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                                         113 N.J.L.J. 383
                                        April 5, 1984


Appointed by the New Jersey Supreme Court


Conflict of Interest
Municipal Personnel -
When Special Counsel Required

    An insurer has filed suit against a municipality joining certain of the officials of that public body in a claim that the defendants made willful misrepresentations and committed fraud in seeking indemnity in excess of its lawful entitlement under contract.
    The inquirer asks this Committee:
1.    May the municipal attorney represent both the public body-defendant and one or more of the officials-defendants of that entity?
2.    In view of the daily contact the municipal attorney has with the officials in the pursuit of regular municipal business, is it proper for the municipal attorney to represent the public body alone, or must special counsel be engaged?
    In our opinion the municipal attorney may not undertake the defense of both public body and its officials where the charges are, or as likely to be, those of fraud, or willful misrepresentation, i.e., where the official has exceeded the scope of his authority. Our Opinions 174, 93 N.J.L.J. 132 (1970), 187 93 N.J.L.J. 649 (1970) and see N.J.S.A. 59:3-14 and N.J.S.A. 59:2-10.
    With respect to the second question, the municipal attorney as Chief Law Officer of a public body has a duty to protect that body in all litigation affecting it. Where the co-defendants of the municipality are former municipal officials there is no question that the municipal attorney may undertake the defense of that municipality.
    However, the duty of the municipal attorney includes the need to exercise his professional judgment on behalf of his public body free from and independent of any interest or bias he might have for or against municipal officials with whom he or she is in continual day to day contact on the regular affairs of that municipality. If the professional contact with the co-defendant official is substantial and continuing, special counsel should be engaged to defend the municipality. Perillo v. Advisory Committee on Professional Ethics (1980), and see 94 Harvard Law Review 1244, 1422, note 32.
    While the above conclusion brings about some additional expense, the result should be a two-fold benefit to the municipality.
A.    The on-going day to day business of that public body can continue to utilize the independent judgment of its attorney free of any pressure or bias that might be generated by the considerations he or she would have to give to the fraud action.

B.    The defense of the fraud action can be carried on by counsel whose judgment can be exercised in the most independent manner for the benefit of the municipality.
    In coming to the above conclusion, we recognize that the exercise of independent professional judgment may be circumscribed or given a bias in many ways other than in the manner above stated.

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