Contents of article originally published in April 2004
As litigation continues to become increasingly complex with plaintiffs attempting to unite in class action lawsuits while naming as many defendants as possible, the legal costs associated with defending such lawsuits present a great economic challenge to many companies.1 In response to the increasing costs, defendants have banded together by engaging a single attorney or law firm to provide a joint representation. Alternatively, in certain contexts, defendants have formed joint defense groups in which each defendant has an individual attorney, but costs as well as information are shared by the members of the joint defense group.2 Although both approaches appear functional and prudent, significant problems may arise which require the attorney or law firm to withdraw from representation of one or all of the defendants in the multiple representation context and which may implicate disqualification of an attorney in a joint defense group if conflicts develop.
This article addresses a number of ethical concerns which an attorney must consider before undertaking a joint defense in mass tort litigation. Of paramount importance is a strong possibility that conflicts of interest may develop between defendants even if their interests appear to be aligned at the beginning of the joint representation. In cases of multiple representation, attorneys would likely prefer to continue representation of at least one defendant even if they are forced to withdraw from representation of another due to conflicts of interest. In addition, an attorney must further consider the handling of confidential information provided by the individual defendants. The attorney's ethical obligations regarding such information to may lead to the attorney's inability to further represent any of the defendants in light of the Texas Supreme Court's recent ruling in National Medical Enterprises v. Godbey.3
Before undertaking a joint defense, an attorney must foresee all of the potential ethical concerns associated with the representation and take precautions to ensure that any conflicts which arise will not work a prejudice on clients or subject the attorney to disciplinary action. This article describes an approach based upon informed consent of all parties for handling the ethical concerns of the joint defense group or multiple representation. The article concludes that by performing a number of prudential steps prior to beginning a joint representation, an attorney may avoid a number of problems that may thereafter arise. This article suggests, however, that the Texas courts have improperly construed the attorney ethics rules to eliminate the ability of a client or former client to prospectively consent to an adverse representation if a joint representation must be terminated due to development of conflicts between the parties.
II. Benefits of Joint Defense Group or Common Representation
Initially, most defendants do not consider multiple representation. But as they examine the cost implications of defending the lawsuit, they begin to identify ways to reduce their cost burden. Engagement of the same law firm representing another defendant is naturally a way to reduce legal expenses. In addition, the client may enter into a multiple representation arrangement in order to be represented by a particular firm if that firm has already undertaken representation of a codefendant.
Regardless of the clients' objectives in agreeing to joint representation or participation in a joint defense group, each client should benefit from cost savings due to the representation.4 In the mass tort context, the legal costs of defending every lawsuit may be staggering.5 Accordingly, defendants have increasingly united to reduce the defense costs.
Common representation of defendants provides benefits in various types of mass tort litigation. Lawsuits related to alleged environmental contamination, especially actions brought under the Comprehensive Environmental Response, Compensation, and Liability Act6 (CERCLA or Superfund) lend themselves to multiple representation.7 Toxic tort defendants such as asbestos manufacturers may also benefit from a joint defense. Additionally, one of the most common mass tort situations in which defendants engage common counsel is in single-incident disasters where a corporation and its officers or employees are both named as defendants.
One of the primary reasons CERCLA litigation favors joint representation is the sheer number of defendants who may be potentially responsible parties (PRPs).8 "Under CERCLA, any person who has contributed to the disposal of hazardous substances can be held responsible, even if such contributions occurred decades before the initiation of the clean-up action."9 This amounts to joint and several, strict liability on any party responsible for the contamination of a site.10 Because so many PRPs may be involved in a CERCLA case, in addition to the cost advantages, joint representation avoids needless duplicative effort in becoming familiar with the case and enhances the chances for settlement because of the reduced number of attorneys present at settlement negotiations.11
Common representation or joint defense groups may also benefit toxic tort litigation. In fact, a group of asbestos producers and insurers signed an agreement in June 1985 to provide a streamlined approach to asbestos-related litigation through the creation of an organization known as the Asbestos Claims Facility ("ACF").12 In its operation, the ACF would select one or more law firms to represent its members in litigation in a city and further select one firm to represent all members who were defendants in a single case.13 Although the ACF dissolved in 1988, at that time, twenty-one companies formed the Center for Claims Resolution ("CCR") with generally the same objectives.14 The CCR continues in operation today.
Despite the effectiveness of organizations such as the CCR in streamlining litigation costs, the approach has been criticized as encouraging litigation. Commentators have recognized that as the ACF began to settle asbestos-related cases more frequently than the individual companies had done prior, the number of asbestos-related claims dramatically increased.15 Accordingly, although the litigation costs associated with an individual case may have decreased, the savings were not necessarily felt by the asbestos defendants.
A third type of mass tort litigation which may benefit from multiple representation involves a single-event which leads to the filing of several claims against one or more corporations as well as officers or employees of the corporations. The most obvious example of this type is litigation resulting from an aircraft crash. Following a crash, multiple plaintiffs often sue every party which may have contributed in some way to the accident. Typically, defendants may include the airline, the airframe manufacturer, the engine manufacturer, other aircraft component manufacturers, or the government. In addition, the plaintiffs may include the pilot as a defendant.
In such cases, multiple representation could occur on two levels. First, the corporate defendants such as the airline and manufacturers could agree to a joint defense. Although this is a possibility, in practice, the positions of these parties are likely to be adverse from the outset of the litigation. Accordingly, these parties would rarely, if ever, engage in a joint defense. The more probable joint defense arrangement would include the airline and the pilot. Because the airline may recognize a duty to indemnify and to provide a defense for the pilot, the airline and the pilot may agree to multiple representation. This situation is appropriate for joint defense because, at least at the outset, the interests of the airline and the pilot will likely be aligned.
