State Bar of Arizona Ethics Opinions

07-04: Joint Representation; Conflicts; Communication; Informed Consent
11/2007

The representation of multiple clients in a single litigation matter is generally permissible so long as the lawyer reasonably believes that he or she will be able to provide competent and diligent representation to each client, the representation does not involve the assertion of a claim by one client against another client, and each client gives informed consent, confirmed in writing.  Ethical Rule (“ER”) 1.7(b). The requirement of informed consent arises only if, as an initial matter, the lawyer determines that the lawyer can, in fact, competently and diligently represent each client in the particular matter. Once that determination is made, the lawyer bears the burden of showing that there was adequate disclosure to each client and that each client gave an informed consent.

The disclosures required to obtain the client’s “informed consent” will depend on the facts and circumstances of the particular matter. The lawyer must explain the possible effects of the common representation on the lawyer’s obligations of loyalty, confidentiality and the attorney-client privilege. In addition to the confirming writing required by ER 1.7(b), informed consent usually will require that the lawyer explain the advantages and disadvantages of the common representation in sufficient detail so that each client can understand why separate counsel may be desirable. Finally, during the course of the matter, the lawyer must continue to evaluate whether conflicts have arisen that may require additional disclosures and consent or withdrawal from the representation.



FACTS

The inquiring lawyer seeks to represent multiple plaintiffs bringing claims against a defendant in a single matter and has asked for comment on a proposed written disclosure (“consent form”) that each client would be asked to sign.  This opinion references the proposed consent form for purposes of illustration only, and is intended to set forth general guidelines that lawyers should undertake in determining whether the representation of multiple clients in litigation is permissible and, if so, the general subject matter of required disclosures under ER 1.7.[1]

QUESTION PRESENTED

Where a lawyer seeks to represent multiple clients in a single litigation matter, what information must the lawyer adequately communicate to the clients to satisfy ER 1.7's requirement of an “informed consent, confirmed in writing”?[2]

RELEVANT ETHICAL RULES

ER 1.0  Terminology

(a) “Belief” or “believes” denotes that the person involved actually supposed the fact in question to be true.  A person's belief may be inferred from circumstances.

(b) “Confirmed in writing,” when used in reference to the informed consent of a person, denotes informed consent that is given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent.  See paragraph (e) for the definition of “informed consent.”  If it is not feasible to obtain or transmit the writing at the time the person gives informed consent, then the lawyer must obtain or transmit it within a reasonable time thereafter.

. . .

(e) “Informed consent” denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.

. . .

(h) “Reasonable” or “reasonably” when used in relation to conduct by a lawyer denotes the conduct of a reasonably prudent and competent lawyer.

(i) “Reasonable belief” or “reasonably believes” when used in reference to a lawyer denotes that the lawyer believes the matter in question and that the circumstances are such that the belief is reasonable.

. . .

(n) “Writing” or “written” denotes a tangible or electronic record of a communication or representation, including handwriting, typewriting, printing, photostating, photography, audio or video recording and e-mail.  A “signed” writing includes an electronic sound, symbol or process attached to or logically associated with a writing and executed or adopted by a person with the intent to sign the writing.

. . . .

ER 1.6  Confidentiality of Information

(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted or required by paragraphs (b), (c) or (d), or ER 3.3(a)(3).

. . . .

ER 1.7  Conflict of Interest: Current Clients

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.  A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client. a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if each affected client gives informed consent, confirmed in writing, and:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law; and
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal.

RELEVANT ARIZONA ETHICS OPINIONS

Ariz. Ethics Ops. 96-04, 02-06

OTHER RELEVANT ETHICS OPINIONS

ABA Formal Op. 06-438; D.C. Bar Op. 327
 
OPINION

The Ethical Rules specifically contemplate that a lawyer may represent multiple clients.  See ER 1.8, cmt 13. The potential benefits of multiple representation include “reduced legal fees, the avoidance of unnecessary future conflicts, and, in litigation, the opportunity to present a united front.” Sellers v. Superior Court, 154 Ariz. 281, 286, 742 P.2d 292, 297 (App. 1987). However, representation of multiple clients in a single matter presents a significant risk of materially limiting the interests of individual clients. Both Sellers v. Superior Court and Ariz. Ethics Op. 96-04 (February 1996) [3] illustrate the type of conflicts that can arise when a lawyer undertakes to represent multiple clients in the same matter. The ABA/BNA Lawyer’s Manual on Professional Conduct cautions that “clients seeking shared representation often do not understand the risks and disadvantages of shared counsel,” including that there can be “no secrets inside the joint attorney-client relationship,” and that if interests later diverge, the clients may be forced to hire new counsel.  ABA/BNA Lawyer’s Manual on Professional Conduct §51:305 (2005).  Based on these and other inherent risks of joint representation, ER 1.7(b) bars representations involving concurrent conflicts unless the lawyer obtains the clients’ “informed consent, confirmed in writing.”

