Legal Ethics Opinion No. 1444

Conflict of Interest--Former Client--Personal Interest Affecting
Representation--Bankruptcy Representation: Attorney, Also
Creditor, Representing Current Client Against Former Client   

You have presented a hypothetical situation in which  Attorney
was retained by an architect (A), as agent of the architectural
firm (B) for which A works, to represent B in a dispute with D
regarding fees for services rendered by B to D.  Services
rendered by B to D consisted of site plan and building renovation
plans for a parcel of land in jurisdiction X.  You indicate that
the dispute was resolved without litigation.

Subsequently, Attorney was retained by A to represent A and B in
defending against a mechanic's lien filed by a subcontractor (C)
on A's personal residence.  You indicate that that dispute was
compromised and settled.

Following both representations, both A and B failed to pay full
amounts for services rendered by Attorney.  A and B notified
Attorney that other counsel had been retained to handle their

You have informed the committee that Attorney was later notified
that A and B failed to perform as required by the settlement 
agreement with C.  Attorney declined to represent A and B in
subsequent negotiations with C's counsel because of the potential
that Attorney would be a witness adverse to A's and B's interests
in any litigation to enforce the settlement agreement.

You have indicated that, during the representation, Attorney
acquired no secrets or confidential information about either A or
B, A's qualifications, or A's and B's internal business
procedures and operations.

Attorney was subsequently retained by E to assist in acquiring
approval of a site plan in jurisdiction Y.  The site plan was
prepared by A, working for B, based upon a contract between E and
B.  Attorney was not involved in negotiating the contract, or
with the site plan, prior to its submittal to jurisdiction Y. 
The site plan was rejected by jurisdiction Y for technical
reasons.  You indicate that E then instructed Attorney to
terminate the contract between E and B because E stated that (1)
E had learned that A had misrepresented his credentials and
skills to E prior to E and B entering into the contract; and (2)
E had further learned that A had used his position with B to
divert money paid by E to B to pay personal obligations of A
rather than to pay an engineering firm (F) for work done on the
site plan.  B and F have filed mechanic's liens against E's

Finally, you indicate that, several months later, A and B filed
for Chapter 11 bankruptcy, listing Attorney as a creditor.  The
following month, B filed a bill of complaint to enforce its
mechanic's lien against E. 

You have asked the committee to opine whether, under the facts of
the inquiry, (1) Attorney may represent E in defending against
mechanic's liens filed by B and F in circuit court, and (2)
Attorney may represent E against A and B in bankruptcy court to
contest the discharge of monies owed to E, where Attorney is not
contesting the discharge of amounts owed him by A and B.

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 5-105(D), which dictates that a lawyer who
has represented a client in a matter shall not thereafter
represent another person in the same or substantially relatedmatter if the interest of that person is adverse in any material
respect to the interest of the former client unless the former
client consents after disclosure [emphasis added]; DR 4-l0l(B)
which prohibits a lawyer from knowingly revealing a confidence or
secret of his client and from using a confidence or secret of his
client to the disadvantage of the client or to the advantage of
himself or a third person, unless the client consents after full
disclosure; and DR 5-101(A), which provides that a lawyer shall
not accept employment if the exercise of his 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 [emphasis added]. 

As to your question regarding whether Attorney can properly
represent E in defending against the mechanic's liens filed by B
and F, the committee has repeatedly opined that the earlier
representation of a client who is now the adverse party in a suit
brought on behalf of another client is not per se sufficient to
warrant disqualification of the lawyer on ethical grounds.  See,
e.g., LEOs #1194, #1399.  Additional critical factors to the
determination of a disqualifying conflict of interest are the
relatedness of the two matters and the issue of whether the
lawyer obtained secrets and confidences of the first client in
the course of the representation.  See, e.g., LEOs #284, #441,
#622, #672, #933.

Assuming the matters are not related and no secrets or
confidences were obtained by Attorney, the committee is of the
opinion that there is no per se impropriety in Attorney's
continued representation of E against B and F in the mechanic's
lien suit.

As to your second question, regarding whether or not Attorney can
represent E against A and B in bankruptcy proceedings, the
committee believes that Attorney would have a personal conflict,
as described under DR 5-101(A), because E's claim as a potential
creditor in bankruptcy, if proven, would have priority over
Attorney's claim as creditor.  Therefore, assuming no secrets or
confidences were obtained by Attorney from A and B, the committee
opines that it would not be improper or violative of DR 5-l0l(A)
for Attorney to represent E in the bankruptcy proceeding provided
that he had first obtained the consent of E after full and
adequate disclosure under the circumstances.

Committee Opinion
January 6, 1992