III. Problems in Structuring a Multiple Representation
Large law firms may face a significant problem at the outset of a lawsuit naming more than one of its current clients as defendants. After initiation of the suit, each client will likely contact the attorney at the firm who regularly represents the client. Naturally, each attorney would like to open a file and begin representing the client. Each client would like advice on the representation including whether to agree to a joint representation.
Even if the law firm does not undertake a joint representation, these initial discussions with the clients may prove to be problematic. The client whose representation is not undertaken may later attempt to disqualify the law firm from representing its other client in the matter either because it believes that its position would be damaged or as a litigation tactic.16 Although not involving a multiple representation, In re American Airlines, Inc.17 illustrates a problem may occur after only initial discussions with a potential client.
In American Airlines, a representative of Northwest Airlines contacted a partner at the law firm of Vinson & Elkins ("VE") regarding representation in a lawsuit against American Airlines.18 The partner conducted a preliminary check to determine if American was a current client and then informed Northwest that VE would not undertake representation of another airline without further consultation.19 Four days later, American contacted a second partner at VE to inquire about representation in a different lawsuit filed by Continental Airlines against American.20 The second partner informed American of the need to perform a conflicts check; however, the partner and American began discussing litigation strategy.21 Because VE was already representing Northwest, VE obviously could not undertake representation of American.22
American later sought to disqualify VE from representing Northwest in part because of the preliminary disclosure of confidential information by American to the second partner at VE. The comments to the ethics rules recognize that an attorney may not switch sides to represent an adverse party after the party has "disclosed confidences to the lawyer while seeking in good faith to retain the lawyer."23 American contended that because it had discussed litigation strategy in good faith to the second partner at VE, the firm should be disqualified from representing Northwest.24 Northwest contended that American's actions were not in good faith but were motivated primarily to ensure that VE could not represent Northwest.25 Although the American Airlines court refused to determine the issue,26 the case illustrates some of the ethics implications that may develop at the initial stages of a representation.
An attorney must be careful regarding information disclosed at an initial meeting regarding representation.27 In this context, if the attorney does not actually receive confidential information at the initial interview, the attorney will not be subject to later disqualification from representation adverse to the person with whom the attorney met.28 But where such information has been disclosed, the attorney may be disqualified from adverse representation.29
IV. An Attorney's Duty of Loyalty
Before undertaking representation of multiple defendants in a single litigation, an attorney must consider two separate issues relating to conflicts of interest. First, the attorney must determine that the multiple representation would satisfy the ethical obligations imposed by the State Bar Rules.30 Second, the attorney must consider the consequences of having to withdraw from representation of one of the defendants if an actual conflict develops between the interests of that defendant and the other defendants. Specifically, the attorney must consider whether continued representation of the remaining defendants after withdrawal from representation of one defendant would be proper.
In Texas, Rule 1.06 of the Disciplinary Rules of Professional Conduct outlines the attorney's ethical obligations regarding conflicts of interest between two clients. Under the general rule, a lawyer may not represent a person if "that person's interests are materially and directly adverse to the interests of another client of the lawyer or the lawyer's firm."31 Likewise, a lawyer may not represent a person if the representation "reasonably appears to be or become adversely limited by the lawyer's or law firm's responsibilities to another client or to a third person or by the lawyer's or law firm's own interests."32
The rule provides an exception, however, permitting such representation if the lawyer reasonably believes that neither representation will be materially affected and that "each affected or potentially affected client consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any."33 The attorney's obligations limiting the representation of clients with adverse or potentially adverse interests stem from the attorney's duty of loyalty.34 This duty "is an essential element in the lawyer's relationship to a client."35
Concurrent representation of multiple clients in a single matter necessarily presents the possibility of conflict.36 The potential for conflict is present even if it appears that the interests of the clients are aligned.37 Even though such potential exists, the potential advantages of a joint defense will often outweigh the risk of conflict.
The informed consent requirement embodied in the ethics rules demonstrates that it is ultimately the client, not the attorney, who must decide whether the benefits of the multiple representation outweigh the risks of such representation.38 This tenet comports with the fundamental principle that the client has the ultimate authority to determine the scope and objectives of the representation.39 As long as each client agrees to the common representation knowing all of the risks and benefits, the attorney has fulfilled the initial ethical obligation.40
If the interests of the codefendants remain aligned, the attorney is not faced with further ethical issues relating to the common representation. But additional ethical considerations arise when conflicts between the positions of the codefendants become apparent after initiation of the joint defense. If such a conflict develops after representation has been undertaken, the lawyer may be required to withdraw from the representation.41 The problem for the attorney is that, although the attorney recognizes that withdrawal is necessary to eliminate the conflict of interest, withdrawal from representation of all defendants is undesirable.42 Whether the attorney may continue to represent one or more defendants after withdrawal from the representation of a co-defendant presents some significant ethical issues which are discussed in this article.
V. Continued Representation of Defendants After Withdrawal from Representation of Codefendant
Once an attorney has withdrawn from the representation of one defendant which was part of a joint representation, the attorney's ability to continue represent the other members of the joint defense turns on application of the ethics rules dealing with former clients.43 After withdrawal from the representation, an attorney maintains a duty of loyalty to that former client. As part of that duty, "[w]ithout prior consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client: . . . (2) if the representation in reasonable probability will involve a violation of [the lawyer's duty of confidentiality under] Rule 1.05; or (3) if it is the same or a substantially related matter."44
Before the rule would prohibit the attorney from continuing the representation of one client after withdrawal from representation of another, the interests of the client and the former client must be adverse. In mass tort litigation, conflicts often arise which place codefendants in adversarial positions. Frequently, one defendant will recognize that it may have claims for indemnification, contribution, or other cross-claims against another defendant. If the attorney involved in a multiple representation of mass tort defendants is forced to withdraw from one of the representations because of the development or discovery of such claims, the general rule dealing with former clients would likely prohibit any continued representation associated with the claims.45
The rule dealing with conflicts of interest for former clients presents an exception where the former client consents to the representation of the person adverse to the former client.46 Rule 1.09 is silent as to when such consent from the former client must be obtained. An attorney may attempt to secure, prior to commencement of the representation, the client's consent to continued representation of a codefendant even after withdrawal from the representation of the client. As discussed in Part VI of this article, however, the approach to conflicts currently applied by the Texas courts suggests that such consent may be ineffective. As asserted in Part VI, the Texas courts' position is inconsistent with the ethics rules regarding conflicts of interest and the client's role in determining the scope and objectives of the representation.