Notably, not all conflicts are “consentable.” ER 1.7(b)(1) first requires that “the lawyer reasonably believe[] that the lawyer will be able to provide competent and diligent representation to each affected client.” Thus, even if the client consent form is comprehensive, the clients’ waiver is only effective if the lawyer held a reasonable belief that he or she could competently and diligently represent each of the involved clients. ER 1.7, cmts 2, 14 and 15; see also ER 1.0(a), (h) and (i). For example, Comment 28 to ER 1.7 cautions against representation of multiple clients in the same matter where “contentious litigation or negotiations” between the clients are “imminent or contemplated.” The lawyer should evaluate whether other circumstances unique to the particular matter may make the representation impermissible or require special disclosures, such as the limited financial resources of a defendant where multiple plaintiffs are being represented. This standard requires that the attorney be sufficiently familiar with the facts underlying the proposed representation to reasonably make this threshold determination of whether the representation is permissible under the ethical rules.  See, e.g., Felix v. Balkin, 49 F. Supp. 2d 260, 270 (S.D.N.Y. 1999) (“[a]ccepting a common representation is not a risk-free activity” and “it is incumbent upon the attorney to learn the essential facts in order both to form a professional opinion that interests are, in fact, common and not adverse, and to explain fully to each client the implications of the common representation”).

This opinion therefore assumes that the inquiring lawyer is satisfied that the representation is permissible and that the conflict is, indeed, “consentable.” See In re Bentley, 141 Ariz. 593, 596, 688 P.2d 601, 604 (1984) (applying DR 5-105(C) to hold that representation created an impermissible conflict of interest because “[e]ven with full disclosure, not all conflicts may be waived by consent of the parties”); In re Petrie, 154 Ariz. 295, 742 P.2d 796 (1987 ) (similar).

Although the disclosures need not take any particular form, a lawyer seeking “informed consent” to joint representation generally is required to orally discuss the potential risks and advantages of the joint representation to ensure that each client fully appreciates the risks and has an opportunity to ask questions. ER 1.7, cmt 20. ER 1.0 thus provides that the requirement of an informed consent “confirmed in writing,” “denotes informed consent that is given in writing... confirming an oral informed consent.” ER 1.0(b) (emphasis supplied). “The requirement of a writing does not supplant the need in most cases for the lawyer to talk with the client, to explain the risks and advantages... and to afford the client a reasonable opportunity to consider the risks and alternatives and to raise questions and concerns.” ER 1.7, cmt 20. Here, the inquiring attorney’s proposed consent form recites that the law firm has explained the potential risks of the joint representation and that the clients have been permitted to ask questions about those issues. In each case, the lawyer undertaking to represent multiple clients must evaluate whether such explanation was in fact adequate to fully inform the clients under the governing Ethical Rules and the general guidelines discussed below.

To obtain any client’s informed consent, the lawyer must communicate “adequate information" about the “risks” and “alternatives” of the multiple party representation. The specific disclosures required depend in large part on “the nature of the conflict and the nature of the risks involved” given the facts and circumstances of the particular matter. ER 1.7, cmt 18. One such circumstance that should be considered is the level of each client’s legal sophistication. ER 1.0, cmt 6 (“[i]n determining whether the information and explanation provided are reasonably adequate, relevant factors include whether the client or other person is experienced in legal matters generally”); RESTATEMENT (THIRD) OF LAW GOVERNING LAWYERS § 122 cmt c(i) (2000) (“clients differ as to their sophistication and experience, and situations differ in terms of their complexity and the subtlety of the conflicts presented”).  Unsophisticated clients, such as clients without independent or in-house legal counsel, may require more detailed explanation than other clients who are experienced in litigation or multi-party representations.  Depending on the complexity of the matter, it may be appropriate for the lawyer to advise the client to seek independent counsel to assist in evaluating the potential conflicts, although this is not always required. ER 1.0, cmt 6.

