Legal Ethics Opinion No. 1414

Conflict of Interest--Former Client: Representation of Potential 
Client Over Objection of Former Client

You have advised that a law firm had been approached by a
subcontractor on a Virginia Department of Transportation ("VDOT")
tunnel project and was asked to represent that subcontractor in
connection with potential litigation over tile supplied and
installed by the subcontractor on the project.  The law firm
rendered advice to the subcontractor on various issues related to
the potential litigation.  After the firm's invoice was rendered
to the subcontractor, communication was discontinued with the
firm and the subcontractor handled negotiations, attended
meetings with the other parties, and prepared position papers on
the claim, without advice from the law firm.  Based on the lack
of communication from the subcontractor, its knowledge that the
dispute was on-going, and the lack of payment or any
communication regarding the firm's invoice, the law firm
considered its relationship with the subcontractor to be
terminated and closed its files on the matter.

Several months after its last contact with the subcontractor, the
law firm was approached by the project's prime contractor seeking
representation in connection with requests to VDOT for additional
compensation under the claims procedure contained in  33.1-386,
et. seq., Code of Virginia.  The prime contractor asked the law
firm to accept representation in connection with its requests for
additional compensation from VDOT on the matters of (l)
substantially higher river currents than represented by VDOT in
the initial bidding process; and (2) increased costs incurred by
the prime contractor when a portion of the project site was not
available on the date specified in the contract, resulting in a
change of sequence for the beginning of construction to another
portion of the project site.  You indicate that both of these
matters took place long before the subcontractor supplied or
installed the disputed tile, and neither had any relation to the
tile installed by the subcontractor.  Furthermore, you posit that
"under federal and Virginia State guidelines, each claim for
additional compensation must be considered independently by VDOT
on its own merits".

You indicate further that the law firm then advised the prime
contractor of its previous representation of the subcontractor;
that the firm would be unable to represent the prime contractor
in connection with any dispute it might have with the
subcontractor concerning the tile subcontract; and that, without
the written consent of the subcontractor, the firm would be
unwilling to represent the contractor in connection with its
claim and the subcontractor's claim for additional compensation
from VDOT based upon VDOT's improper rejection of tile.  

The facts you provide indicate further that the law firm apprised
the subcontractor of its intention to represent the prime
contractor before VDOT in connection with the contractor's two
requests for additional compensation which were unrelated to the
tile dispute, while also advising the subcontractor that, in
spite of the law firm's belief that the interests of the prime
contractor and the subcontractor were in parity, the firm would
not represent the prime contractor before the VDOT in connection
with any request for additional compensation on the tile claim
without prior written permission from the subcontractor.  The
subcontractor responded by contending that any representation by
the law firm of the prime contractor on any request for
additional compensation from VDOT on the project would be
impermissible based on the firm's prior representation of the
subcontractor in connection with its potential litigation with
the prime contractor over the tile dispute.

You have asked the committee to opine whether, under the facts of
the inquiry, the law firm may represent the prime contractor, a
potential client, over the objection of the subcontractor, a
former client.

The appropriate and controlling Disciplinary Rule related to your
inquiry is DR 5-105(D) which 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
interests of the former client unless the former client consents
after disclosure.

The committee believes that the propriety of the representation
turns on whether or not the requests for additional compensation
by the prime contractor from VDOT on the tunnel project are the
same or substantially related to the subcontractor's earlier
materials dispute.   Under the facts you have presented, it is
the opinion of the committee that, although the issues for which
the prime contractor seeks the firm's representation grow out of
the same matter as did the issues for which the firm provided
assistance to the subcontractor, the prime contractor's claims
for additional compensation do not appear to be the same or
substantially related to the subcontractor's dispute regarding
VDOT's improper rejection of tile.  Thus, the committee opines
that the firm may properly represent the prime contractor on the
two issues currently in dispute and consent from the
subcontractor to that representation would not be required.  

The committee cautions, however, that should the firm or a finder
of fact determine at any time in the future that the matters are
the same or substantially related and, furthermore, that the
interest of the prime contractor is adverse in any material
respect to the interest of the subcontractor, the firm would then
need to withdraw from further representation of the prime
contractor unless the subcontractor provided the requisite

Committee Opinion
May 14, 1991