92 N.J.L.J. 358
May 29, 1969
Conflict of Interest
Legal Services Corporations
Suing Former Client
This inquiry is presented by a county legal services
corporation (hereinafter referred to as the "Y" Corporation) which
we assume is a nonprofit corporation funded by the Office of
Economic Opportunity. The pertinent facts are as follows:
The Y Corporation succeeded an entity (hereinafter referred to as the "X" Corporation) which was, except for personnel and administrative structure, substantially similar in operation (including funding), communities served and type of work. The files of the X Corporation are in the possession of the Y Corporation. The "open" files are being processed. The "closed" files are stored for reference.
Mrs. S, in September 1966, sought and received advice from an attorney at the office of the X Corporation concerning a divorce. About eight months later, in May 1967, her husband went to the X Corporation regarding criminal charges against him in a municipal court, unrelated to his domestic affairs, and presumably received advice from an attorney different from the one who interviewed his wife. Mr. S was also represented by the X Corporation in January 1968 on a criminal charge in a municipal court and a month later, in February 1968, received advice relating to a domestic relations court appearance. Six months later, in August 1968, Mrs. S came to the Y Corporation and a suit for divorce was instituted on her behalf. A request to enter default against Mr. S in the divorce action, was about to be entered when the Y Corporation discovered, in a closed file, the prior dealings of X Corporation with Mr. S, as above related. The question for determination is whether the Y Corporation can ethically proceed with the divorce action on behalf of Mrs. S.
Canons of Professional Ethics, Canon 6 imposes a duty on a lawyer "to disclose to the client all the circumstances of his relations to the parties, and any interest in or connection with the controversy," and forbids "the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of the client with respect to which confidence has been reposed." Canon 37 provides, in part:
It is the duty of a lawyer to preserve his client's confidences. This duty outlasts the lawyer's employment, and extends as well to his employees; and neither of them should accept employment which involves or may involve the disclosure or use of these confidences... . A lawyer should not continue employment when he discovers that this obligation prevents the performance of his full duty to his former or to his new client.
In the case of In re Braun, 49 N.J. 16 (1967), the Court considered a presentment charging that an attorney violated the Canons of Professional Ethics, Canons 6 and 37, in that he had advised a husband and wife, with a view to reconciliation, and subsequently represented one against the other in a divorce action. The Court said (at page 18):
The factual contention of respondent that no actual confidence was received is without merit even if true. The intent of Canons 6 and 37 is violated whenever the conduct of an attorney raises the possibility that he has or may use the confidences of one client for the benefit of another. In re Blatt, 42 N.J. 522, 524, (l964). Therefore, after respondent had attempted to counsel both husband and wife with a view to reconciliation at the meeting of June 1964, he could not thereafter with propriety represent either in a divorce action. N.J. Advisory Committee on Professional Ethics, Opinion 26, 87 N.J.L.J. 19 (1964). And apart from the meeting of June 1964, after respondent discussed the marital and financial problems of complainant in April 1965, it was highly improper for him to agree to substitute himself as attorney for complainant's wife in her divorce action. N.J. Advisory Committee on Professional Ethics, Opinion 86, 88 N.J.L.J. 773 (1965). To be distinguished are those instances in which the attorney at all times represents one party, and his contact with the other party is limited to non-confidential situations wherein the adversary position of the attorney is clear. N.J. Advisory Committee on Professional Ethics, Opinion 89, 89 N.J.L.J. 56 (1966).
In our Opinion 128, 91 N.J.L.J. 309 (1968), which concerned the propriety of an attorney representing a husband in a divorce action where the wife had consulted the former partner of the attorney about her matrimonial difficulties during the existence of the partnership, we held that it would be unethical to do so even
though the attorney had never interviewed the wife and no confidences were disclosed to him by his former partner. We said:
For all intents and purposes, the client of one partner is a client of all the partners. ... The inquirer here, however, states that no confidence had been reposed in him. But this Committee has made clear in the past that the appearance of conflict, even where no actual conflict exists, may require disengagement by an attorney from the matter which gives rise to such an appearance. See our Opinion 68, 88 N.J.L.J. 91 (1965) and 42, 87 N.J.L.J. 285 (1964).
See also N.J. Advisory Committee on Professional Ethics Opinion 126, 91 N.J.L.J. 257 (1968).
We consider the X and Y Corporations in the same category as law partnerships and the ethical standards established by the Canons of Professional Ethics and the decisions of our courts apply to said entities with the same force and effect as they apply to attorneys in a law partnership. We believe the actions of the X Corporation must be considered the actions of the Y Corporation. The change of the name of the corporate entity or the change of the personnel is of no consequence. It is the attorney-client relationship that must be considered and this relationship existed between Mr. and Mrs. S and all the attorneys of the entities. We conclude, therefore, that it would be unprofessional for the Y Corporation to proceed with the divorce action of behalf of Mrs. S.