Law Firm Ethics: Representing Both Sides In South Carolina

In the United States, the Rules of Professional Conduct outline the ethical obligations of attorneys, including the management of conflicts of interest. A conflict of interest may arise when a lawyer or law firm attempts to represent two parties with opposing interests, which can create an ethical dilemma and impact the lawyer's ability to serve their clients effectively. This scenario is specifically relevant when considering business transactions, mergers, and acquisitions, where the interests of the buyer and seller are inherently adverse. In such cases, the lawyer must obtain informed consent from both clients and maintain confidentiality to proceed with the representation. However, it is essential to analyze the situation carefully to identify any potential conflicts and ensure adherence to the Rules of Professional Conduct.

Conflict of interest

In South Carolina, Rule 1.7 states that a lawyer must refuse or withdraw from one or both representations if there is a significant risk of material limitation without the informed consent of the affected clients. This rule also applies to situations where a lawyer seeks to represent a class of plaintiffs or defendants in a class-action lawsuit.

To avoid a conflict of interest, lawyers should adopt reasonable procedures to determine the persons and issues involved in both litigation and non-litigation matters before undertaking representation. If a conflict arises after representation has begun, the lawyer must ordinarily withdraw from the case unless they have obtained the informed consent of the client(s).

In some situations, multiple representation is plainly impossible, such as when litigation or negotiations between clients are imminent or when it is unlikely that impartiality can be maintained. Additionally, when lawyers are closely related by blood or marriage and represent different clients in the same matter, there is a significant risk of revealing client confidences and interfering with loyalty and independent professional judgment. In such cases, each client must be informed of the relationship and its implications before the lawyer agrees to undertake the representation.

Conflicts of interest can have serious consequences, and attorneys may be sued for breach of fiduciary duty if they violate their ethical duties to their clients.

Informed consent

In some states, certain representations by a lawyer are prohibited, even with the consent of the clients. For example, in capital cases, a single lawyer may not represent more than one defendant, regardless of consent. Similarly, decisional law in some states restricts the ability of a governmental client, such as a municipality, to consent to a conflict of interest.

To secure informed consent, a lawyer must provide clients with sufficient information about the material risks of the representation. This includes disclosing any conflicts of interest that may exist or arise and ensuring that clients understand the implications. The experience and sophistication of the client giving consent are also relevant factors, as they impact the client's understanding of the risks involved.

In South Carolina, Rule 1.7 of the Judicial Branch Rules addresses informed consent. It states that when there is a significant risk of material limitation due to conflicts of interest, the lawyer must refuse or withdraw from one or both representations unless informed consent is obtained from the affected clients.

Confidentiality

The attorney-client privilege does not extend to communications in furtherance of criminal, tortious, or fraudulent conduct. In South Carolina, Rule of Professional Conduct 1.6 allows a lawyer to disclose information if they believe it is necessary to prevent reasonably certain death or substantial bodily harm, or to comply with a court order. A lawyer can also disclose client information to establish a claim or defence on their behalf in a controversy between the lawyer and client, or to respond to allegations concerning the lawyer's representation of the client.

In some situations, a lawyer may be impliedly authorized to make disclosures about a client when appropriate in carrying out the representation. For example, a lawyer may be authorized to admit a fact that cannot be properly disputed or to make a disclosure that facilitates a satisfactory conclusion to a matter. Lawyers in a firm may disclose information relating to a client of the firm to each other unless the client has instructed that the information be confined to specified lawyers.

In the case of multiple clients, the lawyer must make clear that their role is not that of partisanship normally expected, and the clients may be required to assume greater responsibility for decisions. The lawyer must also explain any limitations on the scope of the representation due to the common representation. Each client must give informed consent, and the lawyer must assume that if litigation occurs between the clients, the privilege will not protect any such communications.

A lawyer may be required to take additional steps to safeguard a client's information to comply with state and federal laws that govern data privacy. When transmitting sensitive information, a lawyer must take reasonable precautions to prevent the information from coming into the hands of unintended recipients.

Joint representation

In some situations, joint representation may be suitable and permissible. For example, when two parties, such as an employee and employer or two business partners, want to bring or defend a lawsuit together, they are on the same side of the case and do not have claims against each other. In such cases, a lawyer may undertake joint representation with a properly drafted conflict waiver, which states that secrets will not be kept among clients and that the lawyer will withdraw if a conflict arises.

However, it is crucial to recognize that joint representation carries risks and limitations. A lawyer must consider factors such as their relationship with each client and the clients' relationships with one another. For instance, if the lawyer is closely associated with one client, it may compromise their ability to maintain neutrality. Similarly, if there is a significant power imbalance between the clients, it could impact the dynamics and decision-making process.

Before agreeing to joint representation, a lawyer should assess the potential for conflicts of interest. This involves identifying all relevant parties, determining whether a conflict of interest exists, and evaluating whether the representation can proceed with informed consent from all clients. If a conflict arises during the representation, the lawyer must address it directly and may need to withdraw from representing all or some parties, as outlined in the initial engagement agreement.

To ensure transparency and compliance with ethical standards, it is essential to seek legal advice and carefully review engagement agreements and conflict waivers. While joint representation can offer benefits in certain scenarios, it requires careful consideration and management of potential conflicts to protect the interests of all involved parties.

Ethical responsibility

Lawyers have an ethical responsibility to their clients and must adhere to the Code of Professional Conduct. This includes serving clients well, remaining loyal to those clients, and keeping information and casework confidential. In the case of a conflict of interest, which may arise when a lawyer serves two parties with opposing interests, the lawyer may not be able to adhere to these obligations.

A conflict of interest may exist before or arise during the representation of a client. In the case of a conflict of interest, the lawyer must decline or withdraw from the representation unless they obtain the informed consent of each client. Informed consent means that the lawyer has explained any limitations on the scope of the representation to the clients, and the clients have agreed that the lawyer will keep certain information confidential.

In some cases, a conflict of interest may be unavoidable, and the lawyer may have the option to withdraw from one of the representations to avoid the conflict. This may occur when a company sued by the lawyer on behalf of one client is bought by another client represented by the lawyer in an unrelated matter.

It is important for lawyers to carefully analyze a situation for any possible conflicts of interest before proceeding with representation. This includes considering the size and type of firm and practice, as well as the persons and issues involved. Failing to avoid a conflict of interest is a violation of the state bar.

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