LEO: Conflict of Interest - Attorney Joining  LE Op. 1053

 

Conflict of Interest - Attorney Joining New Firm

Representing Client of Old Firm.

 

March 8, 1988

 

You advise that your law firm has represented the city of * * * on a

variety of matters for the past 25 years. Approximately one and one-half

years ago, your firm was retained by the city to represent it in a case

where a development company challenged the validity of a zoning ordinance.

 

Six months ago, your firm employed Attorney X. At the time of your firm's

employment of X, your firm did not know that X was also a shareholder in

the development company, which is the plaintiff in the lawsuit against the

city. You advise that X did not serve as counsel to the development

company.

 

As soon as your firm realized X's involvement with the development

company, X placed his interest in the company in an irrevocable blind

trust. You state that X never participated in any discussions relative to

legal strategies or settlement posture. X did attend one meeting of the

company's board of directors, at which the decision was made to sue the

city. You advise, however, that no discussion of the merits of the case

occurred at that meeting. This meeting occurred prior to X's employment

with your firm and X attended the meeting in a private capacity, not as

counsel to the company.

 

You further state that you never discussed the case with X. Furthermore,

X has assured you that he has no knowledge that could assist the city's

defense of this action. You state that the city has been advised of X's

employment with your firm and has made no objection to your continued

representation. The development company, however, does object to your

continued representation.

 

You wish to know whether or not your firm may continue to represent the

city in this matter.

 

Based on your representation that Attorney X never served as counsel for

the development company, the Committee opines that there would be no

violation of Canon 4, due to the fact that the development company was not

Attorney X's client.

 

Ethical Consideration 5-3 [ EC:5-3] states that:

 

The self-interest of a lawyer resulting from his ownership of property in

which his client also has an interest or which may affect property of his

client may interfere with the exercise of free judgment on behalf of his

client. If such interference would occur with respect to a prospective

client, a lawyer should decline employment proffered by him. After

accepting employment, a lawyer should not acquire property rights that

would adversely affect his professional judgment in the representation of

his client. Even if the property interests of a lawyer do not presently

interfere with the exercise of his independent judgment, but the

likelihood of interference can reasonably be foreseen by him, a lawyer

should explain the situation to his client and should decline employment

or withdraw unless the client consents to the continuance of the

relationship after full disclosure.

 

The Committee believes that this ethical consideration has been complied

with since disclosure and consent has been received from your client, the

city.

 

The Committee opines that nothing within the factual situation you

presented appears to violate any of the provisions of the Virginia Code of

Professional Responsibility.

 

Committee Opinion March 8, 1988