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RE: Advisory
Opinion 97-01
Arkansas
Bar Association
DATE: June
27, 1997
SUBJECT
: Representation of Municipal Commissions
This
issue presented in this opinion is whether an attorney
who represents a city agency or commission may represent
other clients in their dealings with other branches
of the city government. The further, more specific,
issue is whether an attorney who represents, for example,
a city water commission on an on-going basis may concurrently
represent a landowner whose property is condemned
by the city parks department or a citizen who wishes
to bring a civil rights against the city police department.
These
issues hinge upon the nature of the attorney-client
relationship: namely whether the attorney has a relationship
only with the city agency or whether the attorney
has a relationship, even if less direct, with the
city itself.
Counsel
for the water commission has submitted extensive research
documenting the independence of the entity from the
city. {A.C.A. § 14-234-100 et. seq. ) . If, in
fact, the waterworks is a separate and distinct entity
from the city, no inherent conflict of interest would
exist if counsel for the waterworks represented a
client adverse to the city. However, if the waterworks
is found to be merely a division of the city, a conflict
of interest may exist. The nature of the relationship
between the city and the waterworks is a question
of fact which this committee cannot resolve. However,
the committee can provide the following guidelines
in light of the requirements of the Ark. Rules of
Professional Conduct.
The
existence of an attorney-client relationship is an
issue of fact. In this instance, relevant factors
may include the relationship between the commission
and the city under state law, the degree of independence
that the commission has from the city, the terms under
which the attorney has been hired by the commission,
the control over the attorney exercised by the commission
or the city, and the source of funds that are used
to pay the attorney.
An
attorney has a duty of loyalty to a client. If the
attorney concludes that the waterworks is also the
city, then the attorney who represents the commission
also has an attorney - client relationship with the
city and he would obviously be barred from representing
another client in an adverse relationship suit against
the city. The governing law is found in Arkansas Rule
of Professional Conduct 1.7 (a), which prohibits the
representation of a client "if the representation
of that client will be directly adverse to another
client."
These
issues are presented in City of Little Rock v Cash,
277 Ark. 494, 644 S.W. 2d (1982). In that case, which
involved concurrent litigation, the Court stated:
"A lawyer is charged with a high degree of loyalty
to his client. Suing and defending the same client
at the same time is, at the very best, unseely in
that regard." Id. At 508.
On
the other hand, if the attorney concludes that the
city and waterworks are separate and distinct, then
the issue is analyzed under Rule 1.7 (b), which says
a lawye4r shall not represent another client if the
representation might be materially limited by the
attorney's duty to the first client.
If
the ability to represent the second client is not
impaired by representation of the first client, no
conflict exists. However, if representation may be
materially hampered, the attorney must employ the
three part analysis suggested by Rule 1.7(b) : (1)
would a reasonable attorney believe that the representation
of the second client would be adversely affected,
(2) has the attorney informed the second client of
the attorney's representation of the first client,
and (3) has the second client knowingly consented
and waived the potential conflict?
The
language in the eighth paragraph to the Comment to
Rule 1.7 is helpful: "For example, a lawyer representing
an enterprise with diverse operations may accept employment
as an advocate against the enterprise in an unrelated
matter if doing so will not adversely affect the lawyer's
relationship with the enterprise or conduct of the
suit and if both clients consent upon consultation.
By the same token, government lawyers in some circumstances
may represent government employees in proceedings
in which a government agency is the opposing party."
The
initial burden of resolving questions of conflicts
of interests is primarily the responsibility of the
lawyer undertaking the representation. See Comment
to Rule 1.7. The attorney should keep in mind that
the Arkansas Supreme Court has applied the "appearance
of impropriety" standard to disqualification
matters. Berry v. Saline Memorial Hospital,
322 Ark. 182, 907 S.W. 2d 736 (1995) . However, use
of that standard may override the right of a litigant
to choose his own counsel. Saline Memorial Hospital
v. Berry, 321 Ark. 588, 906 S.W. 2d 297 (1995)
.
In
deciding whether to proceed with the second client,
the attorney should consider the likelihood that opposing
counsel may move to disqualify the attorney. That
possibility should be disclosed to the second client,
who may be reluctant to retain an attorney who will
face a disqualification motion.
We
conclude that the Arkansas Rules of Professional Conduct
neither expressly permit nor prohibit an attorney
who represents a city commission from concurrently
representing clients in matters before other branches
of the same government. A finding of fact as to the
nature of the client is required before a determination
can be made as to whether a conflict of interest prohibited
by the Arkansas Rules exists.
NOTICE
"This is an opinion
only of the Arkansas Bar Association which is a voluntary
association of attorneys licensed to practice in the
State of Arkansas, and reliance thereon is voluntary
and relieves any Association member from liability
for the content hereof. This opinion is intended to
be the Association's best interpretation of the Model
Rules of Professional Conduct as promulgated by the
Supreme Court of Arkansas as that code applies to
the written facts presented to the Committee."
ARKANSAS
BAR ASSOCIATION
By: _________________________
Howard W. Brill
Reporter for Professional
Ethics
and Grievances
Committee
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