Rule 1.7. Conflict of Interest: General Rule

Alabama Rules of Professional Conduct

Client-Lawyer Relationship

Rule 1.7.

Conflict of Interest: General Rule.

(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.

(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 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 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.

Comment

Loyalty to a Client

Loyalty is an essential element in the lawyer's relationship to a client. An

impermissible conflict of interest may exist before representation is undertaken, in

which event the representation should be declined. The lawyer should adopt

reasonable procedures appropriate for the size and type of firm and practice, to

determine in both litigation and non-litigation matters the parties and issues involved

and to determine whether there are actual or potential conflicts of interest.

If such a conflict arises after representation has been undertaken, the lawyer

should withdraw from the representation. See Rule 1.16. Where more than one client

is involved and the lawyer withdraws because a conflict arises after representation,

whether the lawyer may continue to represent any of the clients is determined by Rule

whether there are actual or potential conflicts of interest.

If such a conflict arises after representation has been undertaken, the lawyer

should withdraw from the representation. See Rule 1.16. Where more than one client

is involved and the lawyer withdraws because a conflict arises after representation,

whether the lawyer may continue to represent any of the clients is determined by Rule

1.9. See also Rule 2.2(c). As to whether a client-lawyer relationship exists or, having

once been established, is continuing, see Comment to Rule 1.3 and Scope.

As a general proposition, loyalty to a client prohibits undertaking representation

directly adverse to that client without that client's consent. Paragraph (a) expresses

that general rule. Thus, a lawyer ordinarily may not act as advocate against a person

the lawyer represents in some other matter, even if it is wholly unrelated. On the other

hand, simultaneous representation in unrelated matters of clients whose interests are

only generally adverse, such as competing economic enterprises, does not require

consent of the respective clients. Paragraph (a) applies only when the representation

of one client would be directly adverse to the other.

Loyalty to a client is also impaired when a lawyer cannot consider, recommend

or carry out an appropriate course of action for the client because of the lawyer's other

responsibilities or interests. The conflict in effect forecloses alternatives that would

otherwise be available to the client. Paragraph (b) addresses such situations. A

possible conflict does not itself preclude the representation. The critical questions are

the likelihood that a conflict will eventuate and, if it does, whether it will materially

interfere with the lawyer's independent professional judgment in considering

alternatives or foreclose courses of action that reasonably should be pursued on

behalf of the client. Consideration should be given to whether the client wishes to

accommodate the other interest involved

critical questions are

the likelihood that a conflict will eventuate and, if it does, whether it will materially

interfere with the lawyer's independent professional judgment in considering

alternatives or foreclose courses of action that reasonably should be pursued on

behalf of the client. Consideration should be given to whether the client wishes to

accommodate the other interest involved.

Consultation and Consent

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,

and paragraph (b)(1) with respect to material limitations on representation of 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. Moreover, there may be circumstances where it is

impossible to make the disclosure necessary to obtain consent. For example, when

the lawyer represents different clients in related matters and one of the clients refuses

to consent to the disclosure necessary to permit the other client to make an informed

decision, the lawyer cannot properly ask the latter to consent.

Lawyer's Interests

The lawyer's own interests should not be permitted to have adverse effect on

representation of a client. For example, a lawyer's need for income should not lead

nt clients in related matters and one of the clients refuses

to consent to the disclosure necessary to permit the other client to make an informed

decision, the lawyer cannot properly ask the latter to consent.

Lawyer's Interests

The lawyer's own interests should not be permitted to have adverse effect on

representation of a client. For example, a lawyer's need for income should not lead

the lawyer to undertake matters that cannot be handled competently and at a

reasonable fee. See Rules 1.1 and 1.5. If the probity of a lawyer's own conduct in a

transaction is in serious question, it may be difficult or impossible for the lawyer

to give a client detached advice. A lawyer may not allow related business interests to

affect representation, for example, by referring clients to an enterprise in which the

lawyer has an undisclosed interest.

Conflicts in Litigation

Paragraph (a) prohibits representation of opposing parties in litigation.

Simultaneous representation of parties whose interests in litigation may conflict, such

as coplaintiffs or codefendants, is governed by paragraph (b). An impermissible

conflict may exist by reason of substantial discrepancy in the parties' testimony,

incompatibility in positions in relation to an opposing party, or the fact that there are

substantially different possibilities of settlement of the claims or liabilities in question.

Such conflicts can arise in criminal cases as well as civil. The potential for conflict of

interest in representing multiple defendants in a criminal case is so grave that ordinarily

a lawyer should decline to represent more than one codefendant. On the other hand,

common representation of persons having similar interests is proper if the risk of

adverse effect is minimal and the requirements of paragraph (b) are met. Compare

Rule 2.2 involving intermediation between clients

ict of

interest in representing multiple defendants in a criminal case is so grave that ordinarily

a lawyer should decline to represent more than one codefendant. On the other hand,

common representation of persons having similar interests is proper if the risk of

adverse effect is minimal and the requirements of paragraph (b) are met. Compare

Rule 2.2 involving intermediation between clients.

Ordinarily, a lawyer may not act as advocate against a client the lawyer

represents in some other matter, even if the other matter is wholly unrelated. However,

there are circumstances in which a lawyer may act as advocate against a client. For

example, a lawyer representing an enterprise with diverse operations may accept

employment as an advocate against the enterprise in an unrelated matter if doing so

will not adversely affect the lawyer's relationship with the enterprise or conduct of the

suit and if both clients consent upon consultation. By the same token, government

lawyers in some circumstances may represent government employees in proceedings

in which a government agency is the opposing party. The propriety of concurrent

representation can depend on the nature of the litigation. For example, a

suit charging fraud entails conflict to a degree not involved in a suit for a

declaratory judgment concerning statutory interpretation.