A lawyer “must make reasonable efforts to ensure that the client... possesses information reasonably adequate to make an informed decision.”  ER 1.0, cmt 6. With respect to the required content of the disclosure, Comment 18 to ER 1.7 indicates that the lawyer must explain the “implications of the common representation, including possible effects on loyalty, confidentiality and the attorney-client privilege and the advantages and risks involved.”  Such information includes disclosing to the client: (1) the conflicting or potentially conflicting interests of the other clients; (2) the potential courses of action that may be foreclosed or limited by the joint representation; (3) the effect of the representation upon the client's confidential information and on the attorney-client privilege; (4) any reservations the lawyer would have about the representation if the lawyer were representing only the client being advised; and (5) the consequences on the representation if one client later withdraws their consent to the joint representation.  RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 122 cmt c(i) (2000); ABA/BNA Lawyer’s Manual on Professional Conduct §51:309-311 (2005).  The lawyer must explain the conflict in enough detail that the clients can “understand the reasons why it may be desirable for each to have independent counsel, with undivided loyalty to the interests of each of them.”  DANIEL J. MCAULIFFE, ARIZONA LEGAL ETHICS HANDBOOK §0.1:415 (2d ed. 2003 with 2006 supp.) (quoting Sellers v. Superior Court, supra, and discussing "informed consent" requirement of Arizona law).

While the confirming writing “need not take any particular form[,] it should, however, include disclosure of the relevant circumstances and reasonably foreseeable risks of the conflict of interest, as well as the client’s agreement to the representation despite such risks.” [4] ER 1.7, cmt 20. While there is no “one size fits all” template for ER 1.7’s required disclosures or for the content of the confirming writing, the proposed consent form provided by the inquiring lawyer for the Committee’s consideration illustrates the following general topic areas that should be addressed, in addition to others that may be required by particular circumstances of the proposed representation:

(1) Conflicting Testimony.  The implications of testimonial conflicts among jointly represented parties is addressed in Sellers v. Superior Court, where the defendants had all consented in advance to the joint representation, with knowledge of testimonial conflicts, yet an argument was made in the context of a motion for disqualification that those conflicts presented an “untenable” conflict at the outset on the facts of that case.  Although the inquiring lawyer’s consent form appropriately identifies the potential for testimonial and other conflicts, it may be prudent to provide further explanation on how such testimonial conflicts could negatively impact the claims of each individual client, assuming that was not done orally.  Sellers, 154 Ariz. at 287, 742 P.2d at 298 (on remand following disqualification order, trial court should consider whether the ER 1.7 disclosure “encompass[ed] the divergence of interest among defendants and the potential significance of their testimonial disparities”).  Furthermore, any known testimonial conflicts should be evaluated to determine whether the conflict is “consentable.”

(2) Conflicting Settlement Positions.  The consent form appropriately discloses that there may be conflicts among clients with respect to settlement, including that “there may be different possibilities of settlements of the claims.”  It recites the clients’ understanding that “a lump sum settlement offer to all plaintiffs” is “not permissible,” that the law firm may reject such an offer and demand individual settlement offers, and that each plaintiff is free to accept or reject its individual settlement offer.  This opinion assumes that the inquiring lawyer, in discussing the topic of settlement, orally discussed the advantages and disadvantages of the various settlement approaches, including the possible disadvantages of requiring individual offers (as opposed to aggregate offers).  Additionally, because individual offers are being required, it should also be made clear to each client that information on the individual settlement offer it receives, and any response thereto, cannot be kept confidential from the other jointly represented plaintiffs.  See ER 1.8, cmt 13 (noting that ER 1.8 is a corollary of ER 1.7 and requires that “before any settlement offer... is made or accepted on behalf of multiple clients, the lawyer must inform each of them about all the material terms of the settlement, including what the other clients will receive or pay if the settlement... is accepted”); see also ABA Formal Op. 06-438 (February 10, 2006) (with respect to aggregate settlement offers under ER 1.8, lawyer must provide each client with detailed information on every other client’s participation in the proposed settlement, along with explanation of how costs will be allocated).[5]

(3) Attorney-client Privilege. Lawyers undertaking a joint representation must carefully explain to each client the effect of the joint representation on the attorney-client privilege. As the comments to ER 1.7 reflect, the lawyer must disclose that there is no attorney-client privilege between jointly represented clients during the pendency of the matter, and the implications that arise from the absence of any such privilege. ER 1.7, cmts 29, 30 and 31; see Federal Deposit Ins. Corp. v. Ogden Corp., 202 F.3d 454, 461 (1st Cir. 2000) (privilege is “inapplicable to disputes between joint clients”). Additional disclosures also should be made on the topic of confidentiality and the possibility that withdrawal may be required in the future if untenable conflicts arise, as further discussed below. 

