LEO: Conflict of Interest LE Op. 1129
Conflict of Interest.
October 28, 1988
You have advised that Lawyer Green represents ABC Corporation and was
retained by ABC to draft an agreement between ABC and DEF corporations.
Lawyer Green did not participate in any way on the negotiations, which
were handled by the presidents of ABC and DEF corporations. ABC
Corporation's president reported changes in the agreement to Lawyer Green,
who then prepared an agreement in compliance thereof. In addition, ABC
Corporation, which owed a substantial fee to Lawyer Green, negotiated a
provision in the agreement whereby if the joint venture obtained a
specified level of sales, the venture would be set up as a subsidiary of
DEF Corporation, and Lawyer Green would receive 20 percent of the stock in
Before the aforementioned provision became operative and after
substantial performance by ABC Corporation, DEF Corporation terminated the
agreement. Now ABC Corporation has filed suit against DEF Corporation for
fees allegedly earned prior to the alleged breach, as well as for future
fees had the agreement not been breached.
You wish to know whether Lawyer Green may represent ABC Corporation in
the breach of contract litigation if no claim is made concerning the
subsidiary formation under the provision in the agreement, and Lawyer
Green makes no claim for any rights under the provision in the agreement.
As there is nothing in the facts you have presented indicating that DEF
Corporation was ever a client of Lawyer Green, the committee will assume
therefore that DR:4-101, regarding the preservation of confidences and
secrets of a client, is not an issue which should be raised.
Disciplinary Rule 5-101(A) [ DR:5-101] is the appropriate and
controlling rule in this situation, which states that an attorney may not
accept employment if the exercise of his independent professional judgment
on behalf of his client is affected by a financial, business, property or
personal interest, except with the client's consent after full disclosure
under the circumstances. An attorney should exercise his own professional
judgment solely for the benefit of his client, free from compromising
influences; his loyalty to his client should not be diluted by his own
personal interest. (See EC:5-1)
The Committee opines that it would not be improper, under the facts as
you have presented them in your inquiry, for Lawyer Green to represent his
corporate client in the pending breach of contract litigation, if his
professional judgment on behalf of the client is not impaired by his own
personal interest or any rights which he may claim and consent is given by
the client after full and adequate disclosure as provided under DR:5-101(
LE Op. 932 provides that it is not improper for an attorney who was
named residual legatee and given power of attorney by the testator, who
since has been declared incompetent, to be appointed as committee and
continue in this capacity, as long as he can exercise his independent
professional judgment on behalf of the incompetent without being affected
by his personal interest.
Committee Opinion October 28, 1988