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                                        94 N.J.L.J. 451
                                        May 27, 1971


Appointed by the New Jersey Supreme Court


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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