LEO 1353

LEO: Corporate Practice - Conflict of Interest LE Op. 1353

Corporate Practice - Conflict of Interest - Dual Employment:

Corporate Counsel Also of Counsel to Corporation's

Outside Counsel.

June 13, 1990

You have advised the Committee that you are employed by a parent company

and its subsidiaries ("corporate client") on a regular basis in the

capacity of Assistant General Counsel and Assistant Secretary. As such,

you provide day-to-day legal advice and counsel, and legal representation

before administrative agencies and local courts. In addition, you are

responsible for the selection and evaluation of outside counsel.

Furthermore, you indicate that you have been offered an opportunity to

join a law firm in the capacity of "of counsel," representing outside

clients through the law firm and sharing in the revenues of the law firm,

while retaining your current position with the knowledge and consent of

management of your corporate client. Finally, you indicate that, in your

capacity as of counsel to the firm, you will not provide representation to,

or bill the corporate client, although the firm may represent the

corporate client from time to time while segregating those fees from any

in which you share.

You have asked the Committee to opine as to the propriety of an attorney

who serves as corporate counsel retaining an outside law firm to represent

his corporate client while the attorney has an of counsel affiliation with

the firm and where the corporate client has knowledge and consents to the

arrangement but the attorney does not share in any revenues generated

thereby.

The appropriate and controlling rule relative to the circumstances you

describe is DR:5-101(A), which requires that a lawyer not accept

employment if the exercise of his independent Professional judgment on

behalf of his client may be affected by his own financial, business,

property, or personal interests, except with the consent of his client

after full and adequate disclosure under the circumstances.

The Committee has earlier opined that it is not improper for a member of

the Virginia State Bar to simultaneously be a member of two or more

organizations for the practice of law ( LE Op. 802; see also ABA

Informal Opinion 83-1499) and further that it is not improper for an

attorney who is employed full-time as counsel to a corporation to maintain

a separate office for the private practice of law ( LE Op. 328), or to

furnish legal services to individual employees of his corporate employer (

LE Op. 226).

The Committee is of the opinion that, since the circumstances you

describe do not appear to involve any multiplicity of clients, a parity of

interests would exist between your position as corporate counsel and your

law firm's provision of legal services to the same corporate client.

Nevertheless, it is clear that your referral of your corporate client to

the outside law firm with which you would be affiliated would constitute a

personal interest, regardless of whether or not you would share in any

fees generated by services rendered to the corporate client. It is the

opinion of the Committee that consent of the corporate client after full

disclosure would, however, cure any impropriety arising under DR:5-101(A).

Furthermore, in order to avoid potential improprieties, the Committee

cautions that outside counsel should maintain direct communication and

reporting lines with either the corporation's General Counsel or the

corporate directors, rather than with a lawyer who enjoys a dual role as

corporate Assistant General Counsel and law firm "of counsel."

Committee Opinion June 13, 1990

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