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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1988-11
Conflict: Representation of Clients with Adverse Interests
Facility A is a health-care facility operating in the State of Maryland. It is a member of a trade association comprised of between five and ten similar facilities situated in Maryland. Attorney X is counsel to the trade association. Because of the small size of the association, he regularly interacts with its members at its periodic meetings, as well as with its officers, who are selected from the management of the members.
Facility A has applied for a certificate of need (""CON"") to construct a new facility in another area of the state, and a comparative review of its application and other applications for similar facilities is pending before the Maryland Health Resources Planning Commission. As part of the comparative review, evidentiary hearings will be held, and each party will seek to establish that its proposal is the one best suited for approval. It is likely that only one of the several applications will ultimately be approved.
Attorney X has entered his appearance as counsel for an individual who will appear as an interested party in this comparative review of CON applications. The initial filings on behalf of this individual indicate that he will oppose all of the pending applications, including that of Facility A.
You have requested the Committee's opinion as to whether Attorney X's representation of the trade association of which Facility A is a member creates a relationship between Attorney X and Facility A which is sufficiently similar to a direct attorney-client relationship to preclude his simultaneous representation of an individual who will be opposing the CON application of Facility A.
Subsequent to receiving your inquiry, the Committee received an inquiry which, although drafted in hypothetical form, appears to present the same fact situation you presented from Lawyer X's perspective. This second inquiry, dated August 7 and numbered by the Committee as Ethics Docket 88-17, provided the Committee with the following additional facts.
Attorney X and his law firm have represented Facility B for a number of years in adversarial administrative proceedings in the context of the CON process. Facility B is a health-care facility which is also a member of the trade association to which Facility A belongs. The association was formed to further the common goals of all its members; Attorney X was appointed the association's general counsel at its initial meeting. He has continued to represent Facility B during the course of his representation of the association. Facility A has been aware of his dual representation.
Facility B's administrator has concluded that Facility A's application for a CON would be economically detrimental to Facility B. Attorney X is representing him in his request for an ""evidentiary hearing"" to consider Facility A's application. Counsel for Facility A requested that Attorney X withdraw from representation of Facility B. In response, Attorney X requested and received from both Facility B's administrator and the trade association consent to his dual representation. The association's consent was by resolution adopted at a meeting of its members. Counsel for Facility A was present at the meeting and voted against the resolution. The second inquirer requests the Committee's opinion as to whether Attorney X may represent Facility B's administrator in the upcoming evidentiary hearing.
Rule 1.13 of the Maryland Rules of Professional Conduct describes the obligations of a lawyer who represents an organization. Section (a) of that rule provides:
A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.
Section (e) of Rule 1.13 provides in part:
A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents subject to the provision of Rule 1.7.
It is apparent, therefore, that a lawyer for an organization represents only the organization, but may, under certain circumstances, represent members of the organization. However, the question of whether, in a particular circumstance, a lawyer has established a de facto attorney-client relationship with a member of an organization the lawyer represents, or should be deemed to have a fiduciary relationship to it, is a factual question dependent on the circumstances of that situation. See, e.g., Westinghouse Electric Corp. v. Merr-McGee Corp., 580 F.2d 1311 (7th Cir.), cert. denied, 439 U.S. 955 (1978). See also Annotated Model Rules of Professional Conduct, American Bar Association (1984), pp. 154-155.
If Lawyer X is deemed to have a lawyer-client relationship with Facility A, the rules governing multiple representation will be applicable to his representation of a client adverse to Facility A. See, Rules 1.7, 1.8(b) and (g), 1.9 and 2.2.
Of course, a client may always limit the scope of the lawyer's representation of that client, or the lawyer may impose limits on the representation with the prior consent of the client. See, Rule 1.2. Whether such limitation was agreed upon is, of course, a factual matter.
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