Summer 2019 Defense Comment 23 (1) the lawyer reasonably believes* that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; and (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal. (e) For purposes of this rule, “matter” includes any judicial or other proceeding, application, request for a rulingorotherdetermination,contract, transaction, claim, controversy, investigation, charge, accusation, arrest, or other deliberation, decision, or action that is focused on the interests of specific persons,* or a discrete and identifiable class of persons. Before we get into the mechanics of Rule 1.7, it is worth noting the broad scope of the Rule itself as set forth in subdivision (e). While it may be readily apparent on its face, Rule 1.7 is not limited to litigation matters. However, some attorneys (mostly thetransactionaltypes)areunawareofthis fact. Do not let the fact that the matter in which you are representing multiple clients may not be in litigation (i.e., forming a partnership or limited liability company) dissuade you from complying with Rule 1.7 as that is an easy ticket to a potential conflict and breach of fiduciary duty claim when things go south. SO WHAT DO YOU NEED TO AVOID RULE 1.7 PITFALLS? Easy, Understand the Rule Well, we can all read the Rule, but is that sufficient? Unfortunately, it is not. Not because it is obtusely worded or otherwise unclear, but because many of the terms used are not defined in the comments to the Rule or in case law interpreting the Rule. For instance, subdivision (c) (1) requires written disclosure where the lawyer has “a legal, business, financial, professional, or personal relationship with or responsibility to a party or witness in the same matter.” What is a legal, as opposed to, a professional relationship? Wouldn’t the representation of multiple clients in the same matter fit this description? Well, yes it would because the attorney-client relationship is both a legal and professional relationship. But, what about a “financial” relationship? Isn’t the attorney-client relationship also a financial relationship? Wait for the good attorney answer… “maybe." In the case where you are representing multiple defendants, arguably “no," because simply entering into a legal services agreement withaclient,withveryfewexceptions,does not trigger Rule 1.7 or Rule 1.8.1 (pecuniary transactions with clients). (See Cmt. 5 to Rule 1.8.1; see also Fletcher v. Davis (2004) 33 Cal.4th 61, 65-66.) Conversely, a loan to or from a client, would certainly fall within the scope of this provision. But what if the attorney had sold a car to one of the several prospective defendant clients? That is clearly a financial transaction, but does it warrant compliance with Rule 1.7? Probably not, unless you took a security interest in the car to secure payment. Any number of interactions with your multiple clients could conceivably be considered a “financial” transaction under Rule 1.7. However, if you keep in mind the fundamental principle underlying Rule 1.7 – the duty of loyalty – you should be able to conclude the next time you buy lunch for one of your multiple clients that you really do not need to advise your other joint clients in writing of that transaction. Despite potential ambiguity in the terms set forth in subdivision (c)(1), err on the side of caution. If you have any doubt as to whether the relationship/transaction needs to be disclosed, disclose it! NOW THAT I UNDERSTAND THAT RULE 1.7 APPLIES, WHAT DO I NEED TO DO TO COMPLY Informedwrittenconsent,ofcourse! Great, you are on the right path, but what goes into this informed written consent? In our multiple defendant scenario, it is the pros and cons of representing more than one defendant in the same case based upon the facts of the particular case and claims asserted. Well, if the attorney is representing all the defendants in litigation, aren’t their interests aligned such that a conflict of interest will not arise? I mean, the clients are all on the same page, right? In an ideal world, that would be the case, but in reality, no. There are a number of areas that need to be brought to the clients’ attention in the multiple defendant situation. First, the pros. That is easy. One lawyer representing all of them reduces the costs assuming, of course, the clients’ interests are truly aligned. It is generally cheaper and more efficient, it reduces duplication of argument, time and expense, and it makes coordinating related, if not identical, legal positions simpler. In other words, this allows the attorney to put forth a united front and plan of attack on behalf of all the clients, whereas multiple attorneys representing the other defendants may not agree on strategy or approach, which may put the united front in jeopardy. The cons, for the most part, seem obvious, but some critical issues can be missed. The most important, which is fundamental to the duty of loyalty and inherent in the zealous representation of our clients, is the written disclosure of reasonably foreseeable potential or actual conflicts of interest that the attorney anticipates with the representation. It is important to note that this does not require the attorney to disclose every possible, hypothetical scenario, but only reasonably foreseeable conflicts based upon the facts of the particular case and/or claims asserted. In the multiple defendant context, this can take many forms. The most prevalent would be litigation strategy and settlement. Some clients may want to proverbially fight to the death because they did nothing wrong; whereas, others may recognize the businessaspectofattemptingtoresolvethe case early on. This is common and should be in your letter to all of the clients setting forth the pros and cons of representing multiple defendants. In the employment context, one of the main disadvantages of representing multiple defendants and probably the main Continued on page 24 The Lawyer's Lawyer – continued from page 22