A. Nature of Consent
Until the Texas Supreme Court explicitly establishes whether a client may consent prior to the commencement of representation to an attorney's continued representation of other defendants upon withdrawal from a multiple representation, an attorney initiating a multiple representation should continue to obtain such consent from their clients. If the attorney does not attempt to secure the consent until after a conflict arises, the attorney will likely be unable to obtain the consent.47 Because the attorney needs to obtain this consent long before any conflict appears, the terms of the consent should explicitly state that the client agrees to the continued representation of the other defendants if the attorney must withdraw from representation of the client due to a conflict of interest. In addition, a client's waiver of the right to seek disqualification will present the court with further evidence that the client considered and consented to the continued representation of the other parties after withdrawal.48
B. Sample Letter of Consent
As indicated, the best time for an attorney to obtain consent to continued representation of other jointly represented defendants is prior to commencement of the representation. As part of the engagement letter, the attorney should include provisions specifically informing the client of the potential risks of conflicts associated with a joint representation.49 Moreover, the letter should explicitly state that by acknowledging and signing the engagement letter, the client consents to the joint representation and to continued representation of other codefendants in case the attorney must withdraw from representation of the client.
Sample provisions from such an engagement letter are included below:
Based on the information available at this time, the ABC Law Firm ("the firm") does not believe that its representation of all Codefendants currently involves any actual conflict of interest. Moreover, all Codefendants agree that they have a mutual interest in presenting a unified defense to the Plaintiff's claims. Each individual Defendant, however, recognizes that the representation may in the future involve actual conflicts of interest if the interests of one individual Defendant become inconsistent with the interests of the Codefendants.
Multiple representation may result in divided or at least shared attorney-client loyalties. Although the firm is not currently aware of any actual or reasonably foreseeable effects of such divided or shared loyalty, issues may arise as to which the firm's representation of an individual Defendant may become adverse to the representation of the Codefendants. Each Codefendant recognizes its right to employ separate counsel now, or at any later time in the Litigation.
All Codefendants recognize and agree that by entering into this joint defense agreement, each Codefendant will be unable to assert the attorney-client privilege against another of the Codefendants with respect to any communication made in the course of the representation of the Codefendants.
All Codefendants recognize that, in the event an individual Defendant exercises its right to employ its own counsel, forcing the firm to withdraw from its common representation of the remaining parties would cause severe hardship, potential prejudice, and undue expense. Therefore, each individual Defendant agrees not to seek disqualification of the firm in that event.
Further, each individual Defendant acknowledges that the firm cannot continue to represent any individual Defendant if an actual conflict arises. Should that occur, the individual Defendant will immediately advise the firm of the conflict, but will not discuss the specific circumstances with the firm. The firm will immediately withdraw from its representation of that individual Defendant. In addition, if it becomes apparent to the firm that an actual conflict exists between an individual Defendant and other Codefendants, the firm, on its own initiative, will immediately withdraw from its representation of that individual Defendant. Each individual Defendant agrees not to assert any such conflict of interest against the firm or to undertake to disqualify the firm from its common representation.
In drafting these agreements, attorneys should tailor the provisions to the desired effect following the development of a conflict. If the firm wishes to continue representation of a particular client even if it is that client's interests which become adverse to the other defendants, the agreement should naturally reflect that intention.
Notwithstanding an attorney's efforts to obtain consent to the joint representation and continued representation of other defendants following the development of conflicts, the Texas courts will likely require an attorney to withdraw from the entire representation if a conflict arises between two jointly represented defendants. In such case, the attorney will continue to owe the duty of loyalty to each codefendant under the rules for former clients.
VI. Analysis of Consent and Waiver
Under the ethics rules regarding conflicts of interest, before a consent to multiple representation can be effective, it must be established that the consent was made "after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any."50 In a representation of multiple defendants, two separate consent issues are implicated. First, the attorney must obtain the consent of each client to the joint representation notwithstanding the possibility of conflicting interests between the clients. Second, if the attorney intends to continue representing one or more defendants even after withdrawal from representation of one defendant, the attorney must obtain the consent of the client from whose representation the attorney has withdrawn.
A. Consent to Joint Representation
The requirement that effective consent to joint representation be premised on the attorney's complete disclosure of the risks and benefits of the representation serves to remind the attorney of the duty of loyalty. This duty of loyalty applies equally to every client — a lawyer may not ethically maintain a standard of loyalty inconsistent with the ethics rules in order to favor an existing client over a new client whose representation has been undertaken as part of a joint defense.51
One of the risks associated with multiple representation is that conflicts may arise which would require the attorney to withdraw from the representation of each client.52 Accordingly, the rules require that the attorney obtain prior consent from "each affected or potentially affected client."53 If an existing client refuses to consent to the attorney's joint representation with a new client for fear that such representation could later force the attorney to withdraw altogether, the attorney cannot undertake the representation even if the new client consents to the representation and agrees to waive all objections to conflicts of interest.54 This is essentially a recognition that if one joint defendant has a conflict, the other defendant necessarily has a conflict.
To satisfy the ethics obligations, the level of disclosure for the risks associated with multiple representation may vary depending on the client represented.55 In the context of mass tort litigation, most corporate defendants will be sufficiently experienced in litigation matters to appreciate the risks with only minimal explanation. But because of the potential ramifications including disqualification, attorneys should provide written disclosures of the risks to each client.
