Ethics Opinions

Opinion No. 76-33

Summary: An attorney who formerly was employed as a commercial lending officer for a bank, and who handled on behalf of the bank loan transactions with a borrower, may not thereafter represent that borrower against the bank in connection with the borrower's liability on those loans.

Facts: While employed by a bank as a commercial lending officer, Attorney A had arranged a series of secured loans for a borrower and drafted the necessary instruments for the loans.
Attorney A subsequently left the employment of the bank and commenced private practice with the law firm of X and Y. In the meantime, the borrower defaulted on the loans.
Attorney A inquires (1) whether he or his firm may now represent the borrower in negotiations and legal proceedings in connection with the loans, including possible attacks on the validity of the loan instruments; (2) whether our conclusion would be different if the borrower had retained the firm of X and Y prior to A's joining the firm; and (3) whether A or the firm could ever represent a client with whom A had dealt when he was lending officer of the bank.
Discussion: In our Opinion No. 75-7, we dealt extensively with the general issue of conflict of interest and the obligation to preserve the confidences and secrets of a client, as required by Canon 4. We stated:
Obviously a lawyer would be in violation of DR 4-101(B) if he accepted employment in an adversary matter against a former client under circumstances such that his employment could involve using confidences and secrets of the former client to the disadvantage of that former client.
Later in Opinion No. 76-14, we stated that "[a]n attorney may not ... oppose a former client on behalf of another in the same matter or one which is substantially related to the subject matter of the prior representation." We felt that the potential danger that an attorney may use, either intentionally or inadvertently, the confidences of the former client required such a result.
We believe that it is clear that Attorney A may not represent the borrower against his former employer, the bank, in connection with a legal transaction which the attorney negotiated for it.
Under these circumstances, the bank would be justified in feeling that the trust it had reposed in Attorney A during his employment would be violated by his representing this borrower. We express no opinion on whether the result would be different if A had not been employed by the bank in connection with a legal transaction.
The relationship between Attorney A and the bank with respect to this lending transaction is such as to preclude Attorney A's representation of the borrower, even without considering that Attorney A may be attacking the validity of the very instruments which he prepared. In this regard, we call attention to ABA Formal Opinion 64 (1932), where the ABA committee stated that an attorney who drafted an instrument for a client may not later attack the validity of the instrument. The committee said:
The attorney should not attempt to nullify his own work. He drew the instrument and cannot attack its validity after his client has died and his services are sought by new clients. The death of the former client does not release the attorney from his obligation.
Since Attorney A may not represent the borrower in this case, the firm of X and Y is likewise disqualified. DR 5-105(D). See our discussion of this point in Opinion 76-14.
In response to the second part of the inquiry, our answer is the same regardless of whether the borrower had retained the firm of X and Y prior to the time Attorney A joined the firm. When the conflict of interest becomes apparent, it is the obligation of counsel to withdraw. See ABA Formal Opinion 37 (1931).
In the third part of the inquiry A asks whether X and Y could ever represent a client with whom A had dealt when he was employed by the bank. The answer depends upon the facts of each case. As we stated in Opinion No. 76-14, the determination must be made as to whether there exists a substantial relationship between the prior and the current representation.
On the facts presented, there is no indication that the bank has given its informed consent to A's representation of the borrower. See DR 4-101(C)(1).


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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