Ethics Opinion 217
Multiple Representation; Intermediation
* [NOTE: See how Opinion 217 has been substantively affected by the amendments to the D.C. Rules of Professional Conduct that became effective on February 1, 2007]
After full disclosure and consent from the clients, a firm may represent multiple members of a group of claimants against other individual claimants or groups of claimants to a limited fund. The firm may not serve as an advocate for any of the clients in determining the allocation of any award among the clients. It may be appropriate, however, for the firm to serve as an intermediary in determining the allocation among its clients.
The firm's obligation to protect the secrets of its clients respecting settlements in prior cases would not preclude subsequent joint representation of those clients and a new client, with the consent of the clients after full disclosure. The extent to which any confidentiality agreement might restrict the firm's representation of clients in subsequent proceedings is independent of the Rules, and therefore is not addressed.
Applicable Rules
- Rule 1.7 (Multiple Representation)
- Rule 2.2 (Lawyer as Intermediary)1
Inquiry
A law firm proposes to represent three clients in proceedings before the Copyright Royalty Tribunal. Each year cable television carriers that retransmit broadcast programming signals deposit copyright "royalties" with the Register of Copyrights for ultimate distribution by the Copyright Tribunal. See 17 U.S.C. § 111(d). The tribunal is authorized to determine the allocation of the fund among the claimants, subject to federal court review. See 17 U.S.C. § 111(d)(4); see generally 37 C.F.R. §§ 301.70-301.83 (1990). The tribunal allocates the fund among prescribed "claimant groups" such as "joint sports programmers," "program suppliers," and "devotional claimants" in "Phase I" proceedings. In "Phase II" the tribunal allocates the awards to each group among the members of the group.
The firm has represented two clients before the Copyright Royalty Tribunal in previous proceedings. These clients want the firm to represent them in upcoming proceedings, and believe that it would be in their interest to have a third claimant join them in submitting their claims to the tribunal as a group.2 The three clients would be members of the same Copyright Royalty Tribunal "claimant group." In all negotiations with other claimants or in proceedings before the tribunal, the firm would represent the three clients as a group. The allocation of any resulting award among the three clients would be determined by agreement.
In the past the claims of the firm's clients have been resolved without a hearing before the Copyright Royalty Tribunal. By contract, the terms of prior settlements are confidential.
Discussion
Rule 1.7. Rule 1.7 is as follows:
(a) A lawyer shall not represent a client with respect to a position to be taken in a matter if that position is adverse to a position taken or to be taken in the same matter by another client represented with respect to that position by the same lawyer.
(b) Except as permitted by paragraph (c) below, a lawyer shall not represent a client with respect to a matter if:
(1) A position to be taken by that client in that matter is adverse to a position taken or to be taken by another client in the same matter;
(2) Such representation will be or is likely to be adversely affected by representation of another client;
(3) Representation of another client will be or is likely to be adversely affected by such representation; or
(4) The lawyer's professional judgment on behalf of the client will be or reasonably may be adversely affected by the lawyer's responsibility to or interests in a third party or the lawyer's own financial, business, property, or personal interests.
(c) A lawyer may represent a client with respect to a matter in the circumstances described in paragraph (b) above if:
(1) Each potentially affected client provides consent to such representation after full disclosure of the existence and nature of the possible conflict and the possible adverse consequences of such representation; and
(2) The lawyer is able to comply with all other applicable rules with respect to such representation.
Rule 1.7(a) thus prohibits multiple representation without regard to client consent. Cf. Opinion 158 (1985). Rule 1.7(b) in contrast permits multiple representation with the consent of the affected clients, but only after full disclosure. Cf. Opinion 54 (1978).
