Rutgers School of Law, OAL case acp460

106 N.J.L.J. 205
September 4, 1980

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 460

Conflict of Interest
Regional Sewerage Authority
Counsel, Municipal Counsel - Partners

An attorney inquires whether an attorney may represent a regional sewerage authority when his partner is counsel for a municipality which is a constituent member of the authority, and further where the firm has disqualified itself from any litigation between the authority and the municipality, and from all negotiations between said parties over the signing of a service agreement. The same question is also raised by another attorney, who in addition thereto, states that the municipality also appointed separate counsel for the purpose of handling matters regarding the regional sewer authority, and the attorney asks whether such a municipal arrangement would give "insulation" against the conflict of interest or the apparent conflict of interest under the facts stated.
As to the first question, we point out that a similar question was decided in our Opinion 29, 87 N.J.L.J. 106 (1964), involving an attorney for a county sewer authority who was also municipal attorney for a municipality concerning negotiations and the entering into of a contract between the county sewer authority and the municipality, in which we said:

        It is, therefore, the opinion of this Committee that where, as here, an attorney represents two public agencies, it would clearly be a breach of professional ethics to represent either one or both in negotiating a contract between them and express consent after full disclosure of the facts would not justify such representation because of the public interest involved.

The inquirer states Opinion 29, supra, is in point but distinguishes that case by stating that it did not hold that the two offices were inherently incompatible but only that in certain situations there must be disqualification of counsel. We disagree and suggest that the decision rests on the narrow ground that since two public bodies cannot consent to representation by an attorney in clear conflict of interest situations, it would clearly be a breach of professional ethics for the attorney to represent either or both.
    The present question was not raised, or decided, in Opinion 29. Here, we are asked whether an ethical question is raised where the law firm disqualified itself from any litigation between the authority and the municipality, and from all negotiations between the parties over the signing of a service agreement. If there is frequent involvement between the public parties, and neither lawyer may represent them, the frequent substitution of counsel is a consequence which ill serves the public. Opinion 300, 98 N.J.L.J. 126 (1975).
    If the functions of the regional sewerage authority attorney and the municipal attorney necessarily involve an inherent potential for conflict, the Supreme Court has decided, "it resolves the question by applying the rule that the appearances of impropriety must be avoided." The Supreme Court In re Opinion No. 415, 81 N.J. 318 (1979), affirmed this Committee's Opinion 415, 103 N.J.L.J. 38 (1979), in which we stated:
    The association or partnership of a county attorney and a municipal attorney of the same county could easily suggest to the public mind that in dealing with matters between municipality and county their respective attorneys may not bring the same objectivity to the problems as would be the case where each practiced law independently. The public may infer that because of their professional relationship these attorneys may be less vigorous in advocating their respective positions than would be the case were they from different law firms. As we noted above, it is no answer to say that where the interests of their respective clients are in conflict each will withdraw, because that not only increases the cost of legal services to the public but also deprives the public client of representation by the attorney first selected by it. A client is entitled to counsel's independent professional judgment exercised objectively. DR 5-105. So, when an attorney's public or professional relationship may raise questions about his ability to function in that manner, the conflicting relationship should be avoided. Opinion 390, above. Compare Opinion 261, 96 N.J.L.J. 1150 (1973), and Opinion 33, 87 N.J.L.J. 249 (1964).

    For the foregoing reasons it is our opinion that these inquiries should not form an office association or partnership.

The second question as to whether the appointment of a separate municipal attorney to handle all problems between the municipality and the authority, will so "insulate the partners" against the appearance of conflict of interest, has to be answered in the negative. The fact that the municipality decided that such an appointment had to be made is a tacit recognition of the problem of potential or apparent conflict of interest. Public confidence is not likely to be enhanced by the municipality's engagement of a separate attorney to handle the potential conflicts; all of which could easily be avoided by the disengagement of the partnership in the first place. From the public viewpoint, the appearance of a conflict of interest is not cured by the formal appointment of the special attorney. In fact, public confidence would be eroded.
    While the Supreme Court, limited its conclusions In re Opinion No. 415 to the precise facts of that case, nevertheless the above quotation must serve as a caveat to all lawyers. The basic principles of that opinion apply with equal force to these inquiries.

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