The necessity for detailed written disclosure becomes more acute when an attorney undertakes the representation of a corporation's employee in addition to the corporation in a single event mass tort, such as representation of an airline pilot and the airline in litigation relating to an aircraft crash. Because the individual defendant is likely infrequently involved in litigation, that defendant may require more explicit information regarding the risks. In dealing with any multiple representation and especially with unsophisticated clients, as part of the risk disclosure, the attorney should advise the client to seek independent legal advice on the risks and benefits of joint representation.
The attorney seeking to represent multiple clients should refrain from advising the clients to consent to the multiple representation. Although not expressly prohibited, the attorney's advice that a client should consent to multiple representation may implicate the attorney's own interest in obtaining the representation. By analogy, the comments to the ethics rule dealing with attorneys serving as intermediaries support this conclusion: "[A] lawyer should not permit his personal interests to influence his advice relative to a suggestion by his client that additional counsel be employed."56
B. Consent to Continued Representation
Although not a case involving mass tort, Wasserman v. Black57 illustrates how parties whose interests are perfectly aligned at the beginning of representation may quickly become directly adverse. In Wasserman, discharged city employees filed suit against the city and city councilmen alleging various claims including conspiracy to libel and slander.58 The city council selected an attorney to undertake representation of each defendant in the lawsuit and agreed to indemnify the individual councilmen.59 After the defense began, one of the councilmen questioned the propriety of certain aspects of the defense.60 Thereafter, the councilman was dismissed, and the city council rescinded its agreement to indemnify the councilman.61
Clearly recognizing the conflict which had arisen, the attorney withdrew from the representation of the dismissed councilman.62 Retaining a new attorney, the councilman filed cross-claims against the city and another of the co-defendants.63 Again recognizing the conflicts, the city retained separate counsel to defend the cross-claims.64 The original attorney, however, continued the representation of the city and other councilmen in the original lawsuit.65 Because of the conflicts, the dismissed councilman sought to disqualify the original attorney from the entire action.66
The Wasserman court concluded that original attorney must be disqualified from the entire suit.67 The court noted that because the attorney had received confidential information during the previous representation, Rule 1.09(a)(2) required disqualification.68 Although the attorney had advised each client of the potential risks of multiple representation, the attorney apparently did not seek consent to continued representation of some of the defendants in the event of a conflict.
To protect their interests and the interests of the other parties, attorneys may attempt to obtain this type of consent to continued representation of one or more of the jointly represented parties even if the conflicts require withdrawal from the representation of one client.69 Although such consent would appear to satisfy the attorney's obligations, the interaction of the attorney's duty of loyalty and duty of confidentiality may preclude such continued representation notwithstanding any consent.
1. Approach of the Texas Courts
Although the Texas courts have yet to specifically address whether a client's pre-representation consent to an attorney's continued representation of a codefendant following withdrawal from the concurrent representation of the client is effective, the Texas Supreme Court's recent decision in National Medical Enterprises v. Godbey70 suggests that such consent may not be effective.
In Godbey, National Medical Enterprises ("NME") retained attorney Ed Tomko to represent a regional administrator and a director at NME in relation to various criminal investigations and discovery in related civil lawsuits stemming from alleged mistreatment of patients and insurance fraud by NME.71 The administrator was named in several civil lawsuits, but in each case the claims against him were dismissed.72 In addition, Tomko nor his firm73 ever represented the administrator in any of the civil suits.74 Although the administrator was never indicted or officially informed that he was the target of an investigation, his predecessor as regional administrator was indicted and pleaded guilty to criminal charges.75
As part of the representation, Tomko received confidential information from each of the clients as well as from NME pursuant to a joint defense agreement.76 Under the terms of the joint defense agreement which applied to NME, NME's employees and former employees, and counsel for NME and its employees and former employees, each of the parties to the agreement recognized that the joint defense privilege applied and therefore prohibited any disclosure to third parties of information subject to the privilege without the consent of the attorney disclosing the agreement to the other parties to the agreement.77 The joint defense agreement provided that each client subject to the agreement was represented only by his attorney and that although the other attorneys in the agreement had a duty to preserve privileged information, the other attorneys did not represent the client.78 In addition, the agreement stated:
Each client member further understands and acknowledges that the attorney members representing other client members have the right, and may well have the obligation, to take actions against his or her own interest . . . .79
Taken together, the provisions of the joint defense agreement demonstrate that the parties understood conflicts of interest might develop between them and that they were subject to suit by the other parties. In a sense, the agreement was akin to a consent to continued representation of an adverse party after a conflict developed. But in the situation presented in Godbey, the conflicts were one step removed in that the parties to a potential dispute would not be represented by the same attorney. Rather, the only connection between the attorneys representing each party in a dispute was that they had previously contracted to share certain information.
