120 N.J.L.J. 317
August 13, 1987
Conflict of Interests:
Representing Public Entities and
Private Co-Defendants in Multi-Party Suits
This inquiry concerns multi-party environmental litigation
against certain municipalities and private entities.
We are asked the following three questions:
1. May an attorney represent both a defendant municipality as well as its co-defendant private entity notwithstanding each must cross-claim against the other?
2. When a law firm has previously represented a municipality in a multi-party environmental action, may that firm later represent a private entity defendant in a subsequent multi-party environmental litigation in which that municipality is also a defendant? and
3. Where a firm has represented a private entity defendant which has cross-claimed against a municipality-defendant in a prior multi- defendant action, may that firm now represent that municipality-defendant in the subsequent multiparty action?
The ethical considerations raised in the above questions concern representation of multiple parties whose interests as respects third parties may be substantially opposed. Further, multiple parties may have valid cross-claims. In undertaking dual representation where cross-claims may exist and where the co-defendants may have different interests as respects third parties, an attorney undertaking such dual representation puts himself or herself at risk of obtaining from one client secrets and confidences which may be of prejudice to one or more of the other parties represented by that attorney.
Consequently, dual representation puts an attorney in peril of being unable to properly advance or protect one client without prejudice to another.
The Supreme Court has laid out the guidelines applicable to multiparty litigation in IMO Petition for Review of Opinion 552, 102 N.J. 194 (1986). There, the questions related to municipal defendants and their staff members joined as co-defendants in civil rights actions under 42 U.S.C. § 1983.
In our Opinion 588, 118 N.J.L.J. 94 (1986), we held that the Court's guidelines for Section 1983 civil rights actions were applicable to multi-party environmental litigation.
As stated by the Court:
. . .[J]oint representation of clients with potentially differing interests is permissible provided there is a substantial identity of interests between them in defending the claims that have been brought against all defendants. The elements of mutuality must preponderate over the elements of incompatibility. 102 N.J. at 204.
The Supreme Court grounded its conclusions: "upon common sense, experience and realism." Id.
In civil rights actions, the Court pointed out that a governmental body may remove potential conflict where it is appropriate under applicable law to indemnify its co-defendant staff member. Id., at 200, 207.