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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1988-15
Conflict: Suit Against Former Client
I will attempt to summarize briefly the extensive facts set forth in your letter. You both were officers and employees of ABC, Inc. until you were terminated in July, 1986. At that time, Mr. X was the President and Mr. Y was the Executive Vice President of the institution. While you were employees, you worked with ABC's counsel, the Law Firm, with respect to several legal matters. You state that during this relationship, you revealed to the Law Firm confidential information about yourselves as well as the business and management of ABC. You also indicate that you established an attorney-client relationship with the Law Firm in conjunction with estate and financial planning matters.
In conjunction with your termination of employment by ABC, you indicate that the Law Firm, in response to a complaint by you that it should not represent ABC, utilized the services of one of its partners, who had not previously been involved with you, with respect to arranging severance pay and a settlement. You also indicate that before you were terminated, you spoke with one of the Law Firm's members concerning a software leasing company owned by you. You now have filed suit on behalf of this leasing company against ABC, and you understand that the same Law Firm will be representing ABC.
You have requested the Committee to consider the propriety of the actions of the Law Firm, and to disqualify the Law Firm from representing ABC in any further actions involving you, directly or indirectly.
With respect to your request that this Committee disqualify the Law Firm, this Committee has no such power or authority. The function of the Ethics Committee is to issue opinions which are advisory only. Furthermore, this Committee has no investigative powers and makes no findings of fact in any given situation; to the contrary, we accept the facts set forth in the inquiry and render our advisory opinion based on those facts.
Rule 1.13 of the Maryland Rules of Professional Conduct deals with a situation where a lawyer or law firm represents an organization, such as ABC. Rule 1.13(d) provides that in dealing with an organization's directors, officers, employees and the like, the lawyer must explain to those persons that his client is the organization when it is apparent that those other persons' interests may be adverse to the organization. Rule 1.13(e) permits the lawyer for the organization also to represent any of the organization's directors, officers and employees subject to the conflict of interest provisions found in Rule 1.7.
With respect to the matters which the Law Firm represented ABC in the past in which you participated in your capacities as officers, the Law Firm's duty was owed to its client ABC, and any communications between you and the Law Firm in that context were on behalf of ABC. No attorney-client relationship was created between you and the Law Firm with respect to ABC matters only.
Your inquiry also indicates, however, that an attorney-client relationship was created between you and the Law Firm with respect to estate and financial planning matters. We assume that these matters were for you personally and not for ABC as an organization. If, in fact, an attorney- client relationship was entered into between the Law Firm and you, and further assuming that that relationship terminated, Rule 1.9 becomes applicable. Rule 1.9 provides as follows:
""A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation; or
(b) use information relating to the representation to the disadvantage of the former client. ..
It does not appear from your inquiry that the Law Firm represented you with respect to the software leasing company. However, we cannot discern from your inquiry whether, in the Law Firm's representation of you personally, the Law Firm learned information about you or the company which would work to your disadvantage in your current litigation. Only you and the Law Firm are in a position to determine whether such a problem exists. If it does exist, then the Law Firm could not represent ABC against your leasing company without your consent. This prohibition would apply to all partners and associates in the Law Firm. See Rule 1.10(a). If the problem does not exist, then the Committee sees no. problem with the Law Firm representing ABC.
References:
Rules 1.7, 1.9, 1.10, 1.13
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