Ethics Opinion

Opinion 03-4

April 2003

Summary: Whether an attorney may undertake a representation against a former client depends upon whether the former matter and the current matter are “substantially related.” On the facts presented, that answer may turn on whether the Supreme Judicial Court follows cases defining “substantially related” matters as those in which the issues are “essentially the same” or whether it follows cases defining such matters as those arising out of the same factual context or same subject matter. Whether the attorney may undertake the representation may also turn on the extent to which he has material information about the negotiating and decision-making techniques of his former client. .

Facts: A homeowner (“Owner”) was referred to Lawyer for advice about a demand for payment she had received from “Builders” for work performed on her residence. Lawyer met with Owner to discuss the claim and made a proposal for rendering legal services. Owner decided not to use Lawyer’s services, but, at the request of the referring attorney, Lawyer wrote a letter to Owner outlining a strategy for dealing with Builder’s claim. Lawyer’s proposed strategy included assertion of a claim against Architects for defects in the design of the work Builders was performing. Lawyer billed Owner and was paid for that work but has performed no further services for Owner.

Landscape Architect now seeks to hire Lawyer in connection with a claim being asserted by Owner against her that arises from landscape work performed at Owner’s residence. None of the work of Builders or Architects about which Owner consulted Lawyer involved landscape design or construction, but the work of Landscape Architect at Owner’s residence overlapped the work of Builders by several months. Lawyer asked Owner for consent to his representation of Landscape Architect but she refused to give it. Lawyer now inquires whether he may nevertheless undertake representation of Landscape Architects and defend against Owner’s claim.

Discussion: Rule 1.9(a) of the Rules of Professional Conduct provides, in relevant part:

A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client consents after consultation.

For purposes of Rule 1.9(a), Owner is a former client, the interests of Landscape Architect are materially adverse to Owner’s interests, and Owner has refused to consent to Lawyer’s representation of Landscape Architect. Thus, the critical issue is whether the matter about which Owner consulted Lawyer is “substantially related” to the matter in which Landscape Architect now seeks Lawyer’s services.

The leading Massachusetts case applying the substantially related rule is Adoption of Erica, 426 Mass. 55 (1997). In that case, the Supreme Judicial Court noted that two lines of cases have developed in applying the substantially related test. Under one line of cases, courts consider whether the issues in the two matters are “identical” or “essentially the same.” Under the second line of cases, courts focus on whether the former and current matters either arise from the same factual context or involve the same subject matter. 426 Mass. at 62. However, the Supreme Judicial Court ruled that, under the facts of that case, it was unnecessary to determine which of the two tests Massachusetts would embrace.

If the Supreme Judicial Court should decide to adopt the requirement that the issues in the two cases be “essentially the same,” then it is reasonably clear that the matter about which Owner consulted Lawyer is not substantially related to the claims against Landscape Architect. The two matters involve different parties performing different work under different contracts, and the determinative legal and factual issues will almost certainly be different. See Silver Chrysler Plymouth v. Chrysler Motors Corp., 578 F.2d 751, 754 (2d Cir. 1975). If the Supreme Judicial Court were to adopt [the] “factual context or same subject matter” test, however, the result is not so clear. Both Builders and Landscape Architect performed construction work for Owner at the same site for a period of several months. Thus, there is some basis for Owner to argue that both matters arise from the same factual context or involve the same subject matter, her house. See, for example, the dissent in Brown v. District of Columbia Board of Zoning Adjustment, 486 A.2d 37, 60 (D.C.App. 1984), which urged that different aspects of one development project should be considered the “same matter.” In addition, while Lawyer states that Owner did not provide him with any information about landscape design or construction, there remains the possibility that the two matters may be related in other ways. For example, some deficiency or delay in the work of Builders may have adversely affected the ability of Landscape Architect to perform her work and may thus provide a defense to Owner’s claims. If that were the case, then Owner may have a basis for claiming that the matters are substantially related under the “factual context or same subject matter” test.

In addition to determining whether the matters are “substantially related” under Rule 1.9(a), Lawyer must also consider whether Rule 1.9(c)(1) applies. That Rule forbids a lawyer to “use confidential information relating to the representation to the disadvantage of the former client, to the lawyer’s advantage, or to the advantage of a third person . . . .” Although Lawyer’s knowledge that Owner failed to pay Builders does not necessarily disqualify Lawyer from representing Landscape Architect, some courts have held that substantial knowledge about a client’s customary decision-making process and negotiating techniques constitutes information protected by Rules 1.6 and 1.9(c). See, e.g., Jessen v. Hartford Cas. Ins. Co., 111 Cal. App. 4th 698 (Cal. App. 5th Dist. 2003) (collecting cases); .Steel v. General Motors Corporation, 912 F.Supp. 724, 737 (D.N.J. 1995). In addressing this second issue, Lawyer should note the broad definition of confidential information contained in Rule 1.6, Comment 5, as qualified to a minor extent by Comments 5A and 5B.  

Rule 1.9(c), unlike Rule 1.9(a), does not expressly prohibit a lawyer from undertaking a new representation.  In many cases, however, possession of relevant confidential information relating to the former engagement will as a practical matter result in disqualification.  In this case, for example, if Lawyer learned material confidential information about Owner's decision making and settlement techniques, it would be difficult for him to put that information out of his head while he represented Landscape Architect.  Lawyer would then be in the ethically impermissible position of choosing between prejudicing his former client by using the information and prejudicing his current client by failing to use it.  In such circumstances, the Lawyer can satisfy his ethical obligations only by declining the new representation.

Ultimately, Lawyer is in a better position than this Committee to judge whether there is some plausible factual connection between the work of Builders about which Owner consulted him and Owner’s claim against Landscape Architect. Lawyer is also in a better position to judge whether he has the kind of knowledge of Owner’s decision-making process and negotiating techniques that rise to the level of material confidential information. Finally, if Lawyer concludes that the matters are not substantially related and that he possesses no disqualifying confidential information, he should nevertheless discuss with Landscape Architect the likelihood that his appearance on her behalf is likely to provoke the Owner to file a motion to disqualify, and that such a motion may result in additional expense and delay in the handling of her case. See Rule 1.4 on the necessity of communication with the client.

This opinion was approved for publication by the Massachusetts Bar Association’s House of Delegates on November 13, 2003.