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Re: Advisory
Opinion 2006-01
Professional Ethics Committee
Arkansas Bar Association
Date: March
15, 2006
Issues: A law firm occasionally represents
clients before a city council or before the city's
planning commission on behalf of business clients
for zoning matters and other issues. The firm is now
interested in bidding for a contract with the city's
Human Resources Department, under which a member of
the firm would give advice on employment law matters
and perhaps assist in litigation on wage and hour
issues, adverse employment issues, and related matters.
The firm asks whether such a role would be an impermissible
conflict of interest under the Arkansas Rules of Professional
Conduct.
Discussions: We previously discussed
this issue in our opinion 97-01, which involved the
representation of a city water commission. We stated:
"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, 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.
. . 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."
That
opinion did not answer the issue of whether a water
commission in a particular municipality was sufficient
independent of the city so that the attorney could
represent the commission while opposing other branches
of the city. However, in the present situation the
Human Resources Department which handles employment
law matters can hardly be called a separate and independent
commission. It does not have separate funding authority,
nor a separate statutory basis; it is merely an administrative
division of the city.
Since
that 1997 opinion, the Arkansas Supreme Court has
revised the Arkansas Rules of Professional Conduct.
Rule
1.7 now provides:
"(a)
Except as provided in paragraph (b), a lawyer shall
not represent a client if the representation involves
a concurrent conflict of interest. A concurrent conflict
of interest exists if:
(1)
the representation of one client will be directly
adverse to another
client; or
(2)
there is a significant risk that the representation
of one or more
clients will be materially limited by the lawyer's
responsibilities
to another client, a former client or a third person
or by a personal interest of the lawyer.
(b)
Notwithstanding the existence of a concurrent conflict
of interest under paragraph (a), a lawyer may represent
a client if:
(1)
the lawyer reasonably believes that the lawyer will
be able to provide
competent and diligent representation to each affected
client;
(2)
the representation is not prohibited by law:
(3)
the representation does not involve the assertion
of a claim by
one client against another client represented by the
lawyer
in the same litigation or other proceeding before
a tribunal;
and
(4)
each affected client gives informed consent, confirmed
in writing."
We also note Comment 16 to Rule 1.7:
"[16]
Paragraph (b)(2) describes conflicts that are non-consentable
because the representation is prohibited by applicable
law. . . . Decisional law in some states limits the
ability of a governmental client, such as a municipality,
to consent to a conflict of interest."
The
Arkansas Supreme Court has stated: "Dual representation
is particularly troublesome where one of the clients
is a governmental body. So, an attorney may not represent
both a governmental body and a private client merely
because disclosure was made and they are agreeable
that he represents both interests. . . Where the public
interest in involved, he may not represent conflicting
interests even with the consent of all concerned."
City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d
229 (1982).
Apparently
such a conflict is prohibited, and therefore consent
is not available under Rule 1.7(b).
Further,
The Arkansas Supreme Court inserted Comment 37, which
is not found in the Model Rules, but is based specially
upon decisional law of the past decade: "[37]
As an integral part of the lawyer's duty to prevent
conflict of interests, the lawyer must strive to avoid
not only professional impropriety, but also the appearance
of impropriety. The duty to avoid the appearance of
impropriety is not a mere phrase. It is part of the
foundation upon which are built the rules that guide
lawyers in their moral and ethical conduct. This obligation
should be considered in any instance where a violation
of the Rules of Professional Conduct are at issue.
The principle pervades these Rules and embodies their
spirit."
It
is irrelevant that one member of the firm will appear
before the city council or planning commission on
behalf of a private client, and another will represent
the city on employment matters. For purposes of conflicts
of interests, the firm is treated as an entity. Rule
1.10. If a single attorney cannot concurrently seek
relief or permission from the city, while at the same
time being employed by the city, neither can members
of a firm. It seems to us to transgress professional
propriety for one member of a firm to be paid by the
city, while another member of the firm seeks city
permission, blessing, or approval for a private client
or in particular challenges city action.
As we stated in Opinion
2001-01, concurrent conflicts are governed by Rule
1.7. Successive conflicts between the representation
of a private client and a government entity are governed
by Rule 1.11, which has a more relaxed standard. This
issue is governed by Rule 1.7.
Conclusion: Nothing in the Rules prohibits
a firm from seeking a position as outside counsel
for a city on employment law issues. But such a position
would bar any member of the firm from appearing before
an integral part of the city and seeking relief for
a private client. Any attempt by the city to consent
and to waive the conflict would appear to be invalid
under Arkansas case law.
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 Professional Ethics Committee
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