(4) Withdrawal of the lawyer in the case of a conflict.  The inquiring lawyer should disclose that the firm may be forced to withdraw if an untenable conflict arises during the representation, and the delays and expense that could result should such withdrawal be required. ABA/BNA Lawyer’s Manual on Professional Conduct §51:309-311 (2005) (lawyer should disclose that withdrawal may be required if one joint client asks the lawyer not to reveal information to another); Ariz. Ethics Op. 02-06 (September 2002) (“Aggregate representation also is ethically proper if the disclosure to each client includes an explanation that the lawyer may have to withdraw from representing each client if a conflict arises among the clients”) (emphasis in original); ER 1.7, cmt 30 (“The lawyer should . . . advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other”).[6]

(5) Confidentiality. Disclosures should be made concerning the impact of the joint representation on the confidentiality of each client’s communications with the lawyer. As noted in Ariz. Ethics Op. 02-06, “information shared by one co-client that is necessary for the representation of the other joint clients will be shared with the other co-clients because there is no individual confidentiality when a joint representation exists.” Hence, the clients should be advised that all information provided by them in connection with the representation will be available to the other clients and that the normal confidentiality obligations of the lawyer do not apply as between the jointly represented clients. See ER 1.7, cmt. [30]; ER 1.6(a) (lawyer shall not reveal confidential information “unless the client gives informed consent”). As noted above, it also should be explained that if one joint client instructs the lawyer not to share material information with other joint clients, a conflict is created that may require the lawyer’s withdrawal from the joint representation. See D.C. Bar Op. 327 (March 2005) (addressing lawyer’s obligation to share otherwise confidential information with all clients in a joint representation).

CONCLUSION

The adequacy of any disclosure under ER 1.7 ultimately depends on the particular risks posed by the facts and circumstances of each case. This opinion sets forth general procedures and guidelines for determining whether representation is permissible under ER 1.7, and the content of the required disclosures.  The inquiring lawyer is best suited to determine whether the consent form, along with oral disclosures, is adequate based on those facts and circumstances.  Additionally, at the time any settlement offer is received, the inquiring lawyer should re-evaluate whether additional disclosure and consent is required under ER 1.8.  See ABA Formal Op. 06-438.  Finally, in cases of joint representation, lawyers must evaluate on an ongoing basis whether future developments in the case create issues that require additional disclosures and consent to the multiple representation or possible 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 2007

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[1] As the opinion makes clear, the disclosures required to obtain an informed consent, and the content of the confirming writing, will depend on the unique facts and circumstances of each matter.  Depending on the nature and complexity of the matter, different disclosures may be appropriate or required under the Ethical Rules or the general guidelines set forth in this opinion.

[2] This opinion addresses only the information that must be disclosed to obtain an informed consent under ER 1.7, and does not address other information that must be contained in a client representation agreement under other provisions of the Ethical Rules.

[3] Sellers involved a trial court order disqualifying defense counsel, who represented 11 defendants in a civil case. The Court of Appeals ruled that the disqualification had been prematurely ordered. Ariz. Ethics Op. 96-04 discussed conflict-of-interest and fee issues that arise when a law firm represents both a driver and passenger in a personal-injury case against another driver.

[4] As the comments to ER 1.7 reflect, the purpose of the confirming writing is both to emphasize the seriousness of the client’s consent and to avoid later disputes and ambiguities about what was disclosed.  [ER 1.7, cmt 20 (“[T]he writing is required in order to impress upon clients the seriousness of the decision the client is being asked to make and to avoid disputes or ambiguities that might later occur in the absence of a writing.”)]

[5] ABA Formal Op. 06-438 states that the special disclosure requirements of ER 1.8 apply whenever “any two or more clients consent to have their matters resolved together.” The opinion notes that an aggregate settlement within the meaning of ER 1.8 can take a variety of forms, and may include an offer that specifies the amount to be paid to each individual client.  The inquiring lawyer should evaluate any settlement offer received to determine whether it is, in substance, an aggregate offer that would trigger the additional disclosure requirements of ER 1.8.

[6] In limited circumstances a lawyer may be able to obtain informed consent allowing each client to keep certain information confidential. See ER 1.7, cmt 30.