State Bar of Arizona Ethics Opinions
91-24: Conflict of Interest; Legal Aid Agencies
Committee analyzes conflict of interest issues arising when persons with adverse interests in legal matters seek the assistance of the Volunteer Lawyer's Program or Community Legal Services.
December 18, 1991
The Advisory Committee of the Volunteer Lawyer Program ("VLP") has requested an opinion of this committee concerning the ethical propriety of certain procedures utilized to screen and refer potential clients of that program. The VLP is a joint project of the Maricopa County Bar Association and Community Legal Services ("CLS"). It has two governing boards, one representing the Bar Association and the other representing CLS, and is housed in the same facility with CLS. The VLP refers persons seeking legal services who qualify for its program to local lawyers (usually in private practice) who agree to volunteer legal services to such persons.
CLS provides legal representation in civil matters to low-income persons in Maricopa County. It is not uncommon for individuals to have consulted CLS for a variety of problems and, over time, for legal services to have been provided by CLS to the same individual on different occasions. Each time an applicant seeks the assistance of CLS, the applicant must demonstrate that he or she qualifies financially for the service pursuant to federal regulations. To do this, the applicant must provide information, including the applicant’s income, assets, living expenses and the general nature of the legal problem. Attached to this opinion as Exhibit A is a copy of the CLS form which sets forth the information the applicant must provide. All of this information is collected by an intake worker employed by CLS.
Upon qualifying on a financial basis, the client may receive legal services from CLS in a variety of ways and in varying degrees. For instance, a client may receive only brief advice from an attorney, or may receive instruction in a classroom setting on how to file a divorce action or defend a forcible detainer action. The most extensive legal assistance involves direct, substantive representation of the client by a CLS lawyer in negotiations or litigation. Many individuals who qualify financially for legal services under the CLS program, after having provided the requisite financial information, receive no service, due to the shortage of CLS staff attorneys. However, the intake application and information remain available to CLS attorneys and staff.
From time to time, CLS refers persons seeking legal assistance to the VLP, which then assigns that person to a volunteer lawyer in the community. Because prospective clients must qualify financially before they become eligible for referral to a lawyer through the VLP, they must provide CLS with confidential information during the intake procedure.
VLP has inquired whether an ethical conflict of interest arises in the following situations:
1. Client A provides CLS with financial information in order to qualify for representation, but CLS does not, for whatever reason, represent Client A.. Client B seeks a referral through the VLP to a VLP lawyer for representation in an unrelated matter that is adverse to Client A.
2. Client A provides CLS with financial information in order to qualify for representation, does qualify for representation, and receives limited advice from CLS. After the matter has terminated, Client B seeks a referral through VLP to a VLP lawyer for representation in an unrelated matter that is adverse to Client A.
3. Client A provides CLS with financial information in order to qualify for representation, does qualify for representation, and has been represented by CLS or VLP in litigation or negotiation. After the matter has terminated, Client B seeks a referral through VLP to a VLP lawyer in an unrelated matter that is adverse to Client A.
4. Client A is currently represented by a CLS lawyer in a matter adverse to Client B who seeks representation in that matter through the VLP.
ETHICAL RULES INVOLVED
ER 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 to 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.
ER 1.9. Conflict of Interest: Former Client
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 consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as ER 1.6 would permit with respect to a client or when the information has become generally known.
ER 1.10. Imputed Disqualification: General Rule
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by ER 1.7, 1.8(c), 1.9 or 2.2.
The first question requires us to determine whether the CLS intake procedure, alone, creates an attorney-client relationship between CLS and Client A. If it does, we must then determine whether that attorney-client relationship applies to the VLP attorney in an unrelated matter so as to create a conflict of interest.
An attorney-client relationship must exist before a conflict of interest can arise. Foulke v. Knuck, 162 Ariz. 517, 520, 784 P.2d 723, 726 (App. 1989). Whether such a relationship exists depends upon the subjective belief of the client and upon "the circumstances under which the confidences were divulged." Matter of Petrie, 154 Ariz. 295, 300, 742 P.2d 796, 801 (1987). Applying that test to this situation, the question is whether, by completing an intake form, Client A subjectively believes that "he is consulting a lawyer in that capacity . . ." Foulke v. Knuck, 162 Ariz. at 520, 784 P.2d at 726.
the particular rule that is involved, and on the specific facts of the situation.
