Speaker 1: I'm Drew Stevenson, this is for my professional responsibility class, continuing my discussion of conflicts of interest under model rule 1.7. And here, we're really going to unpack some more details about directly adverse client interests on how that relates to conflicts of interest. And we're going to be deriving some of our content here are focusing on the comments 6 and 7 to model rule 1.7. So let's dive in. The ABA's comment 6 to model rule 1.7 says, 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. A client as to whom the representation is directly adverse is likely to feel betrayed, and the resulting damage to the client-lawyer relationship is likely to impair the lawyer's ability to represent the client effectively. I did a Google image search a while back for the term feeling of betrayal, and one of the first search results was this shot here from a movie starring Meg Ryan when she was a lot younger. I'm not a huge fan, and I haven't actually seen this movie, but that's kind of how your client is going to look at you when they find out that you are suing them on behalf of another client who you represent in an unrelated matter. They're going to be very upset, and there's going to be a big breach in trust. This is the face of betrayal. I actually hope it makes an impression on you. Now, moving on, Comet 6 adds, in addition, the client on whose behalf the adverse representation is undertaken reasonably may fear that the lawyer will pursue the client's case less effectively out of deference to the other client. That is, that the representation may be materially limited by the lawyer's interest in retaining the current client. So even apart from feeling betrayed, it can undermine the client's faith in the lawyer that the lawyer would try as hard as possible to get a favorable outcome, and they may worry that it will affect you subconsciously, even if you are trying to be objective in the situation. Now you may be wondering, why would clients ever consent to their lawyer representing an opposing party in a matter? And that's a good question. Suppose you've been drafting contracts for Greenacre, and now a new client, Goldenacre, wants to sue them over a minor traffic accident. Well, of course you can't represent both of them in the accident case. You would have to represent one and not the other. But why would Greenacre consent to letting his own lawyer for contract work sue him on behalf of a new plaintiff? Well, maybe Greenacre has already agreed to settle the case, to just pay for the damage to the other person's car. So if there's no disputed issues to litigate, perhaps he would rather have a lawyer he knows and likes as opposing counsel, rather than bring in a new lawyer who might try to complicate things unnecessarily. Or perhaps Greenacre is a large impersonal corporation that outsources a lot of its litigation to lawyers on a contract-by-contract basis, case-by-case. And most of the cases settle quickly. And perhaps they just don't care that today you're representing them, and let's say it's nationwide, and next week you're going to be representing someone else and another insurer, because they don't really take the cases personally. It's all a matter of the business or the numbers. So insurance companies are a great example. They hire a lot of outside lawyers to handle litigation on behalf of their policyholders, and probably 95% of the cases settle quickly before trial. And they may not really care that the lawyers represent is handling a case for them today and a case for another insurance company tomorrow. So with the first example I gave, maybe some matters are trivial or already ready to settle, or the conflict is rather attenuated. Commit six continues. Another directly adverse effect is when the lawyer must cross-examine a client who appears as a witness in a lawsuit involving another client, especially if the testimony will be damaging to the client represented in the lawsuit. So if they need you to really rake this witness over the coals because it's a star witness against them, they're going to worry that you don't try as hard because you are afraid of offending your client. Conversely, if they are suing the other client, or if the client is being sued, they may worry that the one being cross-examined may be indignant that you are humiliating them on the stand. If you think about it, what is your job when you do cross-examination? In law school, you're taught this phrase, impeach the witness. So what that really means is to undermine their credibility, and there's two basic ways to do this. You either need to show that they're a liar or really dumb and unreliable, or that they don't remember things, or both, that they're a dumb liar. So if you do cross-examination really effectively, the person you cross-examine might feel humiliated when you're done. And if that person is your own client, they're going to look at you like Meg Ryan in that picture I showed. Keep in mind that checking for this kind of conflict beforehand can be rather challenging. The lawyer not only has to inquire upfront about who are the opposing parties, but who's likely to be a potential witness for the other side. Commit Six continues, on the other hand, simultaneous representation in unrelated matters of clients whose interests are only economically adverse, such as representation of competing economic enterprises in unrelated litigation, does not ordinarily constitute a conflict of interest, and thus may not even require consent of the respective clients. Normally, this does not count as a conflict and doesn't require disclosure and consent. You represent the owner of one local burger place and also the owner of a rival burger place across the street. It could be rival bookstores, or rival churches, or