Ethics Opinions

Opinion No. 76-22

Summary: A lawyer may continue to represent a client in contemplated or pending litigation unless he learns or it is obvious that he or a lawyer in his firm (1) ought to be called as a witness on behalf of his client, or (2) may be called as a witness other than on behalf of his client and the lawyer's testimony is or may be prejudicial to his client.

Facts: The extent of the duty of a lawyer to withdraw after undertaking employment in contemplated or pending litigation, because he or a lawyer in his firm ought to be called as a witness on behalf of his client, or may be called as a witness other than on behalf of his client, has been the subject of two recent inquiries.
(1) Attorney A represents prospective buyers of real estate and prepared a purchase and sale agreement deleting the provision providing for an automatic extension of time to perfect title. Several days prior to the passing date, an attachment was placed on the property and a controversy developed over a proposed escrow agreement requested by Attorney B representing the sellers, which culminated in the buyers' refusal to purchase at the closing. Both buyers and sellers have instituted actions arising out of this situation. During the pre-trial discovery stage of the litigation, Attorney B informed Attorney A that he intended to call Attorney A as a witness at the trial on the merits concerning the proposed escrow agreement and filed a motion to strike his appearance as counsel for that reason. Must Attorney A withdraw from representation of his clients on this account?
(2) The plaintiff in a civil action for personal injuries recovered a judgment substantially in excess of the defendant's insurance coverage. The plaintiff obtained the appointment of a receiver to assert the rights of the defendant against its insurer for the benefit of the plaintiff. The receiver brought a second civil action (against the insurer) claiming that the excess judgment was a result of the insurer's negligent defense of the first action and bad faith refusal to settle it within the policy limits.
A partner of the attorney who represented the plaintiff in the first action represents the receiver in the second action. Counsel for the insurer in this second action noticed the deposition of the attorney who had represented the plaintiff in the first action and indicated their intention to call him as a witness at the time of trial. At present there is nothing to indicate that the attorney's testimony will be prejudicial to his former client. There appears to be other available evidence about everything material that the lawyer knows about the first case (attorney of defendant in first case; employees of insurer; transcript of testimony). The attorney who is prosecuting the second civil action asks whether his firm is obliged to withdraw from its representation of the receiver.

Discussion: (1) We believe the first situation is clearly covered by DR 5-102(B) which states:
If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm may be called as a witness other than on behalf of his client, he may continue the representation until it is apparent that his testimony is or may be prejudicial to his client.
In such a situation, the attorney must anticipate what his testimony may be relating to the subject matter in dispute and make a judgment whether his testimony is or may be prejudicial to his client. If the attorney reasonably and in good faith feels that his testimony is favorable or, at the very least, that his testimony is not contrary to his client's position, he may continue; on the other hand, if the lawyer believes his testimony is or may be prejudicial to his client he must withdraw.
We note that there is nothing in the facts of this case to indicate that the attorney ought to be called as a witness on behalf of his client.
(2) In the second situation, the attorney for the insurer argues that because they wish to call the lawyer as a witness against his client, he and his firm should be required to withdraw. But no facts are given to make it "apparent that his testimony is or may be prejudicial to his client," as required in DR 5-102(B) above. The mere fact that the present action is being prosecuted by a partner of the lawyer who prosecuted the tort claim is not a sufficient reason for withdrawal. The inquiry must be whether the first partner's testimony would be, or might be, prejudicial to the second client. It is clear that the rule "...was not designed to permit a lawyer to call opposing counsel as a witness and thereby disqualify him as counsel." Golrowicz v. Ward, 230 P.2d 576, 580. "Of course if ... [the attorney] ... believes that the attorneys for the ... [insurer] intend to call ... [his partner] as a witness only as a device to remove ... [the attorney] from the trial of the case ... [he] should not withdraw." MBA Ethics Opinion 74-2.
The second situation also involves DR 5-102(A), which requires withdrawal from the conduct of the trial (with certain exceptions) when "a lawyer learns it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client."
Whether a lawyer "... ought to be called as a witness on behalf of his client ..." depends on the facts of each case. For example, in Opinion No. 74-2, a similar question was presented in a will contest case. There, one lawyer in a firm had known the testator well for several years and drew the will which was being attacked on the basis that there had been "undue influence" by its proponent. The attorney representing the contestant questioned the propriety of the proponent being represented by a partner of the attorney who drew the will. In considering this question, the committee relied upon " ... general experience in other will contest cases ... ." Noting that the attorney who drew the will "... has extensive personal knowledge of the circumstances which induced the testator to execute a new will in 1969," the committee concluded that trial counsel "... may find it in the best interests of the client to call ... [his partner] as a witness for the proponents in rebuttal of evidence presented by the contestants." Because the committee did not have a "detailed knowledge of facts ..." it was unable to conclude definitely that the lawyer ought to be called as a witness. It concluded that a "serious question" was presented which the lawyer would have to resolve for himself based on his more complete knowledge of the facts of the case.
As a general proposition, the mere fact that an attorney represented the plaintiff in the tort action would not ordinarily preclude his partner from prosecuting the action on the policy. In a will contest case, the attorney who drew the will would ordinarily be an important witness. In an action to subject an insurer to liability in excess of the policy, the attorney who tried the first action would not ordinarily testify. Presumably, the events of the first trial could be shown most effectively by a transcript. The insurer's refusal to settle could be shown most effectively by subpoenaing its own records and introducing the testimony of its employees. In cases of this kind, the credibility of witnesses ordinarily plays a minor role. As a practical matter, the result depends on a ruling of law. If the plaintiff can produce some evidence of negligence or bad faith, a jury will be allowed to decide the case against the insurer. If he cannot, a verdict will be directed for the defendant.
In the present case, it is impossible to provide a categorical answer to the question, whether the lawyer "ought" to testify. In order to answer such a question, we would have to know specifically what acts by the insurer and its counsel were relied upon by the plaintiff as evidence of negligent defense or bad faith refusal to settle within the policy limits. Since we do not know this, we are unable to say what evidence ought to be used to prove these facts. We also do not know whether there will be any difference between the versions of the facts relating to the trial and settlement negotiations given by the plaintiff's attorney and that given by the insurer's attorney and employees.
It is certainly possible to imagine situations in which the attorney's evidence would be of crucial importance to the plaintiff's case (e.g, on the issue of bad faith refusal to settle, if the insurer's employees claimed that they had offered to settle the case within the policy limits). It is equally possible to imagine situations where the attorney's knowledge of the first trial would not be of any importance (e.g., claim of negligent defense based on failure to plead the statute of limitations).
Even if it is concluded that the lawyer's partner "ought" to be a witness on behalf of the client, there are several exceptions to the rule requiring his withdrawal, DR 5-102(A). The only one which is arguably relevant to the present case permits continued representation where the lawyer's withdrawal "... would work a substantial hardship on the client because of the distinctive value of the lawyer or his firm as counsel in this particular case." Doubtless the fact that one member of the firm was thoroughly familiar with the litigation of the tort case would be of some value to the client. However, as this committee has previously held, where the action is "relatively simple in nature," the client does not suffer a "substantial hardship" because of the lawyer's withdrawal. Opinion No. 75-2. In the same opinion, the committee gave as examples of "unusually complex matters ... a patent infringement case involving sophisticated technical matters or a complex antitrust case." We are unable to say that the action against the insurer is complicated enough to fall within this exception.


Permission to publish granted by the Board of Delegates, 1976. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.
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