We note, also, that some courts have approved the simultaneous representation of two parties by the same legal services program. Flores v. Flores, 598 P.2d 893, 896-897 (Alaska 1979) ("Regulations might be developed relating to such matters as record keeping, access to files, supervision, and physical separation of offices which would be sufficient to ensure that two attorneys employed by [the legal services corporation] could represent conflicting positions in litigation . .."); People v. Wilkins, 28 N.Y.2d 53, 56, 268 N.E.2d 756, 757, 320 N.Y.S.2d 8, 10 (Ct. APP. 1971) (1'While . . . knowledge of one member of ·a law firm will be imputed by inference to all members of that law firm...,we do not believe the same rationale should apply to ... the Legal Aid Society.") "An important consideration in this regard is the degree of separation between the two lawyers, i.e., whether there are two separate offices, administered and staffed by separate, independent lawyers, and •mutually exclusive' client files." ABA/BNA Lawyers, Manual on Professional Conduct, p. 91: 6403 (1988), citing Michigan Informal Ethics Opinion CI-506 (5/15/80) (ABA/BNA Lawyers’ Manual, supra, p. 801:4801). See also ABA Informal Opinion 1309 (1975), supra.
In our case, VLP refers clients to outside lawyers. But for the fact that the Board of Directors of CLS is responsible, in part, for the operation of VLP, and CLS refers clients to VLP, CLS is separate and apart from the VLP attorneys. In light of the fact that the volunteer lawyers in the VLP program are not under the control of CLS, we do not think that CLS and VLP would be considered one firm. So long as safeguards are instituted to ensure that confidential information obtained in the intake process is not disseminated to the VLP or CLS lawyers, we think that VLP would not be precluded from representing Client B in a matter against Client A who has previously been represented by CLS, regardless of whether the matters are related.1
IF CLS and VLP were to be considered one firm so as to impute disqualification of CLS to VLP, we must then look to ER 1.9, which addresses representation of a client whose interests are materially adverse to those of a former client. Since the matter is not "substantially related," the CLS or VLP lawyer may represent Client B in an action against former Client A. However, Client B’s lawyer may not use information relating to the representation to the disadvantage of Client A "except as ER 1.6 would permit with respect to a client or when the information has become generally known.” ER 1.9(b).
The Board of Commissioners on Grievances and Discipline of the Ohio Supreme Court ("Ohio Board") addressed a similar issue in its Opinion 89-25 (8/18/89) (ABA/BNA Lawyers’ Manual on Professional Conduct, p. 901:6863). In that opinion, the legal aid society did the initial intake screening for cases that ultimately were referred to the volunteer lawyers’ project, which was funded through the legal aid society. The intake procedure involved taking the applicant’s name, address, source and amount of income, the adversary’s name and the nature of the problem. The legal aid society did not disclose the intake information to its staff attorneys. Under these circumstances, the Ohio Board concluded that the legal aid society could properly refer cases to the volunteer lawyers’ project, while representing the adverse party in the same matter, because "a lawyer-client relationship has not been established at the intake stage." The opinion cautions, however, that the applicant must be made aware that the intake worker is not a lawyer.
In reaching that conclusion, the Ohio Board cited ABA Committee on Ethics and Professional Responsibility, Informal Opinion 1309 (Jan. 13, 1975). That opinion concludes that a legal aid society and a neighborhood law office, which was funded through the legal aid society, could represent adverse parties in a controversy. The opinion relies, in part, upon the fact that there was no other connection between the two offices, including no exchange of personnel or information and no controlling or supervisory relationship over the attorneys.
