Two nonprofit legal services agencies are merging into one entity. After the merger, how do the combined agency's conflict-of-interest duties under Rules 1.7, 1.9, and 1.10 apply to clients who were previously with the separate agencies?

Plain-English summary

The inquiring attorney, a director of a nonprofit legal services agency, asked about the ethical issues arising from that agency's potential merger with another nonprofit legal services agency into a single combined entity. The Panel directed the attorney to Rules 1.7, 1.9, 1.10, and 1.6.

The Panel explained that Rule 1.7 addressed the concern that clients previously represented by two separate agencies would, after the merger, become clients of one entity, creating direct-adversity conflicts that did not exist before. Under Rule 1.7, the combined entity had to review its caseload to identify instances where clients' interests were directly adverse; where there was a reasonable belief the representation would not adversely affect the combined agency's relationship with each client, each client had to consent after consultation, and absent that consent the combined entity could represent neither party and had to keep each such client's information confidential under Rule 1.6.

The Panel added that Rule 1.9 (conflict of interest: former client), read together with Rule 1.10 (imputed disqualification), also applied. Rule 1.10 prohibited the combined entity from representing a client in a matter materially adverse to any former client of either predecessor agency absent consent after consultation, and in no event could information about any former client of either predecessor agency be used to that client's disadvantage except as Rule 1.9(b) allowed. The Panel opined that the combined agency should formulate systems and procedures to identify conflicts arising both on the date of the merger and afterward, and it limited its guidance to the Rules of Professional Conduct, not the State Ethics Code or other laws.

Currency note

This opinion was issued in 1995 (Opinion 94-77, issued March 23, 1995), after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rules 1.7, 1.9, 1.10, and 1.6 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which amended these rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: When two legal aid agencies merge, do their existing clients suddenly create conflicts?

A: The Panel said they can. Clients who were with two separate agencies became clients of one entity after the merger, so under Rule 1.7 the combined agency had to review its caseload and identify where clients' interests were directly adverse.

Q: What did the Panel say the combined agency must do about a directly adverse pair of clients?

A: Where there was a reasonable belief the representation would not adversely affect the relationship with each client, each client had to consent after consultation; absent consent, the combined entity could represent neither party and had to keep each client's information confidential under Rule 1.6.

Q: How far back do the conflict duties reach?

A: The Panel applied Rules 1.9 and 1.10 to former clients too: the combined entity could not represent a client adverse to any former client of either predecessor agency absent consent, and could not use a former client's information to that client's disadvantage except as Rule 1.9(b) allowed.

Background and rules framework

The opinion interprets Rhode Island Rules of Professional Conduct 1.7 (conflict of interest: general rule), 1.9 (conflict of interest: former client), 1.10 (imputed disqualification), and 1.6 (confidentiality of information), the analogs of Model Rules 1.7, 1.9, 1.10, and 1.6. The Panel treated the merged agency as a single firm for imputation purposes, so a conflict held by either predecessor agency became a conflict of the combined entity, curable only by consent after consultation.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / RI RPC 1.7 (conflict of interest: general rule; consent after consultation)
• MR 1.9 / RI RPC 1.9 (conflict of interest: former client)
• MR 1.10 / RI RPC 1.10 (imputed disqualification)
• MR 1.6 / RI RPC 1.6 (confidentiality of information)

See also

• RI EAP Opinion 94-74: a new firm may oppose its lawyers' old firm's former client under Rule 1.10
• RI EAP Opinion 91-28: divorce conflict from a partner's joint real estate closing under Rules 1.9 and 1.10

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2094-77.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

ETHICS ADVISORY PANEL
OPINION # 94-77, Request # 551
Issued March 23, 1995

The inquiring attorney, a director of a non-profit legal services agency, seeks guidance with respect to ethical issues arising out of the potential merger of that agency with another non-profit legal services agency. Following the merger, the combined entity will operate as one non-profit legal services agency.

The Panel refers the inquiring attorney to Rule 1.7, 1.9, 1.10, and 1.6. Rule 1.7 addresses the inquiring attorney's concern regarding conflicts of interest between clients of the combined entity in cases where prior to the merger, no conflict existed as the clients were represented by two separate agencies. However, following the merger, clients of two previously separate entities became clients of a single entity. Rule 1.7 entitled "Conflict of Interest: General Rule" states:

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

Rule 1.10 "Imputed Disqualification" prohibits the combined entity from representing a client when either of the predecessor agencies would have been prohibited from doing so.

Accordingly, the combined entity must review its caseload to identify instances where clients' interests are directly adverse. If there is a reasonable belief that the representation will not adversely affect the combined agency's relationship with each client, each client must consent after consultation. Absent such consent, the combined entity cannot represent either party and information with respect to each such client must be kept confidential in accordance with Rule 1.6.

Rule 1.9 "Conflict of Interest: Former Client" read together with Rule 1.10 "Imputed Disqualification" is also applicable to the combined entity. Rule 1.9 states:

A lawyer who has formerly represented a client in a matter shall not thereafter:

(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation; or

(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client or when the information has become generally known.

Rule 1.10 prohibits the combined entity from representing a client in a matter materially adverse to the interests of any former client of either of the predecessor agencies, absent consent after consultation. In no event may information with respect to any former client of either predecessor agency be used to the disadvantage of the former client except as provided in Rule 1.9(b).

The Panel opines that the combined agency should formulate systems and procedures to identify conflicts of interest arising both on the date of the merger and thereafter. Practical guidance can be found in the following sources. See, Cantor, "How to Merge Law Practices," in 1 Barbier, "The Dynamics of Merger," 64 Mich. B.J. 1208 (Nov. 1985); Rose, "Merging of Firm's Increases Capacity to Serve Clients," 28 Law Off. Econ. & Mgmt. 30 (1987); Altman, "Ingredients of a Successful Law Firm Merger," 59 N.Y. St. B.J. 48 (Oct. 1987); McGinity, "Small Law Firm Mergers," 132 N.J. Law. 30 (Jan/Feb 1990).

The Panel's guidance is restricted to interpretations of the Rules of Professional Conduct and does not extend to issues under the State Ethics Code or any other rules, regulations or laws that may have a bearing on the issues raised by this inquiry.