104 N.J.L.J. 129
February 14, 1980
Conflict of Interest
Representing Agent Against
Management Corporation Previously
Represented in Combined Tax Rebate Action
The attorney for a management corporation has engaged to
defend it against a property owner's termination of its management
agreement. The attorney had been retained by the management
corporation to litigate the owner's dispute under the Tenant's
Property Tax Rebate Act. By the terms of management agreement, the
monies recovered in the name of the owner inured to the benefit of
the management corporation. Then, at the request of the management
corporation and with the consent of the owners, he renewed the
The inquirer represents that in the prior litigation the owner was but a nominal party, since only his client the management corporation received the pecuniary benefits resulting from the action. He also states that at no time in the litigation did he ever meet with or have any direct contact with the general or limited partners, that he has never received either from the agent or from the partnership any confidential information as to the firm's affairs. The question to be decided is whether or not an attorney may represent the agent of a principal in a dispute with that principal over the agency agreement notwithstanding that the attorney previously represented the principal as a nominal party in a suit where monetary benefit of the litigation inured to the agent by reason of the agency contract. The inquiry suggests that since the money produced in the litigation went to benefit the agent alone, the principal was not the real party in interest, hence not a "true" former client. The agent received the benefit only as a consequence of its contract with the principal. Absent such contractual result, the fruits of the action seeking interpretation of the Tenant's Property Tax Rebate Act would benefit the successful owner-principal. We do not view this distinction as controlling. Thus the issue is one of possible conflict of interest where suit is brought against a former client.
The current controversy over the validity of the management agreement does not concern the factual issues litigated on behalf of the principal under the Tenant's Property Tax Rebate Act. Prior contact with the "former client" was limited to communication from its agent on matters unrelated to the present controversy. The inquirer was engaged to review the agency contract on the agent's behalf. The conclusion then depends upon whether or not in doing so the attorney acquired any confidential information prejudicial to the principal. As propounded to us, the inquiry discloses no evidence that the attorney's activities either in the earlier litigation or in preparing the review opinion produced confidential information prejudicial to the principal. On this basis we see no conflict of interest. The attorney may with propriety now represent the agent against the principal in the matter of the termination of the management agreement. For our prior opinions applicable to the above see Opinions 352, 99 N.J.L.J. 841 (1976), 367, 100 N.J.L.J. 415 (1977), and 425, 103 N.J.L.J. 495 (1979).