Rutgers School of Law, OAL case ACPE054

87 N.J.L.J. 689
October 29, 1964

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 54

Conflict of Interest
Municipalities

    This inquiry presents the problem of two partners representing two different municipalities in litigation involving a county tax situation where the interests of the municipalities are in conflict.
    The facts are these: A third municipality not represented by either partner instituted a suit alleging that certain municipalities in its county were not properly assessing personal property, as a result of which the plaintiff municipality was paying a disproportionate share of county taxes. The other municipalities in the county which were made parties defendant included the one represented by the attorney posing the inquiry, the one of which his law partner was attorney, and certain others which engaged the partner, or the firm, as special counsel.
    As the complaint was first filed, it did not necessarily indicate that the position of the municipality represented by the inquirer would be in conflict with those of the other defendants represented by his partner or the firm. However, plaintiff's cause of action was amended, as a result of which if plaintiff's theory of law was correct, the municipality represented by the inquirer would be in a position not only to have its current county tax reduced, but perhaps to secure a tax refund for a prior year or years. On the other hand, the municipalities represented by the partner, and some of those specially represented, would have to pay additional taxes because it was charged that some of them under- assessed the properties within their boundaries.
    The inquirer had recently become attorney for his municipality as a result of a change in the political alignment of the municipal council. When the divergent positions of the two municipalities developed, questions were raised as to the ability of the inquirer to represent his municipality in a situation where his partner was supporting a position for at least one other municipality which appeared to be in conflict with the best interests of the municipality represented by the inquirer.
    The inquirer states that neither he nor his partner contributes his municipal salary to the firm account, but that each retains his own and does not share in the salary of the other. This
fact, we believe, has no bearing on the problem involved.
    At the time the inquiry came to this Committee, it was important that the Committee give an immediate opinion as to whether a conflict of interest existed, so that if it did the inquirer could promptly withdraw from the suit and have other counsel substituted for him. It was the unanimous conclusion of this Committee that a conflict of interest did exist and the inquirer was advised that he should withdraw and that a formal opinion would be filed in due course. The inquirer did withdraw.

    Subsequently, a majority of the members of the council of the mmunicipality involved stated upon the record of their proceedings that they had considered the entire matter and believed that the attorney had acted properly in all respects for the best interests of the municipality.
    Of course, the municipality cannot give its consent where the public interest is involved, and mere disclosure to the municipality is not sufficient to resolve the conflict of interest
problem. Ahto v. Weaver, 39 N.J. 418 (1963); N.J. Advisory Committee on Professional Ethics, Opinion 29, 87 N.J.L.J. 106 (1964).
    While initially it might not have been apparent to the inquirer that there was a conflict of interest, it should have become immediately evident when the plaintiff's approach to the problem changed, so that if its legal theory was correct the inquirer's municipality was in a situation to secure tax benefits as contrasted with the position of at least one of the municipalities represented by the inquirer's partner, which would be required to pay additional taxes. See Drinker, Legal Ethics 106
(1953), and the Opinions of the American Bar Association's Committee on Professional Ethics therein cited. See also, N.Y. County Lawyers Ass'n., Committee on Professional Ethics, Opinion 33 (1914).
    This case provides a clear example of what was pointed out in N.J. Advisory Committee on Professional Ethics, Opinion 8, 86 N.J.L.J. 718 (1963), that counsel in matters involving the public business must not only be extremely careful to avoid any situation which actually involves a conflict of interest, but also must avoid any situation which could be construed to be in conflict with his duties and responsibilities to the municipality.

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