Editor's note: This article first appeared in New Jersey Lawyer, the NJSBA's award-winning bi-monthly magazine. To check out the magazine archives visit here.
By Robert McAndrew, Esq.
McAndrew Vuotto, LLC
Conflicts of interest are the source of many grievances and malpractice claims. Always be vigilant in checking for possible conflicts and understanding your ethical obligations. Here is a brief look at two Rules of Professional Conduct (RPCs), promulgated by the New Jersey Supreme Court, that address conflicts.
RPC 1.7 Conflict of Interest: General Rule
The most obvious conflict is one where your representation of one client is directly adverse to the interests of another current client. RPC 1.7(a). However, under certain circumstances, clients may elect to waive the conflict. If so, they both must be fully advised of the nature of the conflict and give their consent in writing. RPC 1.7(b). This course of action should only be undertaken if the lawyer is confident the clients have fully understood the explanation and that the lawyer’s obligations to each client will not be impaired or limited by going forward. See RPC 1.7 (b)(2). Keep in mind that not all conflicts can be waived. For example, see, Baldassare v. Butler, 132 N.J. 278, 296 (1993), where the Supreme Court held an attorney may not represent both sides in a contract negotiation, even with their consent, if the transaction involves large sums of money, contains complex contingencies, or where options are numerous.
RPC 1.8 Conflict of Interest: Current Clients; Specific Rules
First and foremost, you should not enter into a business transaction with a client. RPC 1.8(a). But if you do, you must first be sure the terms are fair and reasonable to the client and the client is fully informed of those terms in writing and has given informed consent. RPC 1.8(a)(1). The client must also be advised, in writing, of the advisability of obtaining independent legal advice, and the client must give “informed consent” in writing to the entirety of the transaction, including the lawyer’s involvement. RPC 1.8(a)(2)(3).
RPC 1.8 covers a host of other situations where conflicts arise, including: the prohibition against using information obtained from one client to the detriment of another client (RPC 1.8(b)); soliciting gifts from clients (RPC 1.8 (c)); accepting payment from someone other than the client (RPC 1.8(f)); making any agreement with a client that limits your liability to the client, (i.e., malpractice) (RPC 1.8(h)).
When in doubt, do not hesitate to seek advice from an experienced attorney, preferably one having a background in ethics.