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RE: Advisory
Opinion 97-02
Arkansas
Bar Association
DATE:
June 30, 1997
SUBJECT:
Representation that is Adverse to Director of Corporate
Client
ISSUE:
A law firm represents a corporate client {designated
as ABC) which has a multi-person board of directors.
One director, who is not an employee or officer of
the corporate client, is an officer and employee of
a second corporation {designated as XYZ) . The law
firm does not represent XYZ, nor any officer, director
or employee of XYZ.
The
issue raised is whether the firm may represent a third
party in a dispute that is adverse to XYZ. ABC will
not be a party to the litigation and has no interest
in the outcome of the litigation. The firm will not
discuss the litigation withrepresentatives of ABC.
ANALYSIS:
An attorney who is retained to provide legal services
for a corporate entity has an attorney-client relationship
with the corporation. Ark. R. Prof. Conduct 1.13{a)
. That relationship does not automatically extend
to individual corporate directors or officers. The
Comment to the Rule describes those individuals as
"the constituents of the corporate organizational
client." In describing the duty of confidentiality,
the Comment states "this does not mean, however,
that constituents of an organizational client are
the clients of the lawyer."
Rule
1.13{e) permits the attorney to represent a director,
officer, or employee, provided the provisions of Rule
1.7 are satisfied. However, in this situation, the
firm has not entered into any relationship with the
director as an individual. Therefore the firm has
no attorney-client relationship with XYZ, and likewise
has no attorney-client relationship with a director
of XYZ.
CONCLUSION:
The Arkansas Rules of Professional Conduct do not
prohibit an attorney from opposing a corporation,
even though one of the corporate directors is also
a director of a client corporation.
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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