Can a firm represent a client suing one division of a bank while another lawyer at the firm represents a different division of the same bank, even with everyone's consent?

Plain-English summary

Attorney A in a firm represented a borrower defending litigation brought by a bank's real estate loan division. While that representation continued, Attorney B in the same firm was asked to represent the same bank against a third party in a litigation/bankruptcy matter arising from the bank's commercial finance division. The commercial finance division, told of Attorney A's adverse representation, reported that it was entirely distinct from the real estate loan division in management and business and so had no objection. The inquiry asked whether the firm could represent one subdivision of the company while representing a client against another subdivision in unrelated matters, with the consent of both subdivisions and the opposing client.

The committee identified DR 4-101(B) (confidences and secrets), DR 5-101(A) (employment affected by the lawyer's own interests, allowed only with consent after full disclosure), DR 5-105(A) and (C) (declining employment likely to adversely affect independent judgment, except where it is obvious the lawyer can adequately represent each and each consents after full disclosure), and DR 5-105(E) (imputed disqualification). It recalled prior opinions holding that a firm cannot, even with consent, defend a client one day and sue the same client the next in a separate action, and that withdrawal from both matters and firm disqualification was appropriate (LE Op. 1150, LE Op. 706).

The committee concluded that the inherent dangers of simultaneously representing and attacking the same client were present despite the two divisions' claim of separateness, because both divisions are part of the same entity managed under the same supervisory scheme, creating a potential for misuse of confidential information. It held that the simultaneous representation was improper because it was not obvious that adequate representation of both clients' interests could be provided, and since that threshold test could not be met, full disclosure and consent from both clients would not cure the impropriety.

Currency note

This opinion was issued in 1991, under Virginia's former Code of Professional Responsibility (the disciplinary rules it cites), before the Virginia State Bar's adoption of the Rules of Professional Conduct effective January 1, 2000. As the committee note observes, the conclusion that consent could not cure this conflict could come out differently under Rule 1.7(a)'s subjective "reasonably believes" standard rather than the old Code's objective "obvious" standard. 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, deadline, or requirement mentioned here.

Common questions

Q: Can a firm sue one division of a company while representing another division?

A: Under this 1991 opinion, not on these facts. The committee held that because the two bank divisions were part of one entity under common supervision, it was not obvious the firm could adequately represent both, so the simultaneous representation was improper.

Q: Does the clients' consent fix the conflict?

A: No. The committee held that because the threshold test (that it be obvious the firm could adequately represent each) could not be met, full disclosure and consent from both clients would not cure the impropriety.

Q: Why did the divisions being "distinct" not matter?

A: The committee said the inherent dangers of simultaneously representing and attacking the same client were present despite the divisions' claim of separateness, because both were part of the same entity managed under the same supervisory scheme, creating a potential for misuse of confidential information.

Background and rules framework

The opinion interpreted former Virginia DR 4-101(B) (confidences and secrets), DR 5-101(A) (the lawyer's own interests), and DR 5-105(A), (C), and (E) (multiple employment, the consent exception, and imputed disqualification). Concurrent conflicts are now governed by Virginia Rule 1.7, confidentiality by Rule 1.6, and imputation by Rule 1.10.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 4-101(B), DR 5-101(A), DR 5-105(A), DR 5-105(C), DR 5-105(E) (Code of Professional Responsibility)
• ABA Model Rule 1.7 (concurrent conflicts); Model Rule 1.6 (confidentiality); Model Rule 1.10 (imputation)

Other opinions cited:

• Virginia LE Op. 1150; LE Op. 706: improper, even with consent, to defend a client while a firm partner sues the same client in a separate matter; withdrawal and firm disqualification appropriate.

See also

• VA LEO 1426: Defending the Victim and the Accused
• VA LEO 1459: Side-Switching Partner and Screens
• VA LEO 1796: Defending Two Adverse Co-Defendants
• VA LEO 1821: Suing a Board a Partner Sits On

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1408.pdf

Original opinion text

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

Committee Opinion
March 12, 1991
Affirmed and Expanded
May 13, 1991
LEGAL ETHICS OPINION 1408

CONFIDENCES AND SECRETS –
CONFLICT OF INTEREST – MULTIPLE
REPRESENTATIONS: MULTIPLE
REPRESENTATION ADVERSELY
AFFECTING ATTORNEY'S
PROFESSIONAL JUDGMENT.