After representing the two NME employees for approximately one year, Tomko withdrew as counsel.80 Seventeen months later, other attorneys from Tomko's firm filed suit on behalf of over ninety plaintiffs against NME.81 The lawsuit did not name as a defendant either employee formerly represented by Tomko. In addition, Tomko agreed not to disclose any information regarding NME or the prior representation of the employees with anyone else at his firm.82 NME moved to disqualify the firm, however, because of Tomko's possession of confidential information provided by NME pursuant to the joint defense agreement.83
After the trial court denied the motions to disqualify, NME and the administrator sought mandamus relief from the Texas Supreme Court.84 The court quickly stated that if Tomko had represented NME in the same matters as the employees, both he and his firm would be disqualified from bringing the action against NME.85 The court observed that Tomko had not represented NME; however, the court recognized that the joint defense agreement imposed a duty on Tomko to preserve confidential information of all parties to the agreement including those he did not represent.86 Because Tomko received confidential information from NME while under a duty to preserve it, the court concluded that Tomko would be unable to honor his obligations and sue NME at the same time.87
The court next considered whether the fact that Tomko would be precluded from suing NME prohibited other members from his firm from doing the same. The court recognized that an "attorney's knowledge is imputed by law to every other attorney in the firm. There is, in effect, an irrebuttable presumption that an attorney has access to the confidences of the clients and former clients of other attorneys in the firm."88 The court concluded that an attorney's promise to preserve confidences of a non-client under a joint defense agreement created the same presumption of shared confidences.89 Accordingly, because Tomko would have been disqualified from bringing suit against NME, so too would all attorney's in his firm notwithstanding Tomko's promise not to disclose any confidential information relating to NME.90
The conclusion in Godbey is consistent with other Texas decisions which have found that when the representation of the current client and the former client share a "substantial relationship," there is a conclusive presumption that confidential information was provided by the former client to the attorney.91 When the court finds that there is a "substantial relationship" between the representations, the Texas courts apply a per se rule of disqualification.92
2. The Texas Courts' Approach Is Inconsistent with the Ethics Rules
In Godbey, the joint defense agreement's consent provision recognized that the attorneys representing other members of the joint defense group "have the right, and may well have the obligation, to take actions against" a member of the group.93 Accordingly, NME may have consented to the attorney's subsequent adverse representation of a member of the joint defense group but not adverse representation of third parties. Because the consent to continued representation provision was not directly implicated in Godbey, the court left unanswered what is required for effective prospective consent to a representation adverse to a former client under Rule 1.9(a).
Although the court appeared to suggest that it would recognize NME's consent to adverse representation of a member of the joint defense group,94 the fact that NME was never a client of Tomko may have been critical in that Tomko's duty of confidentiality arose by contract rather than by the attorney's ethics obligations. Even with an agreement in which each client consented to continued representation of a codefendant, the Texas courts' per se rule of disqualification in representations which are "substantially related"95 may overcome the effectiveness of the consent.
Such strict application of the rule requiring disqualification would be inconsistent with the ethics rules. The ethics rules permit representation of clients adverse to the interests of a former client if the former client consents.96 The rules further permit concurrent representation of clients with potentially adverse interests as long as both clients consent after full disclosure of the risks and benefits of the representation.97 Moreover, "if multiple representation properly accepted becomes improper under this Rule, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules."98 Clearly, this rule anticipates that an attorney will continue representation of one party involved in a joint representation after withdrawal from the representation of another.
Allowing the clients to consent to the continued representation also comports with the fundamental premise that "[t]he client has ultimate authority to determine the objectives to be served by legal representation."99 The client receives several benefits by agreeing to a joint representation. In consideration for those benefits, the client should be permitted to waive certain rights such as the right to object to later object to the continued representation of a co-party. Moreover, if a client has agreed to such a waiver, the client should thereafter be estopped to seek disqualification based on conflicts with a co-party.
The ABA has opined that under the Model Rules of Professional Conduct, a waiver of objection to a possible future representation presenting a conflict of interest may be effective as long as it "contemplate[s the] particular conflict with sufficient clarity so the client's consent can reasonably be viewed as having been fully informed when given."100 This view finds support in the proposed Restatement (Third) of the Law Governing Lawyers which recognizes that consent to future conflicts may be permissible although it is subject to special scrutiny.101
3. California Recognizes the Effectiveness of Consent to Continued Representation
Although the Texas courts have yet to embrace the prospective waiver of objections to conflicts of interest, the California Court of Appeals upheld such a waiver in Zador Corp. v. Kwan.102 In Zador, prior to undertaking a defense of multiple parties in a contractual dispute, the attorney had one of the defendants sign a consent agreement regarding the joint defense.103 In the agreement, the attorney specified the risks associated with the joint defense.104 Additionally, the agreement provided:
Furthermore, because we will be jointly retained by you and the Co-defendants in this matter, in the event of a dispute between you and the Co-defendants, the attorney-client privilege generally will not protect communications that have taken place among all of you and attorneys in our firm. Moreover, pursuant to this "Joint Client" arrangement, anything you disclose to us may be disclosed to any of the other jointly represented clients.
In the event of a dispute or conflict between you and the Co-defendants, there is a risk that we may be disqualified from representing all of you absent written consent from all of you at that time. We anticipate that if such a conflict or dispute were to arise, we would continue to represent the [other Co-defendants]. Accordingly, we are now asking that you consent to our continued and future representation of the [Co-defendants] and agree not to assert any such conflict of interest or to seek to disqualify us from representing the [Co-defendants], notwithstanding any adversity that may develop.105
After a dispute developed between the defendants, the attorney withdrew from the representation of the individual defendant but continued to represent the codefendants.106 At that point, the individual defendant orally reaffirmed the terms of the agreement.107 The dispute between the parties increased to the level that the codefendants filed a cross-claim against the individual defendant.108 Thereafter, the individual defendant filed a motion to disqualify his former attorney from continuing the adverse representation.109
In considering whether the attorney should be disqualified from the continued representation, the court addressed the effect of the attorney's confidentiality obligations on the subsequent adverse representation. Recognizing that the "joint client" or "common interest" exception110 to the attorney-client privilege applied to the common defense, the court concluded that the propriety of disqualification did not turn on the attorney's duty of confidentiality.111 Rather, the question of whether the attorney should be disqualified was limited to the scope of the clients' consent to the continued representation.112
The court concluded that the consent agreement was sufficiently explicit to justify a finding that the individual had consented to the attorney's continued representation of the other defendants in the original action and in the cross-claim.113 Important to the court was the consent agreement's express language where the defendant agreed not to seek disqualification of the attorney "notwithstanding any adversity that may develop."114 The court found that by agreeing to the provision, the former client should have recognized that "any adversity" would naturally include litigation directly against the former client.
