State Bar of Arizona Ethics Opinions
90-15: Conflict of Interest
Absence of detailed facts precludes definitive answer to questions of whether an attorney must withdraw after negligently failed to file personal injury action sounding in strict liability leaving negligence count alone.
October 17, 1990
The inquiring attorney represents a client as plaintiff in a personal injury action, with asserted liability based on both negligence and strict liability theories. The trial court dismissed the count based upon the strict liability theory because the plaintiff's complaint was not filed within the period of the one-year statute of limitations. The action is continuing on the negligence theory alone. The inquiring attorney has informed his client of these events, but the client has not requested that the attorney withdraw. The attorney acknowledges that he has committed "error," and wishes to know whether he should now refer his client to another attorney to complete the negligence action.
Is the inquiring attorney ethically obligated to withdraw as attorney for the plaintiff in the pending personal injury action?
ETHICAL RULE CITED
ER 1.7. Conflict of Interest: General Rule
(b) A lawyer shall not represent a client if the representation of that client may be materially limited...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....
The question is phrased in this opinion differently from the way it was presented by the inquiring attorney for the reason that, if the attorney is required to withdraw from the action because of a conflict of interest, he should not, for the same reason, select a successor attorney although, if requested, he could assist the client in making his own selection of new counsel.
The initial question as to whether the inquiring attorney, in these circumstances, has a conflict of interest, is whether his representation of the client may be "materially limited" by his own interests. For these purposes, we assume that the failure to file the complaint timely was the fault of the attorney who may, because of it, be subject to a claim for malpractice or a bar complaint. If that is so, he would have a personal interest in the conduct and result of the negligence action. For example, the client may decide to reject a reasonable settlement offer, hoping for a bonanza, while knowing that, if he fails to recover in the negligence action, he will still have a malpractice claim against the attorney. The attorney's interest, on the other hand, may be served by acceptance of the settlement offer, thus negating or reducing any damages chargeable against him resulting from the malpractice. Other possibilities of conflict might be imagined, including the possibility that, if the client at any time during the course of the negligence action should decide to bring a separate malpractice action against the attorney, the attorney would be in the untenable position of representing a client who has sued him, and would be compelled to withdraw.
Ethics opinions of other bar committees offer some guidance:
In Opinion 86-1 (May 30, 1986) of the Ethics Committee of the Massachusetts Bar Association, it was concluded that "A lawyer who is a defendant in a legal malpractice action brought by one of his regular clients may continue to represent that client in unrelated matters and in new matters provided that the client consents after full disclosure." (ABA/BNA Lawyers' Manual on Professional Conduct, "Manual," p. 901:4601)
In Opinion 80-3 (1980) of the Vermont Bar Association Committee on Professional Responsibility, it was concluded that "Once a lawyer has certified the marketability of title in a real estate transaction, he may subsequently represent the clients in an action arising from a boundary dispute only if he discloses to the clients that they may have a negligence claim against him and they still desire his representation." (ABA/BNA Lawyers' Manual on Professional Conduct, "Ethics Opinions 1980-1985," p. 801: 8601)
In Informal Opinion RI-25 (May 18, 1989) of the Committee on Professional and Judicial Ethics of the State Bar of Michigan, it was concluded that: "A lawyer whose client is suing him for malpractice may not continue to represent the client in other matters if a disinterested lawyer would advise the client against continued representation." (ABA/BNA Lawyers' Manual on Professional Conduct, "Manual," p. 901:4767)
In criminal cases, a defendant may not accomplish the removal of his court-appointed lawyer by filing a bar complaint against him. State v. Michael, 161 Ariz. 382, 778 P.2d 1278 (App. 1989); State v. Sinclair, 46 Wash. App. 433, 730 P.2d 742 (1986).
We believe that there is no absolute rule which can be applied in the abstract to determine whether a lawyer's continued representation of a client in a particular case may be materially limited by the lawyer's own interests. Where, however, the fault of the lawyer is clear and a malpractice claim against the lawyer is likely, the conflict appears sufficiently substantial for one to conclude that continued representation by the lawyer may be materially limited by the lawyer's own interests.
If a lawyer concludes, under the facts of the particular case, that his or her representation of the client will be materially limited by his or her own interests, the lawyer may continue representation if the two requirements of the rule are fulfilled.The first is that the lawyer reasonably believes that the representation will not be adversely affected. This appears to be another way of phrasing the underlying test as to whether continued representation of the client may be materially limited by the lawyer's own interests -- it is hard to imagine how representation of the client may be materially limited by the lawyer's own interests, and yet the representation not be adversely affected -- but it highlights the initial determination which is that of the lawyer and his or her reasonable belief.
If the lawyer concludes that the representation will not be adversely affected, he or she may continue only if the client consents after consultation. The lawyer does not reach that question, however, if, as the Comment to ER 1.7 notes, “a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances,” in which event "the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent." (Rule 42, Rules of the Supreme Court, Rules of Professional Conduct, ER 1.7 Comment, 17A A.R.S. at p. 351)
“Consultation” is defined in the Rules of Professional Conduct as denoting "communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question." (Rule 42, Rules of the Supreme Court, Rules of Professional Conduct, Terminology, 17A A.R.S. at p. 329). That involves full disclosure to the client of the acts, omissions and faults of the attorney; of the damages, if any, sustained by the client; of the effect of settlement or judgment in the action; and of other matters which may require the attorney to recommend to the client that advice be sought from a disinterested attorney.
In conclusion, it is our opinion that, in the absence of more detailed facts, we cannot answer the question submitted "yes” or "no." If the fault of the inquiring attorney is clear, however, we believe that he should not continue representation, in any event, unless the client consents after consultation.
One member of the committee, in dissent, wrote:
"I must respectfully dissent, in part, from (a committee member's) proposed opinion in response to the above inquiry.
"First of all, what one-year statute of limitations did the inquiring attorney miss? I know of no one-year statute of limitations on strict liability claims. Was it a claim for liability created by statute which would be barred by A.R.S. § 12-541? I think that we should have more facts set forth in the facts section of the opinion. The necessity to fill that factual void is made more clear by the conclusion (the draftsman) reached, that he could not answer the question because of the absence of facts. I think that it would be appropriate for the inquiring attorney to supply (the draftsman) with additional facts so that the question can be more easily answered.
"However, even lacking any additional facts, I think that the question must be answered in the affirmative. I think that the attorney should withdraw from the action.
"E.R. 1.7(b) places a burden on the attorney to act ‘reasonably’ in reaching his conclusion as to whether or not he must withdraw. Before the client is even asked for consent, the attorney must decide whether he can reasonably continue to represent the client.
"Here, assuming that the failure to file the complaint timely was in fact the fault of the attorney, his personal interests in the conduct and result of the negligence action, in my opinion, disqualifies him from further representation. His ability to negotiate a reasonable settlement for his client would necessarily be tainted by his own personal interests.
“Finally, I am not sure that I understand the middle paragraph on page 4 of (the draftsman's) proposed opinion. It seems to me that (the draftsman) is uncomfortably wrestling with himself and verbalizing the same agonizing analysis the inquiring attorney must make in determining whether he is acting reasonably if he decides not to withdraw. I think that the obvious agony and resultant obscurity of that paragraph can be corrected if the opinion were to suggest withdrawal.”
Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings.
©State Bar of Arizona 1990
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