98 N.J.L.J. 449
May 22, 1975
Conflict of Interest
Multiple Parties Fees Upon Withdrawal
A law firm represented a decedent during his lifetime in a
variety of matters including most pertinently a workmen's
compensation proceeding arising out of an accident occurring on
April 15, 1969 and various matrimonial matters against decedent's
wife including proceedings relating to the children's custody.
Decedent's wife and children had prior to his death been living
separately from him since May or June 1969, but no divorce had been
sought. Decedent did, however, with the firm's help execute a will
disinheriting his wife and children in favor of his mother and
Decedent died in January 1972 as a result of an epileptic seizure which the firm contends was causally related to the original accident of April 15, 1969 as well as to the alleged negligence of the hospital at which he died and of his physician or physicians. Since the death of the decedent the law firm has done the following (a) It has represented and still represents the mother and sister as executors of decedent's will. (b) It has continued, with the consent of the mother and sister and authority of the wife and children, to prosecute the prior workmen's compensation proceedings on behalf of the wife and children as statutory dependents. (c) It instituted a new workmen's compensation proceeding relating to the death, again on behalf of the wife and children as statutory dependents but including a claim for funeral expenses on behalf of the mother, and hospital and medical services on behalf of the estate. (d) At the independent request of both the wife and children on the one hand and the mother and sister on the other, it investigated the facts to ascertain whether or not a wrongful death action would lie. Shortly before the running of the statute of limitations, it received expert advice that there was a basis to claim negligence and thereupon instituted suit for wrongful death in the name of the estate on behalf of all as their interests might appear.
In both the workmen's compensation and wrongful death actions, it has become evident to the firm that actual controversies exist between the wife and children on the one hand and the mother and sister on the other relating to entitlement to the proceeds of any recovery. It has also become clear that - although all parties authorized the firm to prosecute the particular action - each group is relying upon the firm to protect its interests against the other group's interests in respect to such proceeds. The firm has even advised the mother and sister to retain separate counsel on account of this controversy in the workmen's compensation proceedings and has also advised both groups in the wrongful death action to retain separate counsel.
From all the facts set forth in the inquiry and memorandum, it is concluded that all actions were continued and initiated in all good faith by the firm.
Three of the questions propounded by the inquirer concern the assassins of improper conflict of interest. Clearly there is a conflict under Disciplinary Rules of the Code of Professional Responsibility, DR 5-105(B) which requires the firm forthwith to withdraw from representation of all parties in any matter. The firm recognizes in its inquiry and memorandum its inability adequately to represent the interests of both groups. It, therefore, cannot obtain informed consent under Disciplinary Rules of the Code of Professional Responsibility, DR 5-105(C). Further discussion of that question would, therefore, appear superfluous.
The remaining questions relate to whether the firm may seek legal fees for services rendered prior to withdrawal. We believe that the firm may make application to the Division of Workmen's Compensation to share on an equitable basis in any fees awarded for services rendered prior to withdrawal and may submit its bill for the reasonable value of its services rendered prior to withdrawal in the wrangle death action. It would appear from the facts presented that the firm has been acing for both groups with the knowledge and in the interests of all in prosecuting the matters to the present point. The stage of the proceedings, wherein the conflict becomes important, i.e., a determination as to which group is to share in any award or recovery and on what basis, has not yet been reached.
It is our opinion that there is no impropriety in seeking compensation for the reasonable value of services rendered to this point.