Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

What is Direct Adversity?
◦ Rule 1.7
◦ ABA Formal Op. 05-434
“Requires a conflict as to the legal rights and
duties of the clients, not merely conflicting
economic interests.”
 But, does not require overt confrontation
between the clients.

Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

ABA Formal Op. 05-435

Curtis v. Radio Representatives, Inc., 696 F.
Supp. 729 (D.D.C. 1988)

Maling v. Finnegan Henderson, 473 Mass. 336
(Dec. 23, 2015)
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

What constitutes a “material limitation” that
may prevent a lawyer from representing
competitors even absent direct adversity?
◦ Comment [8]
◦ Cannot take action that advantages one client to
the detriment of another
◦ Patent context/other contexts
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

To make matters even more complicated….
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Take-Aways:
◦ Robust conflicts checking
◦ Engagement letter language
◦ In-firm resources for conflicts questions
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Privity has been eroded
◦ California test
◦ Third party beneficiary test

But privity’s not dead – see Baker v. Wood, Ris
& Hames (Colo. 2016)
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Who is the client in the corporate context?
◦ Model Rule 1.13
◦ Comment 34 to Model Rule 1.7

Lawyer who represents a corporation does
not necessarily represent any constituent or
affiliated organization, such as a parent or
subsidiary, unless:
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado
◦ Circumstances are such that the affiliate should
also be considered a client of the lawyer, or
◦ There is an understanding between the lawyer and
the organizational client that the lawyer will avoid
representation adverse to the client’s affiliates, or
◦ The lawyer’s obligations to either the
organizational client or the new client are likely to
limit materially the lawyer’s representation of the
other client.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Remember those pesky guidelines?
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado
 ABA
Formal Ethics Opinion 95–390
◦ Lawyer’s work for a parent was designed to
benefit all its subsidiaries, for example on a
stock offering or other financing.
◦ Subsidiary’s in-house counsel reports to
the parent’s general counsel, and that
general counsel is represented by the
lawyer.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado
◦ Lawyer obtained confidential information
from the parent relevant to a dispute with
the subsidiary.
◦ Parent and subsidiary are so closely
connected as to share an identity for
purposes of the representation.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Many courts have reached the conclusion that
the bar to concurrent representation applies
“if a firm’s representation adverse to a client’s
corporate affiliate reasonably diminishes the
level of confidence and trust in counsel held
by the client.”

At the end of the day: It’s fact-specific .
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Take-Aways:
◦ Watch out for situations where an affiliate could be
deemed an implied or “de facto” client
◦ Engagement letter language
◦ Watch out for outside counsel guidelines
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

General Rule: One cannot turn a 1.7 current
client conflict into a 1.9 former client conflict
by firing one of the clients – i.e., one cannot
drop a client like a “hot potato” to attempt to
avoid conflicts
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Example 1:
◦ Law Firm is representing Client A in only one
matter, the appeal of a $20,000 jury verdict arising
out of a truck accident. The matter has been fully
briefed, and the parties are awaiting a decision.
◦ Company B comes to Law Firm and asks it to
represent Company B in a $1 billion patent
infringement action against Client A. Company B
wants to file immediately.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Example 1:
◦ Because the patent case is totally unrelated to the
truck accident, Law Firm asks Client A to consent to
Law Firm's handling the patent case. Client A
refuses to consent.
◦ Law Firm then files a motion to withdraw from the
appeal proceeding, which Client A, now highly
miffed, does not oppose.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Example 1:
◦ After obtaining an order allowing its withdrawal,
Law Firm files the patent case against former Client
A.
◦ Client A now moves to disqualify Law Firm.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Example 2:
◦ Law Firm discovers that, because of a malfunction
in its conflicts system, it has wound up
representing Company A in the accident case and
has opened a file for Company B.
◦ Law Firm begins work for Company B on the patent
infringement case.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Example 2:
◦ Upon learning of the conflict, Law Firm moves to
withdraw from the accident case, which is
unopposed.
◦ Law Firm then files the infringement case, and
Company A moves to disqualify Law Firm in that
case.
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado

Freivogel on Conflicts: “With a handful of
exceptions, all courts of which we are aware
that have addressed the above fact patterns,
have ordered the firm disqualified.”

Exceptions
◦ “Thrust upon” exception
◦ No material adverse effect
Erin Higgins; Carolyn Fairless; Chuck Lundberg
September 30, 2016, Westin Denver Downtown, Denver, Colorado