By raising the issue of the "joint client" or "common interest" exception to the attorney-client privilege, the Zador court may have unnecessarily confused the case's conclusion regarding the former client's express consent to the attorney's continued representation of the party whose interests had become adverse. The Fifth Circuit first distinguished the "joint client" exception and the attorney's duty of confidentiality in Brennan's, Inc. v. Brennan's Restaurants, Inc.115 The Brennan's court recognized that because the parties had previously been represented jointly, neither could assert the attorney-client privilege in the dispute as to communications during the joint representation.116 The court stated that an attorney's ethical duty, however, is broader than the evidentiary privilege,117 and therefore, information acquired from a client "is sheltered from use by the attorney against his client by virtue of the existence of the attorney-client relationship. This is true without regard to whether someone else may be privy to it."118 Unlike in Zador, however, the parties in Brennan's had not previously consented to the continued representation.
Because it recognizes the ability of a client to define the scope of an attorney's representation, the Zador approach is more consistent with the ethics rules and with the American Bar Association's interpretation of those rules than is the apparent Texas approach of per se disqualification. When presented with the specific issue, the Texas courts should recognize the propriety of a prospective waiver of objection to an attorney's continued representation of a codefendant following withdrawal from representation of one defendant as long as the waiver is specifically directed to the conflict which leads to the withdrawal.
4. The Role of a Motion to Disqualify
In considering whether to seek disqualification of opposing counsel, a party may consider several factors. Hopefully, one of those factors will be the presence of an actual conflict of interest and the potential impact of the conflict on the party. But tactical reasons such as "to delay proceedings, [to] deprive the opposing party of counsel of its choice, and [to] harass and embarrass the opponent" have become prevalent in large civil cases.119 "In such cases a motion to disqualify is surely at least prima facie unethical."120
When a defendant who was formerly subject to a multiple representation later seeks to disqualify the attorney from representing the other defendants in the same matter, there will necessarily be a legitimate claim of conflict of interest. But "[t]he court should also consider any other evidence which indicates the motion is being filed not due to a concern that confidences related in an attorney-client relationship may be divulged but as a dilatory trial tactic."121 Where a former client in a multiple representation has consented to the attorney's continued representation of other clients in the representation, the court should carefully scrutinize the purposes of a motion to disqualify due to the movant's prospective waiver of conflicts of interest.
The unique nature of mass tort litigation suggests benefits for multiple representation of both plaintiffs and defendants. By unifying their representation, environmental contamination defendants can reduce costs and to increase the likelihood of settlement. Certain toxic tort defendants such as asbestos manufacturers have used joint representation for years as a method for making litigation and settlement of legitimate claims more efficient and cost-effective. Other mass tort litigation such as single event disasters giving rise to multiple lawsuits also may warrant a joint defense.
Because every joint representation involves a risk that the parties' interests may become adverse during the course of the litigation, the attorney's ethical obligations impose a duty to fully inform each client of the risks and benefits of multiple representation and to obtain consent from each client prior to undertaking the joint representation. In the event that a conflict requiring the attorney's withdrawal from representing one of the defendants develops after commencement of a joint defense, recent Texas court opinions suggest that an attorney may be forced to withdraw from the representation of all defendants because of confidential information disclosed by the former client.
Such an absolute rule requiring withdrawal is inconsistent with the express language of the Texas Disciplinary Rules of Professional Conduct. Moreover, the rule operates to undermine the client's right to ultimately define the scope of the attorney's representation. When considering the specific issue of whether an attorney may ethically continue to represent co-parties after withdrawing from the representation of another co-party, the Texas courts should follow the example set in California and permit the continued representation if the parties have previously consented to continued representation. Moreover, when a client has given such consent, the courts should carefully examine the underlying purposes if the client later seeks to disqualify the attorney from continuing the representation of the other parties.
* Partner, Thompson & Knight LLP, 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201; J.D. 1974, University of Texas Law School.
** Associate, Thompson & Knight LLP, 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201; J.D. 1997, University of Oklahoma College of Law.
1. "Mass tort litigation . . . places significant strain on a defendant's resources and creates considerable pressure to settle the case, regardless of the underlying merits." CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996) (orig. proceeding).
2. . See John W. Lebold, Coordination of Insurance Issues and Defendants in Mass Torts, Corp. Legal Times, July 1996, at 18; see generally Richard A. Horder, Case Management of Mass Tort Litigation from the Perspective of Inside Counsel: What Clients Want, printed in Preparation and Trial of a Toxic Tort Case 1988, 363 PLI/Lit 273, 295-309 (1988).
3. 924 S.W.2d 123 (Tex. 1996) (orig. proceeding).
4. See David Littell, Consent and Disclosure in Superfund Negotiations: Identifying and Avoiding Conflicts of Interest Arising from Multiple Client Representation, 17 Harv. Envtl. L. Rev. 225, 225 (1993).
5. In Able Supply Co. v. Moye, 898 S.W.2d 766 (Tex. 1995) (orig. proceeding), defense costs for two years of the case had amounted to millions of dollars even though the case was early in the discovery process. See Able Supply, 898 S.W.2d at 771.
6. 42 U.S.C. §§ 9601-9675 (1994).
7. See Carol E. Dinkins & Lewis C. Sutherland, Ethics in the Environmental Practice, printed in ALI-ABA Course of Study, Toxic Tort and Environmental Matters, SB73 ALI-ABA 319, 322 (1997).
8. See Patrick E. Donovan, Comment, Serving Multiple Masters: Confronting the Conflicting Interests that Arise in Superfund Disputes, 17 B.C. Envtl. Aff. L. Rev. 371, 372 (1990).
