UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER鈥橲 CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 04-10
RULES 1.6, 1.7, 1.9, 1.10 AND 3.7
Facts
Law Firm A is approached by an insurance carrier to defend a workers鈥� compensation claim. The claim is for injuries suffered by a lawyer in another firm, Law Firm B. During the course of the initial stages of the case, a partner of Law Firm A learned from its potential client that an associate of Law Firm A is a friend of the claimant and the associate, prior to joining Law Firm A, had represented the claimant in a divorce action and in an unrelated civil action. Additionally, the partner of Law Firm A has now learned from opposing counsel that after the associate had joined Law Firm A, but prior to Law Firm A鈥檚 partner鈥檚 involvement with the case, the associate had informally conferred with the claimant and her counsel regarding strategies for pursuing the workers鈥� compensation claim, and the associate had communicated with Law Firm B on behalf of the claimant to arrange for the return of its files in possession of the claimant. Further, the associate of Law Firm A obtained information under the Freedom of Information Act to be used in a potential claim against unrelated third parties. The associate of Law Firm A has not given any legal advice to his friend, the claimant, on this matter since the time of Law Firm A鈥檚 partner鈥檚 involvement.
Questions
Given the facts of Law Firm A鈥檚 associate鈥檚 relationship with and counsel to the
claimant, is Law Firm A barred from representing the insurance carrier, and by implication, the defending employer, because of any conflict or potential conflict created by the actions of its associate? Would a 鈥淐hinese Wall鈥� cure any potential conflict? Would consent of all parties cure any potential conflict?
Summary
Law Firm A may not undertake the defense of the claim. Under the facts presented by the inquirer, the members of the Ethics Advisory Committee believe that the information learned by the associate constitutes an impermissible conflict of interest, not curable by the erection of 鈥淐hinese Wall鈥� nor by consent.
Opinion
Conflicts of interest are treated in the various sub-divisions of Rule 1 of the South Carolina Rules of Professional Conduct, SCACR 407. Under Rule 1.10, a conflict is imputed to the entire firm.
A conflict of interest depends on specific facts of a case. A determination of a conflict of interest often turns on whether there has been prior representation, but a conflict may exist where there was no formal representation.
Some conflicts may be cured by consent of the parties. Lawyers are implicitly allowed under the Rules of Professional Conduct to represent adverse parties by consent, but only where there is a reasonable belief that the representation will not adversely affect the relationship with the other client. Consent of the parties is not sufficient here due to the degree of the direct involvement of the associate with the facts of the case. (See Rules 1.7 and 1.9.)
In this situation, the associate of Law Firm A has had two levels of involvement: 1) prior to his association with Law Firm A, the associate represented the claimant in matters which were wholly unrelated to the present claim; and 2) after his association with Law Firm A (but prior to Law Firm A鈥檚 having undertaken the defense of the claim), he actively participated in the preparation of the claimant鈥檚 case. It is conceivable that consent from the former client (the claimant) would suffice for the prior, unrelated representation, but an issue troublesome to the members of the committee arises out of the subsequent relationship between the claimant and the associate. After the associate joined Law Firm A (but before Law Firm A became involved in the case), the associate continued his role as advisor and counselor to the claimant, even to the extent of advising the claimant and her counsel on how to proceed in filing the claim. (See FACTS: 鈥淎dditionally, the partner of Law Firm A has now learned from opposing counsel that after the associate had joined Law Firm A, but prior to Law Firm A鈥檚 partner鈥檚 involvement with the case, the associate had informally conferred with the claimant and her counsel regarding strategies for pursuing the workers鈥� compensation claim,. . .鈥�)
While apparently no representation agreement was signed between the associate and the claimant for this work, the fact that the associate 鈥�. . . conferred with the claimant and her counsel regarding strategies for pursuing the workers鈥� compensation claim . . .鈥� brings into play the elements of legal representation from which a quasi-contract could be imputed.
Not only do we see prior representation here, but we see involvement by the associate in the factual setting of the case. The associate has learned facts that may be detrimental to the respondent in the workers鈥� compensation claim. The building of a 鈥淐hinese Wall鈥� around the associate will not, in the opinion of the members of this committee, cure the problem. The associate has an on-going relationship with the claimant (鈥渂est friends鈥�), and has already participated with the claimant in preparing the claim, presumably drawing upon the associate鈥檚 expertise gained while employed by Law Firm A and the associate鈥檚 knowledge of Law Firm A鈥檚 tactics and strategies in defending such cases. The purpose of a 鈥淐hinese Wall鈥� or screen is as a device to make consent possible in cases where informed consent by the involved parties can cure the conflict. Where conflicts arise out of situations under Rule 1.9, consent may be reasonable, depending on the circumstances. In some specific instances, screening may be used to make the client more comfortable in giving consent.
In this instance, the conflict (under this very limited set of facts), arises out of Rules 1.6, 1.7, and 1.9. The associate鈥檚 involvement in planning and determining strategy for the worker鈥檚 compensation claim may fall short of a formal attorney-client relationship, but this relationship would certainly impair the ability of the lawyer to represent the insurance company. Because of this degree of involvement, consent would not be reasonable in this case, and thus screening would not be an appropriate tool. Subsequently, Rule 1.10 would pass the conflict onto all other members of the Law Firm A such that representation of the insurance company in this matter would not be appropriate.
There is a real possibility that the associate of Law Firm A could be called as a witness for the claimant, thereby invoking the provisions of Rule 3.7. If Law Firm A is defending the case, it may well be put in the position of cross-examining its employee, even to the extent of attempting to impeach its own employee. Having found an impermissible conflict, we further find that Rule 3.7 applies.
We have reached this result only under the specific facts of this case, which speak to a degree of relationship that creates the conflict. We caution the Bar that determination of the applicability of the Rules of Professional Conduct must turn on the facts of each case. In the instant case, it is the opinion of the members of the committee that the extensive involvement of the associate with the elements of the claim makes Law Firm A鈥檚 representation in this situation an impermissible conflict.
We do not wish, however, to discourage lawyers from helping and advising their friends. We think it admirable for lawyers, when appropriate, to assist their friends, and others, at no charge. We also find it useful for lawyers to discuss hypothetical situations with their lawyer friends, but we caution that such conversations may ripen, as in this case, into impermissible conflicts.