115 N.J.L.J. 601
May 23, 1985
Conflict of Interest -
Representing both Maker
of Promissory Note and Individual Guarantors
A, the maker of a note, retained the inquirer to defend a suit
brought against A as maker and Mrs. A and her parents, Mr. and Mrs.
Y, as guarantors. A advised the inquirer that he was to file an
Answer, and defend on behalf of all, and that A would pay all fees
and any judgment which might be recovered against the guarantors.
The inquirer did so without ever speaking with Mr. and Mrs. Y, who
are described as being of advanced years, because Mr. and Mrs. A
were concerned for their health.
Before the matter came to trial, A died without assets and Mrs. A filed for bankruptcy. The inquirer thereupon engaged a handwriting expert who determined that the signatures of the alleged guarantors, Mrs. A and Mr. and Mrs. Y were in fact forgeries. Upon an application to amend the Answers of Mrs. A and Mr. and Mrs. Y to assert the defense of forgery, the trial court directed the inquirer to withdraw from the representation of all parties.
We have simplified the factual situation to some extent for the sake of clarity, but all of the essential facts are set forth above. The inquirer asks two questions: Whether it would have been proper for him to continue as attorney of record for Mrs. A and Mr. and Mrs. Y if he were to have withdrawn as attorney for the insolvent estate of A; and, whether he was justified in representing the interests of Mr. and Mrs. Y on the basis of the authorization of A even though he had never spoken with Mr. and Mrs. Y.
RPC 1.7(a) forbids representation of a client whose interests are directly adverse to another client unless "... each client consents after full disclosure of the circumstances ..."
Furthermore, the same Rule provides that:
(b) A lawyer shall not represent a client if the representa tion of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(2) the client consents after a full disclosure of the circumstances and consultation with the client, except that a public entity cannot consent to any such representation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
The conflicting interests of alleged guarantors and the maker of a promissory note should have been apparent from the outset. In any case, a lawyer may not undertake to represent a client without the informed consent of that client on the basis of purported authorization by another except, of course, pursuant to the Order of a competent tribunal. We can conceive of no exceptions to that proposition. In this case, the present circumstances of the estate of A and the insulation of Mrs. A by virtue of her bankruptcy leave Mr. and Mrs. Y in a position where the immediate and effective assistance of independent counsel is imperative, and it is clear that the inquirer cannot represent them.