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94 N.J.L.J. 451
May 27, 1971
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 205
Conflict of Interest
Representing Party Against Former Associate
Both Former Clients
There has been presented to us an inquiry:
(a) Whether an attorney may represent a client in an
action against a former partner of the client when
the said attorney had previously represented the
corporation while both men were principals thereto.
This inquiry is based upon the additional
qualification that the suit in question has to do
with an Assignment of Judgment obtained by the
attorney's client while he was representing the
corporation of which both men were principals. In
addition, the present client had been that of the
attorney prior to the matters at issue.
(b) The undersigned represented a certain individual
and several of his corporations in 1969. At this
time, this client brought into one of his
businesses, a certain associate. I did not know
this associate prior to this time. I then did
handle several matters for this associate,
individually. One was a criminal matter and another
had to do with the associate's personal financial
problems. It was understood and agreed at all times
that the undersigned was attorney for the
corporation and the original client. Work done for
the associate was done in order to permit the
business to continue. Payment was received by the
undersigned from the associate for two matters
unrelated to corporate business. These two matters
were the aforementioned criminal prosecution in the
Federal District Court and the attempt to settle
personal financial problems. At all times, the
undersigned was the attorney for the corporation
and the original client.
This inquiry, in essence, concerns itself with the usual query
as to the right of an attorney to continue to represent either of
two clients when they later have a misunderstanding or a
controversy between themselves. While the facts may in some
instances vary, it is quite obvious that the attorney making the
inquiry was quite involved in representing either or both of his
clients at one time or another.
There apparently now is a lawsuit instituted by the original
client and, in reading the history of the activity between the two
parties, it is again quite obvious that there has been continued
and protracted discussion between the parties, as well as advice
given back and forth, if not on the principal issue, on related
issues, by the parties. Now there is a very definite falling out
between the original client and the attorney who is making the
inquiry and the former associate of the parties. There are requests
made that the attorney institute litigation against the client's
former associate and also matters have gone so far as to indicate
that the attorney is being requested to bring a lawsuit to set
aside some alleged ownership of residence in which the former
associate lives and to which title is presumably held by another
party. The inquiring attorney advises us that the former associate
of the basic client believes that the attorney should not represent
the original client, contending that there is a conflict of
interest and further alleging that the attorney is taking advantage
of confidential information which he says has previously been
imparted to him.
We have written innumerable opinions on this subject and we
feel that resorting to the opinions previously filed would clearly
indicate that there is very definitely the possibility of a
conflict of interest. In Opinion 86, 88 N.J.L.J. 773 (1965), we
quote from In re Blatt, 42 N.J. 522 (1964), where the Court states
at page 524, "There is always a possibility, however remote, that
confidential information received from the original client may be
used to his detriment."
There have been more requests for interpretation of Canon 6,
pertaining to adverse influences and conflicting interests; and
Canon 37, which refers to confidences of a client, than perhaps any
of the other canons. Some of the questions and problems are complex
and intricate and we have stated many times that if there is the
slightest doubt as to whether a proposed representation involves
such a conflict of interest, or may encompass the use of special
knowledge or information obtained through a service of another
client, or necessitates a possible conflict between the interests
of a present or former client and those of the attorney, the doubt
must be resolved by the attorney's taking a definite stand that he
cannot serve two masters.
Where, as here, there is a very definite conflict of interest
or an allegation that the attorney would have the advantage of
confidential information, even if the instances are slight, it
should forbid the attorney's becoming thus involved. The attorney
cannot use facts thus obtained which obviously were given to him in
a fiduciary capacity to be used for the benefit of others, or
adversely to his trust.
We are cognizant of the fact that in some instances, conflict
of interest inquiries have been resolved where there has been a
full disclosure and a consent of all parties concerned. We have
made it clear that this practice should be engaged in sparingly and
only where every party involved clearly understands the situation
and the possible eventualities. We have said that this is
permissible in some instances, but not where the facts are as
indicated in the present inquiry. We feel that the prudent lawyer
would be wise never to put himself in the position of representing
conflicting interests such as appear here; and if the conflict
develops as it has, we feel it would be better for him to withdraw
from the matter entirely, giving both parties ample opportunities
to obtain other and different counsel.
Without limiting ourselves to the number of opinions that we
have rendered on this very subject heretofore, we can refer the
inquirer to the following opinions by this Committee: Opinions 6,
86 N.J.L.J. 718 (1963); 42 87 N.J.L.J. 285 (1964); 43, 87 N.J.L.J.
285 (1964); 86, 88 N.J.L.J. 773 (1965); 89, 89 N.J.L.J. 56 (1966);
94, 89 N.J.L.J. 333 (1966); 97, 89 N.J.L.J. 507 (1966); 128, 91
N.J.L.J. 309 (1968); 135, 91 N.J.L.J. 673 (1968); 154, 92 N.J.L.J.
353 (1969); and 155, 92 N.J.L.J. 358 (1969).
We direct the attention of the bar to the language we used in
Opinion 42, supra, where we said, "... the spirit of the Canons not
only requires the avoidance of any conflict of interests but
anything that might given rise to a belief in the minds of the
public or others that a conflict in fact exists which may be used
unfairly to the disadvantage of the first client [person affected
by the conflict]."
We repeat, therefore, not only do we feel that a definite
conflict of interest has presented itself, but we agree with the
inquirer where he suggests that if we deem it inappropriate for him
to continue, he will arrange for substitute counsel. We believe
this is what should be done.
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