In this matter, the VLP intake form elicits only minimal information from the applicant and requests only a brief description of the applicant's problem. If the intake worker advises the applicant that (1) the intake worker is not acting as his attorney, (2) cannot give legal advice, and (3) the information is merely being taken to determine whether the applicant qualifies for CLS and VLP services, there is a strong likelihood that the "subjective belief" of the applicant will be that there is no attorney-client relationship. Further, the CLS and VLP should take steps to prevent dissemination of the contents of the completed intake forms to any of the CLS or VLP attorneys.
If, however, Client A has a subjective belief that CLS represented him in the unrelated matter by virtue of the intake procedure, we must then continue the inquiry to determine whether the VLP lawyer is precluded from representing Client B by virtue of VLP's relationship with CLS.
In discussing the imputed disqualification rule, the Comment to ER 1.10 states:
Lawyers employed in the same unit of a legal service organization constitute a firm, but not necessarily those employed in separate units. As in the case of independent practitioners, whether the lawyers should be treated as associated with each other can depend upon
This committee has previously discussed at length the factors to be considered in connection with ER 1. 9 See our opinion No. 91-05 (February 20, 1991). In that opinion, we pointed out that, "[a]lthough courts apply different tests to determine whether matters are ‘substantially related,’ all seem to give this term a fairly broad reading." Id. at p. 8, n. 2. Further, as we noted in that opinion, the Arizona Supreme Court has recognized that there is a presumption that client confidences were shared in the first representation when addressing the test of ER 1.9. In In Re Ockrassa, 165 Ariz. 576, 578, 799 P.2d 1350, 1352 (1990), quoting ABA/BNA Lawyers’ Manual on Professional Conduct, p. 51:201 (1990), the Arizona Supreme Court recognized this presumption:
"[T]he [substantial relationship] test itself is premised, at least in part, on the presumption that a lawyer who now wants to represent an interest adverse to a former client has received confidences of that former client, which he should not be allowed to Use now against the former client. The majority of courts that have considered the issue have held that the presumption that a lawyer received such confidences may not be rebutted."
The second and third questions ask us to determine whether a conflict of interest arises if a CLS or a VLP attorney has represented the adverse party in litigation and negotiation on an unrelated matter. Our analysis and conclusion with respect to both questions are the same regardless of whether the legal advice is limited or extensive. See Foulke v. Knuck, 162 Ariz. at 520, 784 P.2d at 726 (App. 1989).
In each case, the first inquiry is whether the VLP program and the CLS are considered as a "firm" for purposes of ER’s 1.9 and 1.10. As stated above, CLS and VLP would probably not be considered one firm. If it is determined that they are to be considered as one firm, it still must be determined whether the matters are "substantially related," or require Client B’s attorney to use information relating to the representation to the disadvantage of Client A except as ER 1.6 would permit or when the information has become generally known. If neither is the case, VLP may represent Client B. If it is determined that the matter is substantially related to the matter on which CLS formerly provided representation to Client A, and that the interests of Client A and Client B are materially adverse, then CLS must obtain the consent of Client A to the representation of Client B by VLP.
The last question assumes that the matter is the same matter and that the interests of the parties are materially adverse. In that situation, it must, once again, be determined whether CLS and VLP are considered to be the same firm. As noted previously, the Ohio Board concluded that, even though the legal aid society did initial intake for cases that ultimately were referred to the volunteer lawyer’s project, the legal aid society could represent the adverse party against the party represented by the VLP because a lawyer-client relationship was not established at the intake stage. See Ohio Board Opinion 89-25 (8/18/89), supra. Further, as we have previously noted, courts have refused to block the simultaneous representation of two parties by the same legal services program. Flores v. Flores, supra; People v. Wilkins, supra. See also, Comment to ER 1.10 cited above in this opinion. If the VLP and the CLS are not considered to be one firm, then they can represent parties whose interests are materially adverse in the same matter. If they are one firm, they cannot do so.
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 1991
1 In addition, we suggest that appropriate notices be posted or placed on the intake form (if the form is provided to the potential client) to inform that person that this information is being obtained to determine if he or she qualifies financially for CLS/VLP services, and that it does not create an attorney-client relationship.