The dangers of multiple representation
Multiple representation is a common situation for lawyers. Often, small business owners have a lawyer that they trust and like working with. Over time, as that relationship grows, the owners or managers ask the lawyer to represent them individually on personal matters. Lawyers who are not careful may find themselves in sticky conflict situations very quickly.
What could go wrong?
The above example is common for LLCs with several members. It could be a family company. Or it could be a business with two or more “partners.” In the beginning, the lawyer’s work is only on behalf of the entity. But in almost every case, over time the lawyer handles more and more matters for the members or partners. The individuals usually come to the reasonable belief that the lawyer is “their” lawyer.
If the owners begin feuding, and one or more file a lawsuit or raise a claim, “their lawyer” might be asked to take a position against their individual interest. Naturally, this leads to potential, and sometimes actual, conflicts of interest. On this point, see generally Rule 1.7. Angry clients may file motions to disqualify and grievances with the State Bar. We’ve seen cases where opposing parties have pursued disqualification in litigation, which has resulted in substantial—and unnecessary—expense to their clients. And even in the absence of a “real” conflict, angry clients can pursue these avenues purely as a means to exert leverage on opposing parties or the lawyer.
How do you protect yourself?
If the lawyer truly only represents the entity, it’s the lawyer’s job to educate the person and say, “I only represent the company.” Consider a hypothetical: Lawyer represents LLC and two members, but never documents the file. At a certain point, a dispute arises between the members. Lawyer sends an e-mail which looks like he is taking one side over the other. The aggrieved member files a grievance against the lawyer. What do you think would happen?
The State Bar would be hard-pressed to excuse the lawyer’s conduct. Why? Because an actual conflict is not waivable, and the lawyer “never documented the file” as to who the did and did not represent. Of course, documents are the best way, and maybe the only way, to protect yourself as the lawyer. You need written documents that show you telling the members that you represent the company only. And if a dispute arises between them, the proper course of action is to remind them of that fact, and then advise them to seek independent counsel. As with everything, do it in writing, and keep a copy! Delivery confirmation to the client is also a good idea.
Chandler Law has experience pursuing claims against lawyers who’ve run afoul of the above, as well as defending such claims. If you have any questions, please feel free to contact the firm.