Ethics Opinions

Opinion No. 77-10

Summary: An attorney may properly represent two bonding companies, one of which bonded a subcontractor who failed to perform his subcontract, and the other of which bonded the architect against errors and omissions on another subcontract in the same construction project, where he can adequately represent the interest of each, and the subcontractor, the architect, and both bonding companies have consented after full disclosure of the possible effect thereof. The fact that the owner is an adverse party in both disputes, and that he fears that the first bonding company may be the beneficiary of the adversary relationship between him on the one hand and the architect and the second bonding company on the other hand does not render the attorney's representation of both bonding companies improper.

Facts: Owner O engaged Architect A to draw up plans for a building and garage, and engaged General Contractor C to build both structures.
When Subcontractor S-1 for mechanical work on the building failed to complete its work, another subcontractor was engaged to complete the work, with the consent of Bonding Company B-1 which had issued a performance bond for Subcontractor S-1. There was a cost overrun on this work, and B-1 and O are in dispute as to whether certain areas of this overrun result from changes made by O in the contract plans and drawings. Lawyer L has been retained to represent B-1.

When Subcontractor S-2 for structural work on the freestanding garage also failed to complete its work, Bonding Company B-2 undertook to do so. Cracks appeared in certain structural beams, and General Contractor C refused to pay the full agreed price as a result. O and C have sued B-2 for consequences of alleged defective construction, and intend to sue A and the engineer, in order to protect their interests if it appears that there were design errors on their part. B-2 has sued C for the amount claimed to be due, and has sued the Architect A and the engineer for alleged design errors. Bonding Company B-3, which had issued a policy covering errors and omissions by A, requested Lawyer L to represent its insured. L agreed to do so after notifying the two Bonding Companies B-1 and B-2 and the two principals S-1 and A, and receiving assurances from them that no conflict of interest was involved and that they had no objection thereto.

Lawyer L asks whether he may properly represent A on these facts, when O has objected, on the ground that his original client B-1 could be the beneficiary of the adversary relationship between O and his second client A. Lawyer L states that the matters in issue in the proposed suit by O and C against A have absolutely nothing to do with his representation of B-1 in the dispute between B-1 and 0.

Discussion: In a case of multiple employment such as is presented here, the danger to be guarded against under DR 5-105(B) is that the exercise of the lawyer's independent professional judgment in behalf of one client "will be or is likely to be adversely affected by his representation of another client." Such multiple representation by a lawyer is expressly permitted by DR 5-105(C) "if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each.

Assuming that such full disclosure was made to S-1, B-1, A and B-2, we see nothing improper or unethical in L's representation of both sets of clients, who have already consented to the multiple employment. We call attention to the fact that both the nominal parties S-1 and A, and the real parties in interest, their insurers B-1 and B-2, were informed of the proposed multiple representation and consented to it.

It is only if it is not "obvious" that L could "adequately represent the interest" of each client, that DR 5-105(B) would bar him from continuing the multiple representation in question. We see nothing in the situation which would raise any question as to his ability to do so adequately. Indeed, there may well be doubt whether consent of all the clients was needed at all in this case, if the two matters in question--the dispute between B-1 and O, and the proposed suit by O against A and the engineer--have (as L states) "absolutely nothing to do" with each other.

We find nothing in Supreme Judicial Court General Rule 3:22 which would give a person who is involved in two different disputes with two other persons any right to object that the two adverse parties have retained the same lawyer, to their mutual advantage, so long as the interests of the two adverse parties, as between themselves, are protected by compliance with DR 5-105. One party is not entitled to prevent his adverse parties in two different disputes from combining forces to their mutual advantage in any legal manner.

Permission to publish granted by the Board of Delegates, 1977. 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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