disappearing Conflicts of Interest, 5 AM. BANKR. INST. L. REV. 423 (1997) (arguing that the scope of conflicts of interest should not be narrowed in the bankruptcy court, opting instead for a “waiver” model of relaxing conflict rules).

129 See supra notes 4-7 and accompanying text. 130 Morgan, supra note 1, at 128-29. 131 See supra notes 81-102 and accompanying text.


Rule 1.9 applicable to former client conflicts should be made directly applicable to current clients. Even under this more direct approach, American lawyers in at least some jurisdictions will undoubtedly contin-ue to labor under the current rule for a long time to come. Nevertheless, it is time for the ABA to confess error, and start the process of moving the profession towards a more realistic, and appropriate, set of conflict of interest rules. “If not now, when?”132

132 RABBI HILLEL, Ethics of the Fathers, 1:14.


law review article - american bar association · 2017-12-23 · american legal practice or...

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