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Just the parties involved Ma’am, not the facts. Don’t be a “Joe Friday” when getting preliminary information from a prospective client

4/22/24

By: Meredith Freidheim and Scott Eric Anderson

ABA Formal Opinion 510 – Avoiding the Imputation of a Conflict of Interest When a Law Firm is Adverse to One of its Lawyer’s Prospective Clients  

On March 20, 2024, the American Bar Association (“ABA”) released Formal Opinion 510 discussing how to avoid imputing a conflict of interest to a law firm when it is adverse to one of its lawyer’s prospective clients. Formal Opinion 510 examines what constitutes a “reasonable measure” within the context of Rule 1.18 of the Model Rules of Professional Conduct. This article outlines what actions a lawyer must take to avoid imputing a conflict of interest to his or her own law firm under Rule 1.18.  

The takeaway: to avoid imputation of a conflict to one’s own law firm under Rule 1.18, when a lawyer learns disqualifying information from a prospective client, that lawyer must take “reasonable measures to avoid receiving more disqualifying information than reasonably necessary for these purposes.” As discussed below, the lawyer should ensure that information learned relates to “whether to represent the prospective client.” Second, even if the information does relate to the lawyer’s decision to represent the client, the information nonetheless must be “reasonably necessary” to make such a determination. Lastly, to avoid exposure to disqualifying information, the lawyer should caution the prospective client at the outset of the initial consultation to avoid volunteering information about the matter beyond what the lawyer specifically requests.  

However, even if these guidelines are followed to avoid imputation to the law firm, the disqualified lawyer must still be “timely” screened from the matter and receive no part of the fee, and the prospective client must be given prompt written notice pursuant to Rule 1.18. 

Rule 1.18 of the Model Rules of Professional Conduct 

If a lawyer consults with a prospective client, even when not retained, that lawyer cannot represent another client “in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter.”1 Generally, if a conflict of interest exists pursuant to Rule 1.18, it is imputed to that lawyer’s law firm.  

Nonetheless, Rule 1.18(d) provides two circumstances when the disqualified lawyer’s conflict of interest will not be imputed to that lawyer’s law firm. First, representation is permissible if both the affected client and the prospective client give their informed consent, confirmed in writing. The second mechanism, the focus of Formal Opinion 510, allows for representation of the disqualified lawyer’s law firm when each of the following conditions are met: 

  • The lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client; and  
  • The disqualified lawyer is timely screened from any participation in the matter and receives no portion of the fee; and 
  • Written notice is promptly given to the prospective client.  

The ABA set forth three guidelines in Formal Opinion 510 to aid lawyers to avoid imputation of conflicts of interest to their law firms under Rule 1.18. 

ABA Formal Opinion 510 

  1. Information relevant to assessing a potential representation. 

To avoid imputation, the initial question to consider is whether particular information that a lawyer elicited from a prospective client at a preliminary meeting related to the lawyer’s determination to represent the client or not. The ABA asserts that there are generally two categories of information that a lawyer may obtain to determine whether to represent a prospective client:  

(1) information that may relate to the lawyer’s professional responsibilities (i.e., whether the rules permit the lawyer to take on the matter); and  

(2) information that may relate to the lawyer’s general business decisions (i.e., whether the lawyer wants to accept the matter).  

The first category (i.e., whether the rules permit the lawyer to take on the matter) would include “information that is necessary to ensure compliance with legal and ethical obligations, including those obligations set forth in the Model Rules of Professional Conduct.”2 The ABA states that the most obvious determination the lawyer must make when taking on a new client is whether a conflict of interest would preclude the representation or would require one or more clients’ informed consent. To determine if a conflict exists, the lawyer typically seeks information regarding the identity of other relevant parties, witnesses, and other counsel. If this determination reveals a current or former representation of one or more parties, the lawyer may need additional information to decide how the conflict rules would apply. 

The second category (i.e., information regarding the business decision) entails information which would allow the lawyer to assess the amount of time the matter will take, the range of anticipated compensation for that time, the potential expenses, and the likelihood of being fully compensated. This category may also include whether the potential matter “aligns with the lawyer’s abilities and interests” and the law firm’s internal policies, “such as one limiting contingency matters or limiting the representation of parties in certain industries.”  

However, the ABA provides examples that would be unrelated to the lawyer’s determination of “whether to represent the prospective client.” Unrelated examples include detailed information elicited by the lawyer to “persuade the prospective client to retain the lawyer” or “details about the prospective client’s litigation or transaction which might enable the lawyer to impress the prospective client by offering strategic insight into how to conduct the representation or by relating the matter to the lawyer’s past experience.” Although a lawyer may generally promote themselves, “a legitimate factual inquiry toward this end” would be unrelated to the lawyer’s determination of “whether to represent the prospective client.”  

