ETHICS DOCKET 2019-05
FINAL April 15, 2019
You have asked the Committee for its opinion on an issue involving the application of the conflicts of interest rules to an issue of the duty to a prospective client. In doing so, you describe facts pertinent to you and which when extrapolated to other members of the bar might offer guidance. Generally, the Committee does not offer opinions on matters involving litigation, but in this case, the issue as you describe it has long since passed and the intent of your request seeks guidance for yourself and others when handling prospective clients.
You describe a factual scenario in which you worked with firm X where you met with a potential client for 30 minutes 9 years ago in a domestic case (divorce and custody). The prospective client did not retain you or pay you for that consult or any legal services. You changed firms and you did not retain files of that consult, nor was the prospective client identified as a client to whom an “Election of Counsel” form should be sent, nor was that form sent to the prospective client. At your new firm, the prospective client’s son sought representation to modify a custody order that granted the prospective client custody. That custody order was entered 6 years after the consult at firm X. At your new firm, no conflict appeared upon searching your list of clients nor did you recall meeting the prospective client and you accepted the case. The prospective client asserted a conflict of interest and moved to strike your appearance which motion the court granted.
In granting the motion, the court explained that there is a “presumption” that protects “all clients, potential or otherwise,” from lawyers taking cases adverse to them on the same issues no matter how long ago, how many firms ago or what information was revealed or not revealed that could be used against a prospective client.
You ask whether, under Rule of Prof. Cond. 1.18 (Duties to a Prospective Client) or any other Rule, a conflict of interest exists when an attorney seeks to be adverse to a former potential client, where the potential client consultation occurred at a former firm where no services were rendered, no files were retained or transferred, and no substantive information (that could be significantly harmful to the potential client in the subsequent matter) is recalled by the departing lawyer?
You also ask if there is a duty to maintain records of all potential consults to properly screen new clients, and, if so, do lawyers face the risk of malpractice and attorney grievance disciplinary action for the failure to do so? And, if yes, what if the lawyer’s former firm/company refuses to turn over potential client contact lists to the departing lawyer and/or there is a noncompete agreement that prohibits the departing lawyer from receiving such records? If yes, is that former firm/company now subject to disciplinary action and, by extension, does the departing lawyer have a duty to report that former firm to the Attorney Grievance Commission, which may also implicate the lawyer if that lawyer signed off on a non-compete?
Rule 1.18 (MD Attorney’s Rules of Professional Conduct Rule 19-301.18) applies to this question as you have indicated your research discloses. That rule was adopted in Maryland in 2005 as part of an omnibus change in the Rules under the ABA’s Ethics 2000 project. The rule provides:
(a) A person who discusses with an attorney the possibility of forming a client-attorney relationship with respect to a matter is a prospective client.
(b) Even when no client-attorney relationship ensues, an attorney who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 19-301.9 (1.9) would permit with respect to information of a former client.
(c) An attorney subject to section (b) of this Rule shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the attorney received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in section (d) of this Rule. If an attorney is disqualified from representation under this section, no attorney in a firm with which that attorney is associated may knowingly undertake or continue representation in such a matter, except as provided in section (d) of this Rule.
(d) Representation is permissible if both the affected client and the prospective client have given informed consent, confirmed in writing, or the disqualified attorney is timely screened from any participation in the matter and is apportioned no part of the fee therefrom.
Subsection c prohibits an individual attorney from representing someone adverse to a prospective client with interests materially adverse to the prospective client in the same or a substantially related matter if the attorney received information from the prospective client that could be significantly harmful to the prospective client in the matter absent consent. “While the passage of significant time may be a consideration in evaluating whether matters are substantially related, the rule does not contain any temporal limitations.” The key questions that must be asked in applying the rule are:
Based on your summary, we assume that each of these questions must be answered affirmatively, as explained below. For that reason, the prohibition applies when asserted.
Rule 1.18 differs significantly from Rule 1.9, the rule that addresses requirements of an attorney to former clients. Rule 1.9 creates a much higher hurdle to overcome where an attorney seeks to represent someone against a former client; it eliminates the requirement that the attorney has received “significantly harmful” information from the client that could be used against the client in the matter. It prevents an attorney from representing a former client in a substantially related matter regardless of whether the attorney had received information that might prove harmful to the former client.
In the scenario you describe, if you did not receive “significantly harmful” information from the prospective client, then the rule does not require disqualification. (See: Wisconsin Formal Ethics Opinion EF 10-03 for a very insightful discussion of the Rule describing what “significantly harmful information” means in the context of the rule and offering tips to avoid disqualification in dealing with prospective clients.) But, any attorney who has no recollection of a consultation with a prospective client or files that confirm the elements of the consultation will be hard-pressed to refute a prospective client’s recollection of the information communicated during the consultation. So, whether the prospective client disclosed “significantly harmful” information to the attorney in the earlier matter will be left to the prospective client’s recollection and govern the result under the rule.
We recently opined in Ethics Docket 2018-06 in conjunction with the application of the GPDR privacy rules and the “right to be forgotten” that an attorney who has been asked by a client to purge the attorney’s files does not have a duty to maintain files to perform a conflict check, nor a duty to avoid representation of a client that such a conflict check might reveal, except where the attorney retains knowledge of the representation or of the facts learned during the representation sufficient to cause the attorney to understand that a conflict exists. Nevertheless, we recognized that there may be instances where a former client might assert the existence of a conflict, and the required purge of files would not absolve the attorney or the firm of that conflict.
Applying the analysis in that opinion to the facts you describe and applying the provisions of Rule 1.18, we believe that while Rule 1.18 can lead to disqualification of an attorney who received information that could be significantly harmful to the prospective client in the matter even though the attorney does not retain files or knowledge of a consultation with a prospective client.
An attorney does have a duty to retain enough information, including files, to allow the attorney to determine if a conflict exists in addition to other reasons that exist to retain a client’s files. One of our previous opinions, Ethics Docket 2004-02 regarding the duty to retain files and how to dispose of them, can inform attorneys regarding those duties. An attorney should always maintain a list of all clients of his or her firm and all potential clients with whom he or she has met. A firm likewise should retain a list of all clients and potential clients of all of its attorneys.
The Committee does not opine on issues of malpractice or project whether an act might be subject to discipline and does not believe it appropriate to opine on whether an abstract non-compete agreement violates the Rules or whether an attorney has a duty to report misconduct of such an agreement.