10. See Littell, supra note 4, at 228-29.
11. See id. at 231.
12. See generally Lawrence Fitzpatrick, The Center for Claims Resolution, Law & Contemp. Probs., Autumn 1990, at 13.
13. See Duca v. Raymark Indus., 663 F. Supp. 184, 185 (E.D. Pa. 1986).
14. See Fitzpatrick, supra note, at 17.
15. See id. at 15.
16. Even if the client has not disclosed any confidential information, in certain circumstances, the ethics rules may preclude the attorney from representing an adverse party. See Tex. Disciplinary R. Prof'l Conduct 1.09 cmt. 4A, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon Supp. 1998).
17. 972 F.2d 605 (5th Cir. 1992).
18. See id. at 612.
19. See id.
20. See id.
21. See id.
22. See Tex. Disciplinary R. Prof'l Conduct 1.06(b).
23. Id. Rule 1.09 cmt. 4A.
24. See American Airlines, 972 F.2d at 613.
25. See id.
26. The court noted that it was unable to determine the issue because the trial court had not made any findings of fact on whether American's actions were in good faith. See id. at 613-14. But the court concluded that it was unnecessary to remand because it found that VE was disqualified on other grounds. See id. at 614.
27. See Attorneys' Liability Assurance Society, Loss Prevention Manual Tab III.B, at 23 (1997).
28. See B.F. Goodrich Co. v. Formosa Plastics Corp., 638 F. Supp. 1050, 1051 (S.D. Tex. 1986).
29. See, e.g., Herbert v. Haytaian, 678 A.2d 1183, 1187-88 (N.J. Super. Ct. App. Div. 1996); Desbiens v. Ford Motor Co., 439 N.Y.S.2d 452, 453 (App. Div. 1981).
30. See generally Tex. Disciplinary R. Prof'l Conduct 1.01-9.01, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon Supp. 1998).
31. Id. Rule 1.06(b)(1).
32. Id. Rule 1.06(b)(2).
33. Id. Rule 1.06(c).
34. See Conoco Inc. v. Baskin, 803 S.W.2d 416, 421 (Tex. App.—El Paso 1991, orig. proceeding); see also Tex. Disciplinary R. Prof'l Conduct 1.06 cmt. 1.
35. Tex. Disciplinary R. Prof'l Conduct 1.06 cmt. 1.
36. See Geoffrey C. Hazard, Jr. & Susan P. Koniak, The Law and Ethics of Lawyering 584 (1990).
37. See Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 1.7:204 n.1 (2d ed. Supp. 1998).
38. Of course, before the client may make such a determination, the attorney must independently conclude that the multiple representation would not materially affect the representation of either client. See Tex. Disciplinary R. Prof'l Conduct 1.06(c)(1).
39. See id. Rule 1.02 cmt. 1.
40. Cf. FDIC v. United States Fire Ins. Co., 50 F.3d 1304, 1314 (5th Cir. 1995) (disqualification of firm inappropriate where client undisputedly consented to representation despite possible conflict).
41. See Wasserman v. Black, 910 S.W.2d 564, 568 (Tex. App.—Waco 1995, orig. proceeding); see also Tex. Disciplinary R. Prof'l Conduct 1.15 (requiring withdrawal if "the representation will result in violation of . . . applicable rules of professional conduct or other law").
42. See Hazard & Hodes, supra note 37, § 1.7:307 (2d ed. Supp. 1998).
43. See, e.g., Wasserman, 910 S.W.2d at 569 (applying Rule 1.09). Unlike the Model Rules, the Texas Disciplinary Rules of Professional Conduct include a provision specifically addressing subsequent representation of a person in a dispute arising from a matter in which the attorney had represented that person concurrently with the other party to the dispute. Under this rule, "[a] lawyer who has represented multiple parties in a matter shall not thereafter represent any of such parties in a dispute among the parties arising out of the matter, unless prior consent is obtained from all such parties to the dispute." Tex. Disciplinary R. Prof'l Conduct 1.06(d).
Although the language of the rule would appear to encompass disputes following joint representation of parties to litigation, the official comment to the rule suggests that only non-litigation multiple representations such as preparation of loan papers or preparation of partnership agreements are implicated. See id. Rule 1.06 cmt. 9. Moreover, a claim for indemnification or contribution would not "aris[e] out of the matter" of the prior representation. Therefore, most, if not all, conflicts involved in joint representation of mass tort litigation defendants would not implicate Rule 1.06(d).
44. Tex. Disciplinary R. Prof'l Conduct 1.09(a).
45. Cf. Wasserman, 910 S.W.2d at 568 (applying general rule to require withdrawal from representation of all clients albeit in a context other than mass tort).
46. See Tex. Disciplinary R. Prof'l Conduct 1.09(a).
47. Although in some cases a person might consent after the development of a dispute to a former attorney's representation of an opponent in a matter substantially related to the former representation, human nature suggests that such cases would be rare.
48. Cf. Tex. Disciplinary R. Prof'l Conduct 1.02 cmt. 4 ("The scope of representation provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer's services are made available to the client.").
49. Although the disclosure of the risks and the client's consent need not be in writing, see Tex. Disciplinary R. Prof'l Conduct 1.06 cmt. 8, a writing will assist the attorney prove that the client provided such informed consent, if required.
50. See Tex. Disciplinary R. Prof'l Conduct 1.06(c)(2).
51. See Hazard & Koniak, supra note, at 657 ("Conventional doctrine is that a lawyer owes 'equal' loyalty to every client.").
52. See Littell, supra note, at 235 (in CERCLA context).
53. Tex. Disciplinary R. Prof'l Conduct 1.06(c)(2) (emphasis added).
54. Id. Rule 1.06 cmt. 7.
55. See id. Rule 1.06 cmt. 8.
56. Tex. Disciplinary R. Prof'l Conduct 1.07 cmt. 2.
57. 910 S.W.2d 564 (Tex. App.—Waco 1995, orig. proceeding).