A lawyer may represent parties having antagonistic positions on a legal

question that has arisen in different cases, unless representation of either client would

be adversely affected. Thus, it is ordinarily not improper to assert such positions in

cases pending in different trial courts, but it may be improper to do so in cases pending

at the same time in an appellate court.

Interest of Person Paying for a Lawyer's Service

antagonistic positions on a legal

question that has arisen in different cases, unless representation of either client would

be adversely affected. Thus, it is ordinarily not improper to assert such positions in

cases pending in different trial courts, but it may be improper to do so in cases pending

at the same time in an appellate court.

Interest of Person Paying for a Lawyer's Service

A lawyer may be paid from a source other than the client, if the client is informed

of that fact and consents and the arrangement does not compromise the lawyer's duty

of loyalty to the client. See Rule 1.8(f). For example, when an insurer and its insured

have conflicting interests in a matter arising from a liability insurance agreement, and

the insurer provides special counsel for the insured, the arrangement should assure

the special counsel's professional independence. So also, when a corporation and its

directors or employees are involved in a controversy in which they have conflicting

interests, the corporation may provide funds for separate legal representation of the

directors or employees, if the clients consent after consultation and the arrangement

ensures the lawyer's professional independence.

Other Conflict Situations

Conflicts of interest in contexts other than litigation sometimes may be difficult

to assess. Relevant factors in determining whether there is potential for adverse effect

include the duration and intimacy of the lawyer's relationship with the client or clients

involved, the functions being performed by the lawyer, the likelihood that actual conflict

will arise and the likely prejudice to the client from the conflict if it does arise. The

question is often one of proximity and degree

. Relevant factors in determining whether there is potential for adverse effect

include the duration and intimacy of the lawyer's relationship with the client or clients

involved, the functions being performed by the lawyer, the likelihood that actual conflict

will arise and the likely prejudice to the client from the conflict if it does arise. The

question is often one of proximity and degree.

For example, a lawyer may not represent multiple parties to a negotiation whose

interests are fundamentally antagonistic to each other, but common representation is

permissible where the clients are generally aligned in interest, even though there is

some difference of interest among them.

Conflict questions may also arise in estate planning and estate administration.

A lawyer may be called upon to prepare wills for several family members, such as

husband and wife, and, depending upon the circumstances, a conflict of interest may

arise. In estate administration the identity of the client may be unclear under the law

of a particular jurisdiction. Under one view, the client is the fiduciary; under another

view, the client is the estate or trust, including its beneficiaries. The lawyer should

make clear the relationship to the parties involved.

A lawyer for a corporation or other organization who is also a member of its

board of directors should determine whether the responsibilities of the two roles may

conflict. The lawyer may be called on to advise the corporation in matters involving

actions of the directors. Consideration should be given to the frequency with which

such situations may arise, the potential intensity of the conflict, the effect of the

lawyer's resignation from the board, and the possibility of the corporation's obtaining

legal advice from another lawyer in such situations. If there is material risk that the

dual role will compromise the lawyer's independence of professional judgment, the

lawyer should not serve as a director.

ith which

such situations may arise, the potential intensity of the conflict, the effect of the

lawyer's resignation from the board, and the possibility of the corporation's obtaining

legal advice from another lawyer in such situations. If there is material risk that the

dual role will compromise the lawyer's independence of professional judgment, the

lawyer should not serve as a director.

Conflict Charged by an Opposing Party

Resolving questions of conflict of interest is primarily the responsibility of the

lawyer undertaking the representation. In litigation, a court may raise the question

when there is reason to infer that the lawyer has neglected the responsibility. In a

criminal case, inquiry by the court is generally required when a lawyer represents

multiple defendants. Where the conflict is such as clearly to call in question the fair or

efficient administration of justice, opposing counsel may properly raise the question.

Such an objection should be viewed with caution, however, for it can be misused as a

technique of harassment. See Scope.

Comparison with Former Alabama Code of Professional Responsibility

DR 5-101(A) provided that “[e]xcept with the consent of his client after full

disclosure, a lawyer shall not accept employment if the exercise of his professional

judgment on behalf of his client will be or reasonably may be affected by his own

financial, business, property, or personal interests.” DR 5-105(A) provided that a

lawyer “shall decline proffered employment if the exercise of his independent

professional judgment in behalf of a client will be or is likely to be adversely affected

by the acceptance of the proffered employment, or if it would be likely to involve him

in representing differing interests, except to the extent permitted under DR 5105(C).”

DR 5-105(C) provided that “a lawyer may represent multiple clients if it was obvious

that he can adequately represent the interest of each and if each consents to the

representation after full disclosure of the

y affected

by the acceptance of the proffered employment, or if it would be likely to involve him

in representing differing interests, except to the extent permitted under DR 5105(C).”

DR 5-105(C) provided that “a lawyer may represent multiple clients if it was obvious

that he can adequately represent the interest of each and if each consents to the

representation after full disclosure of the possible effect of such representation on the

exercise of his independent professional judgment on behalf of each.” DR 5107(B)

provided that a lawyer “shall not permit a person who recommends, employs, or pays

him to render legal services for another to direct or regulate his professional judgment

in rendering such services.”

Rule 1.7 clarifies DR 5-105(A) by requiring that, when the lawyer's other

interests are involved, not only must the client consent after consultation, but also,

independent of such consent, the representation reasonably appear not to be

adversely affected by the lawyer's other interests. This requirement was implicit in EC

5-2, which stated that a lawyer “should not accept proffered employment if his personal

interests or desires will, or there is a reasonable probability that they will, affect

adversely the advice to be given or services to be rendered the prospective client.”