LEO: Conflict of Interest - Representing  LE Op. 1055

 

Conflict of Interest - Representing Another Client in a

Substantially Related Matter.

 

March 16, 1988

 

You advise that you represent a bondholder on a bond which was executed

by the bondholder's son (who is now deceased) and his wife. In 1981, prior

to the execution of the demand bond and deed of trust, the bondholder sent

her son to your office so that you might help him recover a

tractor/trailer rig which had been repossessed. At that time, you made one

or two phone calls on behalf of the deceased son. The son hired other

counsel after you were unable to secure the release of the

tractor/trailer. The son died in the spring of 1984 after executing the

deed of trust and bond in December of 1983. In November of 1984, the

daughter-in-law hired an attorney to seek to have the deed of trust and

bond set aside for lack of consideration. At that time, your client, the

bondholder, requested your assistance. You substituted yourself as trustee

and commenced to make demands of payment in full or to proceed to

foreclosure. In April of 1985, the daughter-in-law instituted a suit to

set aside the deed of trust.

 

During discovery, it was determined that part of the debt which made up

the bond, which was secured by the deed of trust, was money paid by the

bondholder (your client) and the bondholder's late husband to get the

tractor/trailer out of repossession and to make payments guaranteed by the

bondholder for six months thereafter.

 

You advise that neither you nor your firm participated in the

arrangements for getting the tractor/trailer out of repossession or

prepared the deed of trust or the demand bond. At a final hearing for

compelling discovery, the daughter-in-law informed her attorney that she

recognized you because her husband had sought your advice in 1981. As a

result, the judge suggested that you not represent the bondholder at trial

even though the daughter-in-law made no objections to your remaining as

counsel.

 

The court ruled that the deed of trust and bond were valid and

enforceable in January 1988.

 

You wish to know whether or not you may serve as trustee to foreclose on

the parcel of land.

 

Disciplinary Rule 5-105(B) states, "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 interests of that person is adverse in

any material respect to the interest of the former client unless the

former client consents after disclosure." In that situation, however, it

appears that the only manner in which these two matters are related is the

manner in which the funds were used. You state that part of the money

secured by the note and deed of trust were paid to stop the foreclosure on

the tractor/trailer. The Committee opines that DR:5-105(B) would not be

violated in this situation.

 

Committee Opinion March 16, 1988