Can a lawyer retained and paid by a sales agent represent investors who may have claims against that same sales agent?

Plain-English summary

The lawyer was retained by a former sales agent for a now-bankrupt company to represent a number of former investors in the company, for whom the lawyer held powers of attorney. The former sales agent had sold the promissory notes in question to the investors.

The committee, after considering the materials submitted with the inquiry, concluded that the fact pattern demonstrates the potential for non-waivable conflicts of interest, citing RPC 1.7 and 1.8. It noted that unfulfilled obligations may exist regarding the fee agreement under RPC 1.5. It expressed serious concerns that, on the facts presented, a lawyer would be able to form a reasonable belief that the language in the submitted documents complies with RPC 1.2, 1.3, 1.4, and 1.6. The committee observed that the "disclosure" authorized by the former sales agent contains language suggesting the lawyer has entered into representation of multiple clients who may have claims against the former sales agent. It urged the lawyer to seek competent legal advice on whether to continue the representation.

Currency note

This opinion was issued in 1999, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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. The conflict and client-duty rules the opinion cites (RPC 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, and 1.8) were restructured in the 2006 revisions, so verify the current rule text before relying on it.

Common questions

Q: Can a lawyer paid by a sales agent represent investors who may sue that agent?

A: The committee concluded the fact pattern demonstrates the potential for non-waivable conflicts of interest under RPC 1.7 and 1.8.

Q: Were there problems beyond the conflict?

A: Yes. The committee noted possible unfulfilled fee-agreement obligations under RPC 1.5 and serious concern whether the lawyer could reasonably believe the documents complied with RPC 1.2, 1.3, 1.4, and 1.6.

Q: What did the committee advise the lawyer to do?

A: It urged the lawyer to seek competent legal advice on the question of whether to continue the representation.

Background and rules framework

The opinion identified potential non-waivable conflicts of interest under Washington RPC 1.7 and 1.8 (conflict of interest: current clients and specific rules, MR 1.7 and 1.8), where a lawyer retained and paid by a third party represents multiple clients who may have claims against that third party. It also raised RPC 1.5 (fees, MR 1.5), and questioned whether the documents could satisfy RPC 1.2 (scope, MR 1.2), RPC 1.3 (diligence, MR 1.3), RPC 1.4 (communication, MR 1.4), and RPC 1.6 (confidentiality, MR 1.6).

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.7 (conflict of interest: current clients); Washington RPC 1.7
• ABA Model Rule 1.8 (conflict of interest: current clients, specific rules); Washington RPC 1.8
• ABA Model Rule 1.5 (fees); Washington RPC 1.5
• ABA Model Rule 1.2 (scope of representation); Washington RPC 1.2
• ABA Model Rule 1.3 (diligence); Washington RPC 1.3
• ABA Model Rule 1.4 (communication); Washington RPC 1.4
• ABA Model Rule 1.6 (confidentiality of information); Washington RPC 1.6

See also

• WA Ethics Op. 1693: Insurance-Agent Referrals & Fees
• WA Ethics Op. 1882: Free Estate Plans, Donations
• WA Ethics Op. 1887: Suing an Insurer the Firm Represents

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1085

Original opinion text

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

Advisory Opinion: 1891
Year Issued: 1999
RPC(s): RPC 1.2; 1.3; 1.4; 1.5; 1.6; 1.7; 1.8
Subject: Conflict of interest; lawyer retained by third party acting on behalf of investors who may have additional claims against third party

[The lawyer was retained by a former sales agent for a now bankrupt company to represent a number of former investors in the company for whom he had powers of attorney. The former sales agent had sold the promissory notes in question to the investors.] The committee carefully considered the materials you submitted in addition to your inquiry. The committee has concluded that the fact pattern presented in those materials demonstrates the potential for non-waiveable conflicts of interest. See RPC 1.7 and 1.8.

We further note that unfulfilled obligations may exist regarding your fee agreement under RPC 1.5.

We have serious concerns that based on the facts presented, a lawyer would be able to form a reasonable belief that the language contained in the documents submitted with your inquiry complies with RPC 1.2, 1.3, 1.4, and 1.6.

The "disclosure" authorized by [the former sales agent] contains language which suggests that you have entered into representation of multiple clients who may have claims against [the former sales agent].

We urge you to seek competent legal advice on the question of whether you should continue this representation.