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                                         120 N.J.L.J. 235
                                        July 30, 1987


Appointed by the Supreme Court of New Jersey


Conflict of Interest:
Familial Relationships Amongst
Lawyers in Opposing Law Firms

    The inquirer, a member of a large firm, asks for guidelines "concerning the employment of attorneys who bear a familial relationship to attorneys practicing in other law firms within the State of New Jersey." We are told that the inquirer's firm has received employment applications from spouses and children of attorneys who are partners or associates in other firms, and also employs attorneys who have married lawyers in other firms after joining the inquirer's firm. The firms of the related attorneys sometimes are on the opposite side from the inquirer's firm in litigated matters or commercial transactions. Recognizing the potential for actual or apparent conflicts of interest in such cases, and with a view toward determining the practicality of hiring attorneys related to lawyers in other firms, the inquirer poses two basic questions which are stated as follows:
    (1) Must a law firm decline to represent, or withdraw from representing, a client whose interests are adverse to those of a client of the firm where the familial attorney works when neither familial attorney is involved in the representation?

    (2) Must a firm disclose the existence of the familial relationship to existing or prospective clients when neither familial attorney is involved?

    In Opinion 434, 104 N.J.L.J. 204 (1979), we held that a law firm which employed as an attorney the spouse of an assistant county prosecutor could properly practice criminal law in that county, provided that the attorney-spouse did not personally do so and that the assistant prosecutor-spouse was completely insulated from all criminal matters in which the firm was involved. This ruling represented a significant departure from the rationale of earlier opinions of the Committee in the sensitive area of interspousal disqualification, and was based largely upon modern perceptions of marriage partners as independent individuals fully capable of pursuing separate professional careers. In re Gaulkin, 69 N.J. 185 (1976). The same reasoning was applied in Opinion 508, 111 N.J.L.J. 1 (1983), which held that a firm would not be disqualified from representing casino-related interests by hiring the attorney-spouse of an assistant counsel to the Casino Control Commission, again provided that appropriate insulation of both spouses was maintained by their respective employers. Most recently, we ruled in Opinion 599, 119 N.J.L.J. 632 (1987), that the father and brother of an assistant county prosecutor are not precluded by "the family relationship alone" from practicing criminal law in the same county, so long as that assistant prosecutor is not involved in any of their cases.
    These latest rulings by our Committee on the subject of familial relationships, evolving as they have in the highly charged contexts of criminal law and casino regulation, a fortiori should be extended to other types of law practice which in some respects are touched less by the public interest. Accordingly, we hold that a familial relationship between attorneys who are with private law firms representing adverse interests does not per se disqualify either firm from handling any such matter, provided that neither of the related attorneys has any contact, participation, or specific knowledge with respect thereto. In the latter aspect, we stress that the insulation of both related attorneys is the affirmative responsibility of their respective firms and must be complete.
    The second question posed by this inquiry, i.e., whether the familial relationship should be disclosed to existing or prospective clients in an adversary situation, stems from our statement in Opinion 434, supra, that "full disclosure should be made to every prospective criminal client that the inquirer's associate is married to an assistant prosecutor but that neither will in any way be involved in his case." This disclosure requirement was an integral ingredient of our attempt in Opinion 434 to achieve a practical balance between (1) traditional notions concerning the appearance of impropriety and (2) the right of modern professionals to pursue their independent career aspirations without having employment opportunities unduly curtailed because of family relationships with other attorneys. We believe that the same considerations are applicable here.
    The inquirer, however, objects to such a disclosure requirement in the case of private law firms for the following reason:
        Large firms are placed in a particularly difficult position because of the many attorneys they employ, the many matters they handle, and the many different law firms with which they deal on a regular basis. There is a concern that if disclosure of a familial relationship to prospective clients is necessary in each case regardless of the particular attorneys' involvement in a matter, clients will choose not to retain this law firm or others in a similar predicament. To avoid this problem, this firm, and others, may be forced to avoid hiring familial attorneys. (emphasis added)

But such a statement of the objection itself supplies the reason why a familial relationship to a lawyer on the other side should be disclosed before undertaking a client's cause. If, for whatever reason, a prospective client were to be so discomfited by the existence of the relationship as to decline the services of the inquirer's firm for that reason alone, it certainly would be preferable to tell him in advance rather than to have him unearth the relationship for himself after the fact, particularly if his case is lost. We frankly doubt that most potential clients of any sophistication whatever would be dissuaded from retaining a firm simply because of such relationships, particularly when both related attorneys are completely insulated from the matter involved, and thus we do not believe that the disclosure requirement raises the spectra of widespread attorney unemployment to anything like the degree posited by the inquirer. However, there will always be the overly suspicious few who infer impropriety from personal relationships between attorneys in opposing firms. To the extent that it is precisely this type of client whose business the inquirer wishes to retain by not disclosing the relationship, it would seem far better for the prospective client, for the inquirer's firm, and for the interest of the public in preserving the appearance of propriety in the practice of law, to make full disclosure in all such cases. We do not believe that the disclosure need be raised to the level of obtaining a formal consent of the type needed to permit a representation which would otherwise be improper. See RPC 1.7. However, disclosure should be made. We add that our Opinion 508, supra, which followed and incorporated the reasoning of Opinion 434 in all respects, is not to the contrary because of its omission to expressly mention disclosure.
    The inquirer further asks whether our responses to his questions concerning disqualification and disclosure "depend upon the nature of the family relationship." As is evident from the facts set forth by the inquiry itself, and from our own experience with past inquiries in this area, most of the concerns arise from the relationships of husband-wife and parent-child. To a lesser degree, the potential for apparent conflict has been discerned in the relationship between brothers and/or sisters. See Opinion 599, supra; Opinion 191, 94 N.J.L.J. 33 (1971). Whether insulation and disclosure should be required where the relationships are more distant could depend upon particular facts, such as the sizes of the firms involved and the positions of the relatives within their respective firms. For this reason, we limit our holding here to situations in which the familial relationships involved are those of husband and wife, parent and child, and sibling. As to these, insulation and disclosure are required in all cases. As to other relationships, the rule of reason should apply and each case should be considered individually.
    Finally, the inquirer asks whether our responses concerning disqualification and disclosure would be different if one of the related attorneys were directly involved in the matter to be contested. Such involvement would be entirely outside the rationale of Opinion 434, and would present at least an apparent conflict of interest curable only by the fully informed consent of the prospective client to the extent permitted by RPC 1.7(b)(2) and 1.10(e).

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