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Too close for comfort: Massachusetts Court warns attorneys on conflicts in joint vs. singular representation

8/21/24

By: Allison H. Eddy and Nancy M. Reimer

In Koch, et al. v. Curley, et. al, the Massachusetts Superior Court disqualified an attorney from defending a client when the attorney previously represented the client’s former employer who was the Plaintiff. The opinion reminds attorneys to be mindful of potentially adverse interests when engaged by business entities and their agents, as accommodating a former client in a friendly deal can create confusion regarding joint or singular representation.  

Here, Plaintiff, an owner of several business entities, entered into a contract to sell property owned by one of the entities to an employee, the Defendant, who managed various aspects of Plaintiff’s operations in 2015. The property was worth $9 million, but Plaintiff agreed to sell it to Defendant for $500,000 and an agreement that the Defendant would work for the Plaintiff for the next 20 years while forgoing annual six-figure bonuses. On the recommendation of Plaintiff’s in-house counsel, the Defendant hired an attorney (“Attorney”) to facilitate the property conveyance. Attorney had represented the Plaintiff in several prior real estate transactions.  Notably, the Plaintiff and the in-house counsel believed Attorney was representing the Plaintiff in the conveyance, even though he provided legal advice to both parties throughout the transaction. Attorney did not execute an engagement letter with either party.  

In 2018, the Defendant allegedly breached his promise to remain employed by the Plaintiff. As a result, the Plaintiff brought this action claiming breach of contract and fraud. The Defendant hired Attorney to defend him in the action.

The Plaintiff moved to disqualify Attorney from representing the Defendant, arguing Attorney has a conflict of interest prohibited by Mass. R. Prof. C. 1.9(a), which forbids lawyers from representing a client against a former client in a substantially related matter. The Court agreed with the Plaintiffs, holding Attorney could not represent the Defendant because 1) it was clear Attorney had a longstanding attorney-client relationship with Plaintiff in the specialized area of real-estate transactions, 2) documentary evidence of Attorney’s and in-house counsel’s actions in connection with the 2015 transaction supported the notion that Attorney had an attorney-client relationship with Plaintiff, and 3) if Attorney truly was only representing Defendant, Attorney was required to comply with his obligation to obtain “informed consent, confirmed in writing” from both parties under Mass. R. Prof. C. 1.7(b)(4).  

The Court found disqualification to be “mandatory” because the issues in the breach of contract and fraud action were substantially related to the 2015 transaction. The Court also clarified, under the Rule, it need not be proven that Plaintiff’s confidential information obtained in the 2015 transaction was used to advance Defendant’s position in the present case. Rather, Mass. R. Prof. C. 1.9 provides possession of confidential information need only provide a “tempting situation” to use such confidences.  

This case is a reminder that attorneys should tread lightly when facilitating deals between clients and their agents, as even amicable transactions often have interests that are potentially adverse. It may be tempting for an attorney to assist all parties in a friendly business deal, but it presents issues when conflicts arise, and the attorney is pulled to one side. Once adverse interests present themselves, it’s the attorney’s job to recognize the conflict of interest and notify the parties that new counsel is required. Moreover, this decision emphasizes the importance of having a written engagement agreement with a client. Not only does an engagement agreement serve to identify an attorney’s client, but it is a valuable risk management tool should disputes or malpractice allegations arise.  

For more information, please contact Allison H. Eddy at allison.eddy@fmglaw.com, Nancy M. Reimer at nancy.reimer@fmglaw.com, or your local FMG attorney.