You have presented a hypothetical situation in which Attorney A in a firm represents a
borrower in the defense of litigation filed by a bank on an indebtedness generated from
the bank's real estate loan division. Subsequent to Attorney A undertaking his
representation, but while it is continuing, Attorney B in the same firm is asked to
represent the same bank against a third party in a litigation/bankruptcy matter generated
from the bank's commercial finance division. Upon a disclosure to the commercial
finance division of Attorney A's representation, the commercial finance division reports
that it is entirely distinct from the real estate loan division in management and business
and, therefore, there is no objection to Attorney A's representation in an unrelated matter
with another division of the bank.
You have asked the Committee to opine whether, under the facts of the inquiry, the law
firm can simultaneously represent one subdivision of a company while representing a
client against another subdivision of the same company in unrelated matters, with the
consent of both subdivisions and the client who opposes one of the two subdivisions.
The appropriate and controlling disciplinary rules related to your inquiry are DR:4-101(B), DR:5-101(A), DR:5-105(A), (C), and (E). Disciplinary Rule 4-101(B) states
that, except in certain very limited circumstances, a lawyer shall not knowingly reveal a
confidence or secret of his client or use a confidence or secret of his client to the
disadvantage of the client or for the advantage of himself or a third-person, unless the
client consents after full disclosure. Disciplinary Rule 5-101(A) requires that a lawyer
may only accept employment when the exercise of his professional judgment on behalf of
his client may be affected by his own financial, business, property, or personal interests,
with the consent of his client after full and adequate disclosure under the circumstances.
Disciplinary Rule 5-105(A) and (C) state, in pertinent part, that a lawyer shall decline
proffered employment if the exercise of his independent professional judgment in behalf
of a client will be or is likely to be adversely affected by the acceptance of the proffered
employment, except if it is obvious that he can adequately represent the interest of each
and if each consents to the representation after full disclosure.
Finally, DR:5-105(E) states that if a lawyer is required to decline employment or to
withdraw from employment under DR:5-105, no partner or associate or his firm may
accept or continue such employment.
The Committee has previously opined that where an attorney represents the plaintiff in
a medical malpractice suit against a hospital medical group and where a partner in the

Committee Opinion
March 12, 1991
Affirmed and Expanded
May 13, 1991
same law firm was subsequently retained by an insurance carrier, which provided
premise liability insurance to the aforementioned medical group in an unrelated premise
liability matter, it would be improper, even with the clients' consent, to continue the
simultaneous, multiple representation as it would not be possible to adequately represent
the interest of a client when the attorney is defending a client in an action one day and
suing the same client the next day in a separate action brought by an unrelated party. The
Committee has also stated that a lawyer should be diligent in his efforts to prevent the
misuse of the client's confidential information, and employment should not be accepted if
disclosure of the same to another client would be required. The committee further opined
that withdrawal from the representation in both matters, as well as disqualification of the
firm would be the appropriate action. (See LE Op. 1150, LE Op. 706.)
Under the facts you have provided, the Committee believes that the inherent dangers of
simultaneously representing and attacking the same client are present despite the two
subdivisions' indication that they are entirely distinct from each other in both
management and business. A potential misuse of clients' confidential information exists
since both divisions are part of the same entity managed under the same supervisory
scheme.
Therefore, the Committee is of the opinion that the simultaneous representation of the
bank's borrower and of the commercial finance Legal division of that same bank, in
unrelated litigation, would be improper since it is not obvious that adequate
representation of both clients' interests can be provided. Since that threshold test cannot
be met, full disclosures of the potential conflict and consent from both clients will
not cure the impropriety.
Legal Ethics Committee Notes. – This opinion’s conclusion that consent would not
cure this conflict could be different under Rule 1.7 (a)’s “reasonably believes” subjective
standard rather than the old Code’s “obvious” standard.