The prohibition of Rule 1.7(a) is absolute, and precludes representation in any "matter," whether it involves judicial or administrative proceedings, an application, drafting a contract, negotiations, estate planning, or family relations. The reach of Rule 1.7(a), however, is relatively narrow: representation is prohibited only with respect to a particular "position" in a matter in which the firm also represents a second client who actually takes or will take an adverse "position" on the same issue. Comment [4] to the Rule confirms that "[t]he absolute prohibition of paragraph (a) applies only to situations in which a lawyer would be called upon to espouse adverse positions in the same matter."
Thus, Rule 1.7(a) precludes a firm that takes a position on behalf of Client A from representing Client B in the same proceeding only if Client B actually takes or will take an adverse position on the issue. If the benefits of joint representation are sufficiently great or the likelihood of prevailing on a position that would increase its individual recovery is sufficiently small, each of the clients might after "consultation" choose to forgo such arguments. See generally Rule 1.3(b) (client determines lawful objectives); Opinion 143 (1984). Accordingly, if Client B chooses to forgo taking an adverse position on the particular issue, Rule 1.7(a) would be inapplicable by its terms. Rule 1.7(b) governs in any case in which simultaneous representation of clients with potentially adverse interests would not actually require the firm to take inconsistent positions in the same proceeding.
Similarly, notwithstanding Rule 1.7(a), a firm may represent multiple clients in one phase of a case, even if the firm will be precluded from representing the clients in subsequent phases of the case. For example, a firm could represent two or more parties in the liability phase of a case, although separate counsel will be required for each of the clients in the damages phase of the case because the parties will take adverse positions. Rule 1.7, Comment [4]. In such a case, Rule 1.7(b), and not Rule 1.7(a), would be controlling. See also Rules 1.6 and 1.9.
Under Rule 1.7(b) clients may "consent" to the simultaneous representation of potentially adverse parties, so long as the lawyers in the firm can satisfy their professional responsibilities.3 "Consent' denotes a client's uncoerced assent to a proposed course of action, following consultation with the lawyer regarding the matter in question." Terminology [2]. "'Consult' or 'consultation' denotes communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question." Terminology [3]. Effective consent therefore requires full disclosure sufficient to allow each client to make an informed decision.
In this case, full disclosure necessarily would include a frank discussion of Rules 1.9 and 1.6 in particular. If the clients fail to agree on an appropriate allocation of any award among themselves or if any one of them concludes that its interests are irreconcilable with those of the others for another reason and terminates the joint representation, the firm may be precluded from representing any of the clients in proceedings before the Copyright Royalty Tribunal. Further, because the firm has represented two of the clients in prior proceedings, the extent to which the proposed joint representation might require the firm to use or disclose confidences or secrets previously obtained also should be discussed explicitly. Finally, as discussed below, if the firm will participate in the efforts of the clients to agree on an allocation among themselves, Rule 2.2(d) should be addressed explicitly at the outset.
In the case posed by the inquirer, Rule 1.7(a) would not prohibit joint representation of the clients in any phase of the proceedings before the Copyright Royalty Tribunal or in negotiations with the other participants. Under Rule 1.7(b), the clients may "consent" to joint representation, provided the firm makes full disclosure of the costs and benefits of proceeding in that fashion. Each of the clients is entitled to consider whether the benefits of joint representation warrant putting aside its differences with the others to pursue a common negotiating or litigating strategy. See generally Rule 1.3; Opinion 143 (1984). In some cases, additional attorneys fees and the likelihood of increased delay may outweigh the value of any expected incremental recovery from separate representation. Opinion 143 (1984).
Rule 2.2.
In contrast, the firm plainly cannot serve as an advocate for any of the three clients in negotiations with the others to establish the allocation of any award among them. More for any one of the three would necessarily mean less for at least one of the others. Nonetheless under Rule 2.2:
(a) A lawyer may act as intermediary between clients if:
(1) The lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each client's consent to the common representation;
(2) The lawyer reasonably believes that the matter can be resolved on terms compatible with the client's best interests, that each client will be able to make adequately informed decisions in the matter, and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and
(3) The lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients.
