LEO: Conflict of Interest - Representing LE Op. 1055
Conflict of Interest - Representing Another Client in a
Substantially Related Matter.
March 16, 1988
You advise that you represent a bondholder on a bond which was executed
by the bondholder's son (who is now deceased) and his wife. In 1981, prior
to the execution of the demand bond and deed of trust, the bondholder sent
her son to your office so that you might help him recover a
tractor/trailer rig which had been repossessed. At that time, you made one
or two phone calls on behalf of the deceased son. The son hired other
counsel after you were unable to secure the release of the
tractor/trailer. The son died in the spring of 1984 after executing the
deed of trust and bond in December of 1983. In November of 1984, the
daughter-in-law hired an attorney to seek to have the deed of trust and
bond set aside for lack of consideration. At that time, your client, the
bondholder, requested your assistance. You substituted yourself as trustee
and commenced to make demands of payment in full or to proceed to
foreclosure. In April of 1985, the daughter-in-law instituted a suit to
set aside the deed of trust.
During discovery, it was determined that part of the debt which made up
the bond, which was secured by the deed of trust, was money paid by the
bondholder (your client) and the bondholder's late husband to get the
tractor/trailer out of repossession and to make payments guaranteed by the
bondholder for six months thereafter.
You advise that neither you nor your firm participated in the
arrangements for getting the tractor/trailer out of repossession or
prepared the deed of trust or the demand bond. At a final hearing for
compelling discovery, the daughter-in-law informed her attorney that she
recognized you because her husband had sought your advice in 1981. As a
result, the judge suggested that you not represent the bondholder at trial
even though the daughter-in-law made no objections to your remaining as
The court ruled that the deed of trust and bond were valid and
enforceable in January 1988.
You wish to know whether or not you may serve as trustee to foreclose on
the parcel of land.
Disciplinary Rule 5-105(B) states, "A lawyer who has represented a client
in a matter shall not thereafter represent another person in the same or
substantially related matter if the interests of that person is adverse in
any material respect to the interest of the former client unless the
former client consents after disclosure." In that situation, however, it
appears that the only manner in which these two matters are related is the
manner in which the funds were used. You state that part of the money
secured by the note and deed of trust were paid to stop the foreclosure on
the tractor/trailer. The Committee opines that DR:5-105(B) would not be
violated in this situation.
Committee Opinion March 16, 1988