Legal Ethics Opinion No. 1408

     Confidences and Secrets--Conflict of Interests--Multiple
Representations: Multiple Representation Adversely Affecting
Attorney's Professional Judgment

You have presented a hypothetical situation in which Attorney A
in a firm represents a borrower in the defense of litigation
filed by a bank on an indebtedness generated from the bank's real
estate loan division. Subsequent to Attorney A undertaking his
representation, but while it is continuing, Attorney B in the
same firm is asked to represent the same bank against a third
party in a litigation/bankruptcy matter generated from the bank's
commercial finance division. Upon a disclosure to the commercial
finance division of Attorney A's representation, the commercial
finance division reports that it is entirely distinct from the
real estate loan division in management and business and,
therefore, there is no objection to Attorney A's representation
in an unrelated matter with another division of the bank.

You have asked the committee to opine whether, under the facts of
the inquiry, the law firm can simultaneously represent one
subdivision of a company while representing a client against
another subdivision of the same company in unrelated matters,
with the consent of both subdivisions and the client who opposes
one of the two subdivisions.

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 4-101(B), DR 5-101 (A), DR 5-105(A), (C), and
(E).  Disciplinary Rule 4-101(B) states that, except in certain
very limited circumstances, a lawyer shall not knowingly reveal a
confidence or secret of his client or use a confidence or secret
of his client to the disadvantage of the client or for the
advantage of himself or a third person, unless the client
consents after full disclosure.  Disciplinary Rule 5-101(A)
requires that a lawyer may only accept employment when the
exercise of his professional judgment on behalf of his client may
be affected by his own financial, business, property, or personal
interests, with the consent of his client after full and adequate
disclosure under the circumstances.  Disciplinary Rule 5-105(A)
and (C) state, in pertinent part, that 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 if it is obvious that he can adequately
represent the interest of each and if each consents to the
representation after full disclosure.  Finally, DR 5-105(E)
states that if a lawyer is required to decline employment or to
withdraw from employment under DR 5-105, no partner or associate
or his or his firm may accept or continue such employment.

The committee has previously opined that where an attorney
represents the plaintiff in a medical malpractice suit against a
hospital medical group and where a partner in the same law firm
was subsequently retained by an insurance carrier, which provided
premise liability insurance to the aforementioned medical group
in an unrelated premise liability matter, it would be improper,
even with the clients' consent, to continue the simultaneous,
multiple representation as it would not be possible to adequately
represent the interest of a client when the attorney is defending
a client in an action one day and suing the same client the next
day in a separate action brought by an unrelated party. The
committee has also stated that a lawyer should be diligent in his
efforts to prevent the misuse of the client's confidential
information, and employment should not be accepted if disclosure
of the same to another client would be required. The committee
further opined that withdrawal from the representation in both
matters, as well as disqualification of the firm would be the
appropriate action. See LEOs 1150, 706.

Under the facts you have provided, the committee believes that
the inherent dangers of simultaneously representing and attacking
the same client are present despite the two subdivisions'
indication that they are entirely distinct from each other in
both management and business.  A potential misuse of clients'
confidential information exists since both divisions are part of
the same entity managed under the same supervisory scheme.    

Therefore, the committee is of the opinion that the simultaneous
representation of the bank's borrower and of the commercial
finance Legal division of that same bank, in unrelated
litigation, would be improper since it is not obvious that
adequate representation of both clients' interests can be
provided.  Since that threshold test cannot be met, full
disclosures of the potential conflict and consent from both
clients will not cure the impropriety. 

Upon review, the committee determined that the same principle
attached to the second situation described and, thus, the law
firm which represents one subdivision of a bank may not
simultaneously represent a client in defending against a third-
party complaint filed against him by another subdivision of the
same bank.

Committee Opinion
March 12, 1991

Affirmed and Expanded
May 13, 1991