(b) A lawyer should, except in unusual circumstances that may make it infeasible, provide both clients with an explanation in writing of the risks involved in the common representation and of the circumstances that may cause separate representation later to be necessary or desirable, the consent of the clients shall also be in writing.
(c) While acting as intermediary, the lawyer shall consult with each client concerning the decisions to be made and the considerations relevant in making them, so that each client can make adequately informed decisions.
(d) A lawyer shall withdraw as intermediary if any of the clients so request, or if any of the conditions stated in paragraph (a) are no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation.
It is essential that each client fully understand the firm's role. Because the risks are great for the lawyer as well as the clients, a written explanation of the implications of common representation should be provided whenever feasible.4
Thus, although the firm would be precluded from serving as an advocate for any of the clients with respect to the allocation of the award among them, the interests of all the clients might be served by having the firm serve as an intermediary to facilitate agreement. "In considering whether to act as intermediary between clients, a lawyer should be mindful that if the intermediation fails the result can be additional cost, embarrassment, and recrimination." Rule 2.2, Comment [5]. As noted above, full disclosure to the clients would require discussion of the possible adverse consequences to each of the clients if the attempted intermediation is unsuccessful.
Prior Settlements.
Finally, the inquiry refers to confidentiality agreements governing prior settlements. Whatever the firm's contractual obligations under previous confidentiality agreements, they are independent of the firm's ethical obligations under Rule 1.6, and we express no opinion on the effect of any such agreements on the firm's representation of any of the three clients. We note, however, that the body of knowledge possessed by a firm's lawyers, including the general terms on which disputes before the Copyright Royalty Tribunal have been resolved (as distinguished from the fact that a particular entity accepted particular terms), may not be a "secret" within the meaning of Rule 1.6.5 In any event, Rule 1.6 expressly permits a lawyer to use or reveal client confidences or secrets with the consent of the client, after full disclosure. Cf. Opinion 158 (1985).
Inquiry No. 90-10-39
Adopted January 15, 1991
1. District of Columbia Rules of Professional Conduct became effective January 1, 1991. Accordingly, there is no reason to consider whether the proposed representation would have been appropriate under the District of Columbia Code of Professional Responsibility.
2. For purposes of submitting claims to the Copyright Royalty Tribunal, “claimants may agree among themselves as to the proportionate division of compulsory licensing fees among them, may lump their claims together and file them jointly or as a single claim, or may designate a common agent to receive payment on their behalf.” 17 U.S.C. § 111(d)(4)(A).
3. “For example, even if a client provides informed and uncoerced consent, a lawyer may not undertake or continue a representation if the lawyer is unable to comply with the obligations regarding diligence, communication, and protection of client confidences provided in Rules 1.3, 1.4, and 1.6.” Rule 1.7, Comment [15].
4. The firm should carefully consider whether its prior representation of two of the three clients makes intermediation inappropriate. “Since the lawyer is required to be impartial between commonly represented clients, intermediation is improper when that impartiality cannot be maintained. For example, a lawyer who has represented one of the clients for a long period of time and in a variety of matters could have difficulty being impartial between that client and one to whom the lawyer has only recently been introduced.” Rule 2.2, Comment [7]. The prior relationship certainly should be disclosed.
5. In construing analogous provisions of the Code of Professional Responsibility, the Committee explained: “A lawyer is useful to his clients because of his knowledge of the law and how it can be applied to different factual situations. Such knowledge is not gained through formal legal training and postgraduate courses alone, but also from the everyday practice of the law while representing various clients. The Code of Professional Responsibility would surely place an unbearable burden upon every legal practitioner if it prohibited the use of such knowledge except for the benefit of the client whom he happened to represent when he acquired it. Legal expertise consists of layer upon layer of knowledge and experience gained gradually through the representation of many clients in many situations. It is not something that can be parsed and sold exclusively to any one client. The usual attorney-client relationship does not include such exceptions.” Opinion 175 (1986).
