Can a lawyer represent taxpayers in a test suit against a city when the city itself will pay the taxpayers' attorney fees and court costs?

Plain-English summary

A city had voted a bond issue to build a city-owned waterworks, and had sold and delivered part of the bonds and spent the proceeds on partial construction. Eastern bond attorneys then questioned the validity of the bond issue, and the remaining bonds had to be sold to finish the system, which required a test suit to settle validity. Certain taxpayers were willing to sue the city to enjoin delivery of the last bonds, if the city would pay their attorney fees and court costs, and the city was willing to do so. The inquiry was whether it would be unethical for a lawyer to represent the taxpayers knowing the city would pay his fees and costs.

The Board acknowledged that, in one view, the lawyer would be representing conflicting interests, contending against the city that the bonds were invalid while being paid by the city. It quoted Rule 8, that it is unprofessional to represent conflicting interests except by express consent of all concerned after full disclosure. The Board concluded that if the taxpayers are aware the city is to pay their fees and costs, and a full and frank disclosure of all the facts is made in open court, it would not be unethical to represent the taxpayers, leaving it to the court to decide whether to proceed, provided always that the lawyer is not a party to a collusive judgment and in good faith presents the law and facts most favorable to his clients, the taxpayers.

Currency note

This opinion was issued in 1933, decades before Oklahoma replaced its original Rules of Professional Conduct (patterned on the ABA Canons of Professional Ethics) with the Oklahoma Rules of Professional Conduct (adopted 1988) and the later Ethics 2000 revisions. Conflicts of interest, payment of a lawyer's fee by someone other than the client, and candor to the tribunal are governed today by separate provisions of the current Oklahoma Rules of Professional Conduct. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific principle mentioned here.

Common questions

Q: Could a lawyer sue the city on behalf of taxpayers while the city paid his fees?

A: Yes, under conditions. The Board concluded it would not be unethical if the taxpayers know the city is paying and a full and frank disclosure is made in open court.

Q: What kept the arrangement from being an improper conflict?

A: Express consent after full disclosure under Rule 8, made openly in court, plus the lawyer's duty not to be party to a collusive judgment and to present the case in good faith for the taxpayers.

Q: Who decided whether the suit could go forward?

A: The Board left it to the court to determine whether to proceed once the facts were disclosed in open court.

Background and rules framework

The opinion applied Rule 8 of the then-current Oklahoma Rules of Professional Conduct, patterned on the ABA Canons of Professional Ethics, which barred representing conflicting interests except by express consent after full disclosure. The Board treated a city-funded test suit against the city as a conflict that disclosure in open court could cure, conditioned on the absence of a collusive judgment and good-faith advocacy for the named clients.

Citations and references

Rules of Professional Conduct:

• Rule 8 (1929 Oklahoma Rules of Professional Conduct): it is unprofessional to represent conflicting interests except by the express consent of all concerned after full disclosure.

See also

• Okla. Bar Ethics Op. 46: City Attorney Defending Council Members in a Taxpayer Suit
• Okla. Bar Ethics Op. 44: Representing Two Sets of Heirs With Conflicting Claims
• Okla. Bar Ethics Op. 32: City Attorney Firm as Special Prosecutor With Civil Claims

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-62/

Original opinion text

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

Adopted October 27, 1933

The Board is in receipt of a request for an advisory opinion, in which it is stated that a city in the State of Oklahoma had voted a bond issue for the purpose of constructing a waterworks system to be owned exclusively by the city; that the validity of the bond issue is now being questioned by eastern bond attorneys, although a considerable portion of the bonds have heretofore been approved, sold and delivered; that the city has used the proceeds of the bonds sold in the partial construction of the waterworks; that it is necessary that the remaining bonds be sold in order to complete the system; that it becomes necessary that the validity of the bond issue be determined in what is known as a test suit; that certain taxpayers of the city are willing to institute a suit against the city seeking to enjoin it from making the delivery of the last of the bonds, providing that the fees of their attorneys and the court costs be paid by the city; and that the city feels that it is necessary to determine the validity of the bond issue and is willing to defray the attorneys' fees of the taxpayers, and the court costs.

The inquiry is as to whether or not it would be unethical for a member of the bar to accept employment from the taxpayers knowing that his attorney's fees, and court costs, are to be paid by the city.

In response:

In one view of the situation, the member of the bar would be representing conflicting interests in that he would be contending against the city that the bond issue was invalid, while receiving his fees in the contest from the city.

Rule 8 of the Rules of Professional Conduct provides: "It is unprofessional to represent conflicting interests except by the express consent of all concerned, given after a full disclosure of the facts."

The Board is of the opinion that if the taxpayers are aware that the city is eventually to pay the fees of their attorneys and the court costs, and if a full and frank disclosure is made in open court of all of the facts, it would not be unethical for a member of the bar to represent the taxpayers under the circumstances, it then being for the Court to determine whether or not it would proceed with the cause, provided, always, that the member of the bar shall not be a party to a collusive judgment, and shall in good faith and to the best of his ability, present the law and the facts most favorable to the contention of his clients, the taxpayer.