Opinion 89-24
(October 1989)

You have asked the Professional Guidance Committee for an Opinion concerning your conduct in a specific factual situation which is summarized below:

Your clients went to Attorney A for a negligence/product liability case. That attorney let the two year statute of limitations run in that case. As a result of this, a motion for summary judgment by the defendant on the negligence/product liability portion of the case was granted. Summary judgment on the implied warranty portion of the cause of action was denied and is still pending. Attorney A, approximately eight months after summary judgment was issued against the clients because of his malpractice, then referred their case to Attorney B, who used to be his associate. In addition, Attorney B, because of developments in the past two years has a personal grudge against Attorney A. It is not clear if Attorney A knows this, although you do. Attorney B had the client's case for some time and although he notified Attorney A's malpractice carrier that he was representing the clients in a malpractice action against Attorney A, apparently proceeded to permit the statute of limitations run on that attorney malpractice action. Some time after this, the case for the implied warranty was given back to Attorney A, who then proceeded to refer it to you. You also used to be an associate in Attorney A's office, but left his employ prior to his letting the statute of limitations run, although you may have been employed there when the clients first contacted Attorney A. You have received an offer of settlement for a de minimis amount on the warranty claim and have recommended to your clients that they accept it or you will withdraw from their representation. During the course of your representation of the clients, Attorney A's malpractice insurance carrier filed an action in federal district court to obtain a ruling that they do not have to indemnify Attorney A against this claim because he did not comply with the notice requirements in his malpractice policy. Attorney A asked you, and you agreed to represent him in this matter and you have entered your appearance as well as filed an Answer. In that Answer you state that there are indispensable third parties who should be part of this action (meaning your clients) but you did not specifically name them. You admit that although your clients know about your representation of Attorney A, you did not obtain their informed consent to this representation prior to entering upon it. Furthermore, as a result of this representation, you have discovered from the attorney representing the malpractice carrier that attorney B let the statute run on the clients' attorney malpractice action. You know that the clients are not aware of this. You are still recommending that your clients take the minimal settlement and pursue their malpractice action, although you are aware of the possibility that there will be a complete defense to it. You ask if:

1) you have an impermissible conflict of interest that now prohibits you from proceeding to represent both the clients and attorney A if the clients refuse the settlement;

2) you have the duty to inform your clients of attorney B's alleged malpractice;

3) you have the obligation to inform the clients of B's personal grudge against A as a potential conflict of interest;

4) you may proceed to continue to represent attorney A if the clients settle their case or obtain new counsel.

Rule 1.7a of the Rules of Professional Conduct provides as follows:

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

The comment to Rule 1.7 provides in part that:

A client may consent to representation notwithstanding a conflict. However, as indicated in paragraph (a)(1) with respect to representation directly adverse to a client...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. When more than one client is involved, the question of conflict must be resolved as to each client.

Rules 1.9a and B of the Rules of Professional Conduct provide as follows:

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 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.

The Comment to that Rule provides in part that:

The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question.

The Committee was of the unanimous opinion that your representation of the clients while representing attorney A in his federal declaratory action is in direct violation of Rule 1.7a as the parties are clearly adverse, both cases centering around the same facts. This conflict cannot even be waived with informed consent because an independent outside attorney would not condone such dual representation. As such, you should advise the clients of your own potential liability in violating the conflict of interest rules and strongly urge them to obtain independent new counsel prior to making any other decisions about this matter, said new counsel having no connection whatsoever with attorney A, B or yourself, as there may be liability on your part for your past actions.

Regarding your obligation to tell your clients that attorney B may have committed malpractice the Committee felt that at a minimum your duty of loyalty to these clients mandated that you so inform them. Telling them to go to Attorney B and to continue with him thus giving them the impression that they have a viable malpractice action against attorney A, only compounds the conduct described above, regardless of the motivation behind it.

The Committee felt that as you do not know what the clients know of attorney B's grudge against attorney A, and how, if at all, this has contributed to the manner in which their case has been handled, that there was no affirmative obligation to proceed to inform the clients of this grudge or report this potential problem to the Disciplinary Board as you have no actual knowledge of whether it constitutes a conflict of interest or violation of the Rules of Professional Conduct.

Finally, it was the Committee's conclusion that as attorney A's interests are adverse to your clients, and as that adversarial nature arises out of the same facts, i.e. the original injury of the client's and attorney A's malpractice, that the two cases are substantially related and that Rule 1.9a would prohibit you from continuing to represent attorney A in any matter associated with this situation (see comment Rule 1.9 above). Furthermore, there is great potential for a violation of Rule 1.9b should you continue to represent attorney A. Given the multiple conflicts of interests and potential liability on the part of all the attorneys, the Committee advises against your obtaining the client's consent to continue in the representation of Attorney A.

CAVEAT:
The foregoing opinion is advisory only and is based upon the facts set out above. The opinion is not binding on the Disciplinary Board of the Supreme Court of Pennsylvania or any court. It carries only such weight as an appropriate reviewing authority may choose to give it.
     

The Philadelphia Bar Association's Professional Guidance Committee provides, upon request, advice for lawyers facing or anticipating facing ethical dilemmas. Advice is based on the consideration of the facts of the particular inquirer's situation and the Rules of Professional Conduct as promulgated by the Supreme Court of Pennsylvania. The Committee's opinions are advisory only and are based upon the facts set forth. The opinions are not binding upon the Disciplinary Board of the Supreme Court of Pennsylvania or any other Court. They carry only such weight as an appropriate reviewing authority may choose to give it.