Former and prospective clients - Imputed conflicts

Learning Outcomes

After reading this article, you will be able to identify when a lawyer’s conflict of interest regarding former or prospective clients is imputed to their firm, explain the requirements for screening, and apply the substantial relationship and confidentiality tests. You will also be able to distinguish between conflicts arising from former and prospective clients and recognize the steps needed to avoid improper representation under the MPRE.

MPRE Syllabus

For the MPRE, you are required to understand how conflicts of interest involving former and prospective clients can affect an entire law firm. This article covers:

• The rules governing conflicts of interest with former clients and prospective clients.
• The concept of imputed disqualification within a law firm.
• The substantial relationship test for former client conflicts.
• The use and requirements of screening to avoid imputation.
• The duty of confidentiality to former and prospective clients.
• The process for obtaining client consent to waive conflicts.
• The impact of a lawyer’s move between firms on imputed conflicts.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. A lawyer at Firm A previously represented Client X in a contract dispute. The lawyer moves to Firm B, which now represents a party adverse to Client X in a related matter. Under what circumstances may Firm B continue the representation?
   1. Only if Client X gives informed consent, confirmed in writing.
   2. Only if the lawyer is screened and Client X is notified.
   3. Only if the lawyer does not remember any details of the prior matter.
   4. Only if the matters are not substantially related.
2. Which of the following best describes the “substantial relationship” test for former client conflicts?
   1. The lawyer must have actual knowledge of confidential information.
   2. The matters must involve the same legal issue.
   3. The matters involve the same transaction or there is a significant risk confidential information would materially advance the new client’s position.
   4. The lawyer must have personally worked on both matters.
3. When a lawyer receives significant confidential information from a prospective client but is not retained, what must the firm do to avoid imputed disqualification if another lawyer wishes to represent an adverse party?
   1. Obtain the prospective client’s informed consent, confirmed in writing.
   2. Screen the lawyer and provide prompt written notice to the prospective client.
   3. Nothing, as no attorney-client relationship was formed.
   4. Only avoid sharing fees with the screened lawyer.
4. Which of the following is NOT a requirement for effective screening to prevent imputation of a conflict?
   1. Timely isolation of the disqualified lawyer from the matter.
   2. The screened lawyer receives no part of the fee from the matter.
   3. Written notice is given to the affected former or prospective client.
   4. The screened lawyer must leave the firm.

Introduction

Conflicts of interest involving former and prospective clients can affect not only the individual lawyer but also their entire law firm. The Model Rules of Professional Conduct require lawyers to avoid representing clients in matters where their duties to former or prospective clients would create a conflict. In many cases, these conflicts are imputed to all lawyers in the same firm, but there are exceptions if proper screening and notice procedures are followed.

Key Term: Imputed Disqualification
The rule that prohibits all lawyers in a firm from representing a client when one lawyer is personally disqualified due to a conflict of interest, unless an exception applies.

Former Client Conflicts and Imputation

A lawyer who has previously represented a client in a matter must not later represent another person in the same or a substantially related matter if that person’s interests are materially adverse to the former client, unless the former client gives informed consent, confirmed in writing.

Key Term: Substantial Relationship Test
A standard used to determine if two matters are so factually or legally connected that a lawyer’s representation of a new client would risk using confidential information from a former client to the former client’s disadvantage.

If a lawyer is disqualified from representing a client due to a former client conflict, the disqualification is generally imputed to all lawyers in the same firm. However, if the conflict arises from a lawyer’s association with a prior firm, the new firm may avoid imputation by timely screening the lawyer from any participation in the matter, ensuring the lawyer receives no part of the fee, and providing prompt written notice to the affected former client.

Key Term: Screening
The process of isolating a lawyer from any participation in a matter to prevent the sharing of confidential information and avoid imputed conflicts.

Prospective Client Conflicts and Imputation

A lawyer who receives information from a prospective client that could be significantly harmful in a matter must not represent a client with materially adverse interests in the same or a substantially related matter. This conflict is also imputed to the lawyer’s firm unless:

• Both the affected client and the prospective client give informed consent, confirmed in writing; or
• The lawyer receiving the information took reasonable steps to avoid exposure to more disqualifying information than necessary, is timely screened, receives no part of the fee, and prompt written notice is given to the prospective client.

Key Term: Prospective Client
A person who consults with a lawyer about the possibility of forming a client-lawyer relationship, even if no representation results.

Duty of Confidentiality to Former and Prospective Clients

Lawyers owe a continuing duty of confidentiality to both former and prospective clients. Information learned in the course of prior representation or consultation cannot be used to the disadvantage of the former or prospective client, except as permitted by the rules or if the information has become generally known.

Key Term: Confidential Information
Information relating to the representation or consultation that is not generally known and that the lawyer is obligated to protect from disclosure or misuse.

Waiver of Imputed Conflicts

Imputed conflicts may be waived if each affected client gives informed consent, confirmed in writing, and the lawyer reasonably believes they can provide competent and diligent representation to each client.

Screening Requirements

To be effective, screening must:

• Be implemented as soon as practical after the firm knows or should know of the need.
• Prevent the screened lawyer from accessing files, discussing the matter, or receiving any part of the fee.
• Provide written notice to the affected former or prospective client, describing the procedures and compliance.

Worked Example 1.1

A lawyer at Firm X previously represented Company A in a patent dispute. The lawyer joins Firm Y, which is now asked to represent a competitor of Company A in a new patent case involving similar technology. Can Firm Y accept the new representation?

Answer:
Firm Y may represent the competitor only if the new matter is not substantially related to the prior dispute. If the matters are substantially related, Firm Y can proceed only if the lawyer is timely screened from any participation, receives no part of the fee, and Company A is promptly notified in writing. If these steps are not taken, the conflict is imputed and Firm Y is disqualified unless Company A gives informed consent, confirmed in writing.

Worked Example 1.2

A prospective client meets with a lawyer at Firm Z and shares sensitive details about a potential lawsuit. The client does not retain the firm. Later, another lawyer at Firm Z is asked to represent the opposing party in the same matter. What must Firm Z do?

Answer:
Firm Z cannot represent the opposing party if the information received from the prospective client could be significantly harmful, unless the prospective client and the new client both give informed consent, confirmed in writing. Alternatively, if the lawyer who received the information is timely screened, receives no part of the fee, and prompt written notice is given to the prospective client, Firm Z may proceed.

Exam Warning

Be careful: Imputed conflicts for former and prospective clients are not always automatic. Screening and notice can prevent disqualification, but only if all requirements are strictly met. Failure to implement screening promptly or to notify the affected client can result in the entire firm being disqualified.

Revision Tip

Always check whether the conflict arises from a lawyer’s prior firm or from information obtained in a prospective client consultation. The rules for screening and notice are similar but not identical.

Key Point Checklist

This article has covered the following key knowledge points:

• Imputed disqualification extends conflicts from one lawyer to all lawyers in a firm, with exceptions.
• Former client conflicts require the substantial relationship test and may be waived by informed consent.
• Screening, fee restrictions, and prompt written notice can prevent imputation when a lawyer moves firms.
• Prospective client conflicts arise if significant harmful information was obtained; screening and notice can allow representation.
• Confidentiality duties to former and prospective clients prohibit use or disclosure of their information.
• Effective screening must be timely, complete, and communicated in writing to the affected client.

Key Terms and Concepts

• Imputed Disqualification
• Substantial Relationship Test
• Screening
• Prospective Client
• Confidential Information