LEO: Conflict of Interest - Multiple Clients -  LE Op. 1057


Conflict of Interest - Multiple Clients - Insurance.


March 23, 1988


You advise that a law firm represents a corporate defendant in a civil

suit in federal district court. The corporation believes that a certain

insurance policy it had in effect provides coverage for liability in

defense of the claim. The insurance carrier has issued a reservation of

rights. The law firm hired by the corporate defendant has represented the

insurance company before, but does not have any present or ongoing cases

on its behalf. Without advising the corporation's in-house counsel that

the law firm has represented the insurance company in other matters, the

law firm requests and has furnished to it the draft of a letter the

corporation's in-house counsel was preparing to send to the insurance

company in an effort to have the company confirm its coverage. The law

firm then recommends to the corporation's in-house counsel that certain

legal arguments the in-house counsel had planned to advance to the

insurance company not be made at that time. The corporation's in-house

counsel relies on that advice. It later turns out that the insurance

company is receptive to some of the arguments the law firm advised the in-

house counsel not to make.


You advise that there is no evidence that the law firm used the

confidential information it received from the in-house counsel to

prejudice the corporation's position with the insurance company. You also

advise that there is no evidence that any information was gained by the

law firm and then passed on to the insurance company.


You wish to know whether the law firm violated any of the provisions of

the Virginia Code of Professional Responsibility.


Based upon the information you provided, the Committee opines that DR:4-

101 dealing with the preservation of client confidences and secrets was

not violated.


Disciplinary Rule 5-105(A) states "A lawyer shall decline proffered

employment if the exercise of his independent professional judgment in

behalf of a client will be or is likely to be adversely affected by the

acceptance of the proffered employment, except to the extent permitted

under DR:5-105(C)." Nothing within the facts provided indicates that

DR:5-105(A) has been violated. Disciplinary Rule 5-105(C) states that "In

the situations covered by DR:5-105(A) and (B), a lawyer may represent

multiple clients if it is obvious that he can adequately represent the

interest of each and if each consents to the representation after full

disclosure of the possible effect of such representation on the exercise

of his independent professional judgment on behalf of each."


Disciplinary Rule 5-105(D) states that "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 interest of that person is

adverse in any material respect to the interest of the former client

unless the former client consents after disclosure." If the law firm

handles the insurance company's matters from time to time, whether on

retainer or not, whether presently engaged or not, it would be subject to

the proscriptions of DR:5-105(B) and consequently would have to comply

with the provisions of DR:5-105(C) and obtain consent after full

disclosure from the multiple clients. If, on the other hand, the law

firm's representation of the insurance company was not ongoing, but was

based on the completion of a specific project which is not completed, then

 DR:5-105(D) would control. Nothing within the facts you provided

indicates the firm was engaged or had been engaged to interpret the

particular policy terms in issue in this instance for the insurance

carrier; therefore, the Committee opines that the two matters are not

substantially related. Since the two matters are not substantially related,

consent and disclosure would not be necessary. (See also LE Op. 873)


Committee Opinion March 23, 1988