You have asked this Committee whether you may accept a referral fee in the following circumstances: You originally represented, as plaintiffs, both a passenger and the driver of a car involved in a motor vehicle accident. Before suit was filed, the driver retained another lawyer to represent him. You filed your complaint on behalf of the passenger and against the drivers of other vehicles involved in the accident. One of those defendants brought in the driver of your client's car as an additional defendant. You want to know whether you can accept a referral fee from the driver's new attorney upon resolution of the case by settlement or verdict. It is the opinion of this Committee that, under the facts and circumstances as you have recited them, you should not accept a referral fee from the driver's attorney, as your own financial interests in the outcome of the driver's case may adversely affect your representation of the passenger.
Rule 1.7(b) of the Rules of Professional Conduct states:
(b) A Lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after full disclosure and consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
Obviously, your financial interests favor the maximum recovery of the driver as well as that of the passenger in the same lawsuit. If the driver was brought into the case within the statute of limitations, your client, the passenger, and the driver are directly adverse to each other in the lawsuit. Thus, under Rule 1.7, you cannot proceed with the proposed representation unless you reasonably believe your representation of the passenger will not be adversely affected and you have the client's consent.
While the Rule itself permits a waiver of the conflict, the Comment states: When a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent. In discovery, facts may be developed which tend to place liability on the driver. Your loyalty to the passenger would require that you pursue those facts vigorously. If you are to receive a referral fee on the driver's case, your financial interests would tend to dictate that you press the liability of other defendants and avoid proving fault on the part of the driver.
Although the particular liability facts of the case and question of insurance coverage may have an impact on the outcome, the natural conclusion is that your interest in the driver's recovery could ultimately be detrimental to your representation of the passenger. One can imagine a situation, such as a rear-end collision, where the potential liability of the driver is very limited, and the potential adversity between driver and passenger similarly limited. In such a case, perhaps an informed waiver of the conflict would be permissible. The facts before us seem to indicate something other than a rear-end collision, however, since the original defendants felt it necessary to bring in the driver. Thus, since the potential for direct conflict is great, it would appear that disinterested attorney would advise the client not to waive the conflict.
Several of the Committee members also feel that Rule 1.9 may be implicated by the facts you have presented. Rule 1.9 provides:
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) 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 consents after a full disclosure of the circumstances and consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
It appears on the facts before the Committee that your former client, the driver, consents to your continuing to represent the passenger. If you learned of facts harmful to the driver, while you still represented the driver, the prohibition of Rule 1.9(b) may make it difficult for you to continue to represent the passenger. The Rule would prohibit your using this harmful information, and your obligation to represent the passenger fully would be compromised.
While the Rules of Professional Conduct permit an attorney to represent both parties in an action, provided he satisfies the requirements of Rule 1.7 and the Comment to the Rule, the Committee believes that, in this case, your should represent only one client and decline the offer of a referral fee.