Avoiding Malpractice: Dangers in representing more than one client in the same matter
Lawyers new to the practice of law often are approached by potential clients, including friends and family members, about forming a business entity for more than one client or to represent two individuals in the same automobile accident. The reason usually given is that the clients want to save money by having one lawyer. Sometimes the referral comes from a close friend or family member, where the friend or family member knows and trusts the lawyer.
On the surface, joint representation seems to most laypersons like a perfectly logical and economical thing to do. However, practitioners run into potential conflicts of interest stemming from any joint representation, and especially where one or more of the clients are friends or family members, and others in the transaction are not.
As licensed attorneys, we owe each of our clients a duty of “undivided loyalty.”[1] Whenever there are two or more individuals (including corporate entities) asking you for legal assistance, there is always a potential of a conflict of interest between them which could later “divide” them. If there is a dispute between the clients, even a minor one, the attorney representing multiple interests is not permitted to take sides, or mediate between the parties. Doing so would violate the duty of undivided loyalty to all of the clients, collectively. See Cal. Business & Professions Code sections 6068(e)(1) and 6068(m).
It is important to tell the clients that there is no confidentiality between the lawyer and all of the clients as a group. There is attorney-client privilege as to the rest of the world, but there is no attorney-client privilege between jointly represented clients. Therefore, anything one client tells you that is of a substantive nature relative to the engagement—even if that client wants you to withhold the information from the other clients in the matter—you may have to relay it to the other clients, because the information may be crucial to your duties to one or more of them. If the clients have a dispute that they cannot resolve among themselves, and are unable to provide you with a common set of instructions, you may have to withdraw from the representation and each client may have to hire separate and independent counsel. That can be a very costly situation for the clients, especially assuming that you have been paid already for doing the work. Not only that, but if in fact you find yourself in a conflict situation, you may not be entitled to a fee at all, which may involve disgorging to the clients any fees you may have already been paid. See Sheppard Mullin v. J-M Manufacturing (2018) 6 Cal. 5th 59. An attorney’s violation of the California Rules of Professional Conduct (“CRPC”) may be considered a breach of the attorney’s fiduciary duty to the client, which is also below the applicable standard of care. If the violation actually causes damages to a client, it may form the basis for a legal malpractice or breach of fiduciary duty civil complaint. Violations of a client’s trust, by any attorney, can cause significant financial and emotional damages to a client.
It is the attorney’s responsibility to recognize when there are potential conflicts in a joint representation, to explain to the clients what the potential conflicts are, and to explain to the clients what would happen in the event that the potential conflicts become actual conflicts that would possibly require withdrawal. Informed consent and waiver includes telling the joint clients that additional expense, or harm to the matter on which you are being consulted, may be the result if an actual conflict arises. Finally, you must advise them to seek the advice of an independent attorney on the wisdom of agreeing to be jointly represented, providing enough time for the clients to consult such independent attorney. (CRPC 1.7) An attorney’s failure to recognize and to obtain written informed consent[2] from each affected client may also be considered to be incompetent representation (CRPC 1.1), and a violation of the attorney’s duty to communicate all matters of substance to a client (CRPC 1.4).
Certain circumstances require even more care on the part of the lawyer to obtain informed written consent, including additional disclosures. If one of the clients who are part of the joint representation is a personal friend, family member, former client, or business partner, for example, that fact must be disclosed to the other client(s) because they may feel your advice would be biased in favor of the person with whom you had or have a prior or ongoing relationship. SeeSDCBA Ethics Opinion 2024-2.
Most of these disclosures could be made as part of a written engagement agreement. Best practices in multiple representation call for preparing a separate conflict of interest waiver letter relevant to each set of circumstances related to the particular matter. Not only does this get the clients’ attention, but also will cause the attorney to go through the required mental exercise to determine whether multiple representation in the single matter to which the multiple representation is contemplated is really such a good idea.
Who you are representing is a critical and substantial factor in every representation by an attorney of a client. Asking yourself “Who is my client?” and knowing the answer every time is the Number One requirement.
[1] “The relation between attorney and client is a fiduciary relation of the very highest character, and binds the attorney to most conscientious fidelity—uberrima fides.” Cal Pak Delivery, Inc. v. United Parcel Service, Inc. (1997) 52 Cal.App.4th 1. “Furthermore, where there is reason to doubt the loyalty of counsel or the adequacy of counsel’s representation, serious questions arise concerning the preclusive effect of any resulting judgment.” Id.
[2] The definition of “informed written consent” can be found in the CRPC 1.0.1(e), and (e-1).