  1. When disqualifying information is “reasonably necessary” to the lawyer’s determination. 

To avoid imputation under Rule 1.18, even if the information is related to “whether to represent the prospective client,” the lawyer must still assess whether the information sought was “reasonably necessary” to make such a determination. This second step in avoiding imputation to a lawyer’s own law firm is considered more difficult to answer since it is easier to show that a lawyer’s conduct was intended to serve a “legitimate purpose” as opposed to a “necessary” purpose.  

In assessing what is “necessary,” the ABA points to Rule 1.16(a) which states that a lawyer must “inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept…the representation.” Rule 1.16(a) further provides that a lawyer shall not represent a client if, for example, “the prospective client seeks to use…the lawyer’s services to commit or further a crime or fraud despite the lawyer’s discussion…regarding the limitations on the lawyer assisting with proposed conduct.”3 Accordingly, a lawyer’s inquiry into information required by Rule 1.16(a) “necessitates eliciting information from a prospective client.” The ABA notes that “such an inquiry is not just permissible, but ‘reasonably necessary to determine whether to represent the prospective client.’” 

However, once a lawyer has sufficient information to decide if there “is any basis on which the lawyer would or must decline the representation,” the lawyer must cease inquiring on any subject in order to “place the lawyer in the best position to avoid potential imputation of a conflict to other lawyers in their firm.”4 The ABA asserts that the imputation provision of Rule 1.18(d) “strikes a balance between the prospective client’s interest in being assured that the lawyer will comply with confidentiality obligation, on one hand, and other clients’ interest in access to counsel as well as the law firm’s legitimate business interests, on the other.” 

  1. Reasonable measures to avoid exposure to additional information. 

Last, the lawyer must limit the information requested from a prospective client “to avoid exposure to disqualifying information that is not reasonably necessary to determine whether to undertake the representation.” The ABA states the “reasonable measures” standard under Rule 1.18(d)(2) means that “lawyers must exercise discretion throughout the initial communications, while the lawyer and prospective client are considering whether to enter into a lawyer-client relationship.” The ABA specifically asserts that lawyers who obtain information “without limitations fall short of that standard.”  

To avoid exposure to more disqualifying information, the lawyer should caution the prospective client “at the outset of the initial consultation not to volunteer information pertaining to the matter beyond what the lawyer specifically requests.” Although the warning need not have any particular wording, the reasonableness of a lawyer’s measures “depends on whether they are designed to limit the information received before a lawyer-client relationship is established.”  

In circumstances where prospective clients are interviewing several firms for representation in a matter, lawyers should caution the prospective client “against providing prejudicial information.” This is especially true if the lawyer wants to preserve the possibility of representing a future client with interests that are materially adverse in the same or substantially related matter. If the lawyer does not provide such a warning, such representation could be foregone.  

“Timely” screen a lawyer from participation in the matter.  

In Formal Opinion 510, the ABA ends with a note on “timely” screening of a lawyer who interviewed a prospective client but declined representation. In particular, screening is considered “timely” when it occurs “once a law firm becomes aware there is a potential conflict in representing someone adverse to the former potential client.” Rule 1.18 does not require screening for each potential client as it would be an “unnecessary and unreasonable burden.” 

For more information, please contact Meredith.Freidheim@fmglaw.com, Scott.Anderson@fmglaw.com, or your local FMG professional liability attorney.

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  1. ABA Model Rule of Professional Conduct 1.18(b)(c). Formal Opinion 492 address what types of information may disqualify a lawyer who has communicated with a prospective client—including, but not limited to, views on potential resolution options, personal accounts of relevant events, sensitive personal information, and strategies.  ↩︎
  2. This category would include, but is not limited to, information learned under Rule 1.1, Rule 1.2(d), Rule 1.16(a)(4), Rule 1.4, Rules 1.7-1.12, Rule 1.18, and Rule 3.1. However, the ABA notes that it is possible that not all information that is responsive to these Rules—particularly the merits of potential claims—is reasonably necessary to determine whether to undertake representation.  ↩︎
  3. The ABA also notes that the restriction found in Rule 1.16(a) aligns with Rule 1.2(d), which “forbids a lawyer from assisting a client ‘in conduct that the lawyer knows is criminal or fraudulent.’” The ABA’s commentary for Rule 1.16(a) further states that “inquiry and assessment will vary for each client or prospective client, depending on the nature of the risk posed by each situation.” ↩︎
  4. See Comment [4] to Rule 1.18. ↩︎

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