101 N.J.L.J. 54
January 19, 1978
Conflict of Interest
Representing City and Its Medical Center
An attorney employed by a city law department inquires whether
he may represent a municipal hospital managed by a board of
managers appointed by the mayor of the city pursuant to N.J.S.A.
30:9-14 in a dispute with an insurance carrier over premiums. He
indicates that the city has been purchasing the professional
liability insurance covering the independent medical center and its
professional staff. Although the policy is purchased through the
city's department of finance, the named insureds under the policy
are the medical center and its staff physicians and nurses, and
neither the city nor its employees are named insureds. The policies
are purchased by the city through an insurance broker which places
the insurance with an insurer willing to undertake the risk. A
dispute has arisen with the insurer over the amount of the premium
and the insurer has filed a suit against the city, the medical
center and the city's insurance broker.
Crossclaims have been filed between the city and the medical center on the one hand, and the insurance broker on the other. It is suggested that if the medical center were represented by independent counsel, it is possible that a crossclaim would be filed by the medical center against the city.
We have ordinarily held that an attorney should not undertake to represent two boards or agencies if there is or may be a conflict of interest in a particular situation. Opinion 199, 94 N.J.L.J. 225 (1971), Opinion 164, 92 N.J.L.J. 831 (1969). However, in Opinion 300, 98 N.J.L.J. 126 (1975), we held that an attorney for the planning board could serve as attorney to the board of health in the same municipality since the board of health matters did not appear to be inherently in conflict with the planning board matters and the attorney could function in both capacities except where a particular situation presents a conflict of interest.
In the subject inquiry, we find the circumstances analogous to the dual representation deemed permissible in Opinion 333, 99 N.J.L.J. 496 (1976), where the attorney for one insurance company was permitted to represent two defendants if, in fact, there was only one real party in interest. In his statement of facts, the inquirer advises that although the medical center is an independent agency, the city subsidizes the agency and makes up any deficit in its annual operating expenses. Accordingly, we think it is permissible that the attorney continue the dual representation. DR 5-105 does not forbid all employment involving conflicts and, in fact, permits it when it comes within the purview of DR 5-105(C). That applies where the attorney believes he can adequately represent the interest of each party and "each consents to the representation after full disclosure of the facts and of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each." Opinion 357, 99 N.J.L.J. 1074 (1976) (suit by one attorney representing plaintiff for his personal injuries and his insurance carrier in subrogation for his medical expenses). In that case we said that dual representation with informed consent was permissible because it was based upon "a desire to avoid payment of two sets of legal fees from one potential fund under circumstances, where on the merits of the issues in suit, the interests of both parties are identical."
If we accept the statement that the city will make up any deficit in the budget of the medical center, then the interests of both parties are in fact identical and the only issue is the amount of premium to be paid to the insurer, and the desire to avoid payment of two sets of legal fees from one potential fund should justify the dual representation proposed. Ordinarily, where the public interest is involved, an attorney may not represent conflicting interests even with the consent of all concerned, Opinion 353, 99 N.J.L.J. 862 (1976). Here we do not believe the public interest prohibits the dual representation; on the contrary, it militates in its favor.