58. See id. at 565-66.
59. See id. at 566.
60. See id. The councilman believed that the city should not be paying for a cross-claim brought on behalf of only one of the defendants asserting unlawful interference with his other employment with the United States Postal Service. See id.
61. See id. The court of appeals noted that the record did not provide any reason for the discharge of the councilman. See id. at 566 n.2.
62. See id. at 566-67.
63. See id. at 567.
64. See id.
65. See id.
66. See id.
67. See id. at 568.
68. See id. The court refused to assume that the attorney would misuse the confidential information, but concluded that "were he to continue to represent the cross-defendants in Wasserman's cross-claim or the second suit, he could be forced to choose between thoroughly representing his remaining clients and maintaining the confidentiality of the information obtained from Wasserman." Id.
69. See supra notes 47-48 and accompanying text.
70. 924 S.W.2d 123 (Tex. 1996) (orig. proceeding).
71. See id. at 124.
72. See id.
73. At the time NME first hired Tomko to represent the administrator, Tomko was with the law firm of Doke & Riley. Later, Tomko joined the firm of Baker & Botts where he continued the representation of the NME employees. See id.
74. See id.
75. See id.
76. See id. at 125.
77. See id.
78. See id.
80. See id.
81. See id. The plaintiffs were former patients at NME's psychiatric hospitals who physical and mental abuse by the Defendants. See id. These claims were substantially similar to some of the claims for which NME was in litigation at the time of the joint defense agreement with Tomko.
82. See id. at 129.
83. See id. at 126. Notwithstanding the fact that he had not been named in the suit, the NME administrator intervened and sought disqualification based on Tomko's loyalty obligations to his former clients under Rule 1.09. See id.
84. See id. at 128.
85. See id. at 129 (citing NCNB Texas Nat'l Bank v. Coker, 765 S.W.2d 398, 399-400 (Tex. 1989)).
86. See id.
87. See id. at 131.
89. See id. at 132.
90. See id.
91. See, e.g., NCNB Texas Nat'l Bank v. Coker, 765 S.W.2d 398, 400 (Tex. 1989) (orig. proceeding); Hoggard v. Snodgrass, 770 S.W.2d 577, 583 (Tex. App.—Dallas 1989, orig. proceeding). Given the ethics rules' broad definition of "confidential information," the conclusive presumption is appropriate. See Tex. Disciplinary R. Prof'l Conduct 1.05(a) ("Confidential information" includes "unprivileged client information" which "means all information relating to or furnished by the client, other than privileged information, acquired by the lawyer during the course of or by reason of the representation of the client.").
92. See, e.g., Centerline Indus., Inc. v. Knize, 894 S.W.2d 874, 876 (Tex. App.—Waco 1995, orig. proceeding) (After finding that the present and former representations were "substantially related," the judge "had no discretion to deny Centerline's motion to disqualify Rader and his firm.").
93. Godbey, 924 S.W.2d at 125.
94. See id. at 129 (recognizing that the joint defense group attorneys' duty to preserve confidences "did not preclude an attorney and client from acting in their own best interests, even to the point of using information disclosed by others in ways that conflicted with the others' interests").
95. See supra notes 91-92 and accompanying text.
96. See Tex. Disciplinary R. Prof'l Conduct 1.09(a).
97. See id. Rule 1.06(c)(2).
98. Id. Rule 1.06(e) (emphasis added).
99. Id. Rule 1.02 cmt. 1.
100. ABA Comm. on Ethics and Professional Responsibility, Formal Op. 372 (1993).
101. See Restatement (Third) of the Law Governing Lawyers § 202 cmt. d (Proposed Final Draft No. 1 1996).
102. 37 Cal. Rptr. 2d 754 (Ct. App. 1995).
103. See id. at 756.
104. See id.
106. See id. at 757.
107. See id. at 757.
108. See id.
109. See id.
110. The "joint client" or "common interest" exception to the attorney-client privilege provides that communications between jointly represented parties and their attorney are not privileged in actions between the parties. See Scrivner v. Hobson, 854 S.W.2d 148, 151 (Tex. App.—Houston [1st Dist] 1993, orig. proceeding). "Where parties display mutual trust in a single attorney by placing their affairs in his hands, the attorney must disclose to the others all opinions, theories, or conclusions regarding the client's rights or position to other parties the attorney represented in the same matter." See id.
111. See id. at 759. The court recognized that the "joint client" exception to the attorney-client privilege, standing alone, is not sufficient to allow an attorney to represent a client whose interests are adverse to the interests of a former client. See id. at 762 (quoting Cornish v. Superior Court, 257 Cal. Rptr. 383 (Ct. App. 1989)).
112. See id.
113. See id. at 763-64.
114. The court quoted this language three times on a single page. See id. at 763.
115. 90 F.2d 168 (5th Cir. 1979).
116. See id. at 172.
117. Although Brennan's considered the ABA Code of Professional Responsibility in its analysis of the attorney's duty of confidentiality, the Texas Disciplinary Rules of Professional Conduct recognize that "confidential information" protected by the ethics rules is broader information falling within the attorney-client privilege. See Tex. Disciplinary R. Prof'l Conduct 1.05(a) ("'Confidential information' includes both 'privileged information' and 'unprivileged client information.' 'Privileged information' refers to the information of a client protected by the lawyer-client privilege of Rule 503 of the Texas Rules of Evidence . . . .").
118. Brennan's, 590 F.2d at 172.
119. Koller v. Richardson-Merrell Inc., 737 F.2d 1038, 1051 (D.C. Cir. 1984), vacated on other grounds, 472 U.S. 424 (1985).
120. Lawrence Crocker, The Ethics of Moving to Disqualify Opposing Counsel for Conflict of Interest, 1979 Duke L.J. 1310, 1310.
121. Wasserman v. Black, 910 S.W.2d 564, 568 (Tex. App.—Waco 1995, orig. proceeding) (citing Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) (orig. proceeding)).
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