May a lawyer foreclose a mortgage for client A against a corporation wholly owned by B, where the lawyer's partner and firm have represented B?

Plain-English summary

The inquirer had long represented A, who sold real estate to B; B took title in C, Inc., a corporation wholly owned and controlled by B, giving back a purchase money mortgage signed only by the corporation. The inquirer then formed a partnership with E, who had previously represented B in a negligence matter, and the new firm had also been engaged by B to represent a related sales corporation in which B held a twenty-two percent interest. With the mortgage now in default, A wanted the firm to represent him in foreclosing against C, Inc. B was not personally liable on the mortgage and would be involved only through his ownership of C, Inc. and his interest in the other corporation.

The committee unanimously concluded that it would not be proper for the member to appear for A in the foreclosure. The fact that B was not personally liable on the mortgage did not prevent representation of the mortgagee from conflicting with the interest of the corporate mortgagor owned by B. Such representation would be contrary to Canon 6, which makes it unprofessional to represent conflicting interests except by express consent of all concerned given after full disclosure. Quoting Drinker, the committee noted that where counsel is aware that confidence has been reposed in him by someone not his client but who has assisted his client, he should not afterward act against that person in any matter in which the information would be material, and that the duty not to represent conflicting interests or betray a former client's confidences is not abrogated by a release. Drinker added that the injunction applies equally to law partners representing different clients whose interests conflict.

Currency note

This opinion was issued in 1961, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. The opinion applied former Canons 6 and 37 of the Canons of Professional Ethics; conflicts of interest, duties to former clients, and the imputation of a partner's conflict to the firm are now addressed by Rules 4-1.7, 4-1.9, and 4-1.10 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.9, and 1.10). Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Did it matter that B was not personally liable on the mortgage?

A: No. The committee held that B's lack of personal liability did not prevent representation of the mortgagee from conflicting with the interest of the corporate mortgagor, which B wholly owned.

Q: Could a release from the former client cure the conflict?

A: No. Quoting Drinker, the committee stated that the duty not to represent conflicting interests or betray a former client's confidences is not abrogated by a release signed by the former client; express consent of all concerned after full disclosure was required.

Q: Did the partner's prior representation of B affect the inquirer?

A: Yes. The committee noted that the injunction against representing conflicting interests applies equally to law partners representing different clients whose interests conflict with one another.

Background and rules framework

The opinion applied former Canons 6 and 37 of the Canons of Professional Ethics. Conflicts of interest, duties to former clients, and the imputation of one lawyer's conflict to the lawyer's firm are now addressed by Rules 4-1.7, 4-1.9, and 4-1.10 of the Rules Regulating The Florida Bar (Model Rules 1.7, 1.9, and 1.10). The committee's analysis turned on the partner's and firm's prior representation of B and on the adversity between the mortgagee and the B-owned corporate mortgagor.

Citations and references

Rules of Professional Conduct:

• Canon 6 [Canons of Professional Ethics; see current Rules 4-1.7, 4-1.10]
• Canon 37 [Canons of Professional Ethics; see current Rule 4-1.9]

Other authorities:

• Drinker, Legal Ethics, p. 106

See also

• FL Bar Ethics Op. 61-23: Foreclosing Mortgages Against a Former Client
• FL Bar Ethics Op. 62-9: Representing a New Client Against a Former Client's Matter
• FL Bar Ethics Op. 65-46: Associate Switching Firms Mid-Matter Conflict

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-60-36/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-60-36-1.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 60-36
May 8, 1961
Advisory ethics opinions are not binding.
A lawyer whose partner had on one occasion represented B in a negligence matter and whose firm has also represented B in other matters may not represent A in a mortgage foreclosure against a corporation wholly owned by B, except by express consent of all concerned after full disclosure of all the facts. This is not altered by the fact that the lawyer represented A during the transaction from which the cause of action arises.
Canons: 6, 37
Chairman Holcomb stated the opinion of the committee:
A member of The Florida Bar presents to us the following proposition:
He has for some time represented Mr. A, who last September sold certain real estate to Mr. B, who took title in C, Inc., a corporation wholly owned and controlled by B, giving back a purchase money mortgage signed only by the corporation. Mr. D represented Mr. B in the purchase and still represents him. In July, 1960, the inquirer and Mr. E formed a law partnership. Mr. E had previously represented Mr. B in a negligence matter. In November, 1960, Mr. B contracted with the firm of E and the inquirer to represent F, Inc., a sales organization for the land sold by Mr. A to Mr. B. Mr. B has a twenty-two percent interest in F, Inc. The purchase money mortgage is now in default, and Mr. A desires E and the inquirer to represent him in the foreclosure suit against C, Inc. Mr. B is not personally liable on the mortgage and would not in any way be personally involved other than through his ownership of C, Inc. and his interest in F, Inc. The member requests our opinion as to whether he may ethically appear in this matter on behalf of Mr. A.
It is the unanimous opinion of the Committee that it would not be proper for the member to appear on behalf of Mr. A in this foreclosure. The fact that Mr. B is not personally liable on the mortgage does not prevent representation of the mortgagee being in conflict with the interest of the corporate mortgagor, which is owned by Mr. B.
Such representation would appear to be contrary to Canon 6 of the Canons of Professional Ethics making it unprofessional to represent conflicting interests, except by express consent of all concerned given after full disclosure of the facts.
Mr. Drinker, in his work on Legal Ethics at page 106, says:
"Attorneys . . . should not voluntarily put themselves into positions where the conditions of their compensation may interfere with the full discharge of their duty to their clients."
"The spirit of this rule is to be observed rather than the letter, and where counsel is aware that confidence has been reposed in him by someone not his client, but who has been assisting his client with information, he should not afterwards act against that person in any matter in which such information would be material. . . ."
The duty not to represent conflicting interests or to betray the confidences of a former client is not abrogated by a release signed by the former client.
"The injunction not to represent conflicting interests applies equally to law partners representing different clients who have interests conflicting with one another. . . ."