even two law schools that are cross-town rivals. That's fine, even though your clients compete in the same market for customers and maybe they really resent each other. That's normally not enough to constitute a conflict. In fact, lawyers who specialize in a certain industry and the area of law about that industry, let's say restaurant franchise law or higher education law, are likely to represent rival players in that industry. You don't have to ask them if they have any objection or if they'll give consent to your representation of their local business rivals. Now, if local business rivals sue each other, then they would be directly adverse and a lawyer representing both of them would have a conflict of interest. But if they're not suing each other and instead are merely competing in the same market, there's no conflict. And it's also possible in some circumstances, this is less likely, where you have business rivals as different clients, one of them might try pressuring the lawyer to drop the other client or not pursue their case very zealously. And in that case, it could become a conflict. But that would normally be a material limitation conflict, sort of an undue influence. And in this lecture, we're talking about directly adverse clients. So don't mix them up. If the lawyer can shrug off such pressure from one client, then you could either just ignore it and or if it's a lot of pressure, you might decide to disclose it to the affected the other clients involved and just get their consent. And on the other hand, if your judgment is going to be affected, this is a client you really can't say no to, then it's a non-consentable conflict. Commit 7 to Rule 1.7 says directly adverse conflicts can also arise in transactional matters. For example, if a lawyer is asked to represent the seller of a business in negotiations with a buyer represented by the lawyer, not in the same transaction, but in another unrelated matter, the lawyer could not undertake the representation without the informed consent of each client. So they're not even acknowledging that you would try to be the lawyer for the buyer and seller in the transaction. But even if you're only representing one of them and the other one happens to be your client, let's say you drafted a will or you're doing estate planning for that person, then it could be a conflict. Think about it for a moment. What are you as a lawyer supposed to be negotiating for when clients are hammering out a business deal? What does the seller want? Well, obviously the seller wants to get the highest price possible and the buyer is conversely hoping for the lowest price possible or the best deal or for more items to be thrown in for the same price. Both sides want the best deal for them. How could you argue for both at once? You really can't. So obviously in the transaction, you can't argue for the seller and the buyer at the same time. And even if you are only representing one of them in that transaction, and let's say they have a lawyer, the other one who you normally represent, let's say on contract work, gets a different lawyer for this transaction, this negotiation. There's a chance that your client that you're representing is thinking you're not going to try hard enough because you're afraid of offending this other person whose business you need because they're your client. Now keep in mind that more often conflicts outside the litigation context, that is transactional matters, usually going to fall into the material limitation category of conflicts. That's under 1.782. And here we're talking about directly adverse conflicts under 1.7A1. A few final points here before we wrap up. Simultaneous representation of clients involved in different lawsuits can sometimes give rise to a conflict if the suits involve related matters. Examples of this often come from the area of patent law. So here's the first example. Here a court, you don't have to worry about remembering this specific case, it's just an example, a court disqualified a law firm from simultaneously prosecuting a patent infringement case for one client while representing another potential infringer on other matters. The problem is that if you win for one client, let's say establishing that they are the legitimate owner of a valid patent, that eliminates the best defense your other client might have in a future infringement action. And even makes it more likely that the owner of the patent is going to bring more of these enforcement actions because they've established that they're the patent owner and the patent is valid, which means your other client could end up getting sued because you did such a great job in that case. A second example would be, is almost a mirror image of this. Sometimes a client will ask a lawyer to render an opinion about whether they are infringing on someone else's patent. So let's say you're an expert and you render a non-infringement opinion for one client, but the patent belongs to one of your other clients and you didn't consent. Well, this is a problem, you have a conflict. If you provide legal arguments, really strong legal arguments that your client's product does not infringe on another client's product, and you're persuasive, it could undermine that other client's ability to enforce their patents, not only against this client in question for whom you did the opinion, but it's possible that you will undermine their ability to sue other producers who are making products similar to theirs. So let's wrap this up. That concludes our brief lecture about directly adverse clients and conflicts of interest under Model Rule 1.7. In the next video, we're going to really dive into material limitation and those types of conflicts of interest. And so that's the video you should watch for next.