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

the subsidiary.


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