Attorney should not engage in simultaneous representation of creditors if they have "differing interests", if so, full disclosure to all parties must be effected.

FACTS

Attorney X presently represents A, a foreign judgment creditor. It has come to light that the judgment debtor has more than one outstanding foreign judgment against him. Attorney X has sought the advice of this Committee concerning whether he may represent other judgment creditors in addition to A, against the judgment debtor.

QUESTION

May an attorney represent simultaneously more than one judgment creditor against the same judgment debtor?

CODE PROVISIONS INVOLVED

Canon 5. A lawyer should exercise independent professional judgment on behalf of a client.

EC 5-1. The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of his client and free of compromising influences and loyalties. Neither his personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute his loyalty to his client.

EC 5-14. Maintaining the independence of professional judgment required of a lawyer precludes his acceptance or continuation of employment that will adversely affect his judgment on behalf of or dilute his loyalty to a client. This problem arises whenever a lawyer is asked to represent two or more clients who may have differing interests, whether such interests be conflicting, inconsistent, diverse, or otherwise discordant.

EC 5-15. If a lawyer is requested to undertake or to continue representation of multiple clients having potentially differing interests, he must weigh carefully the possibility that his judgment may be impaired or his loyalty divided if he accepts or continues the employment. Be should resolve all doubts against the propriety of the representation. A lawyer should never represent in litigation multiple clients with differing interests: and there are few situations in which he would be justified in representing in litigation multiple clients with potentially differing interests. If a lawyer accepted such employment and the interests d&& become actually differing, he would have to withdraw from employment with likelihood of resulting hardship on the clients; and for this reason it is preferable that he refuse the employment initially. On the other hand, there are many instances in which a lawyer may properly serve multiple clients having potentially differing interests in matters not involving litigation. If the interests vary only slightly, it is generally likely that the lawyer will not be subjected to an adverse influence and that he can retain his independent judgment on behalf of each client; and if the interests become differing, withdrawal is less likely to have a disruptive effect upon the causes of his clients.

DR 5-105.  Refusing to Accept or Continue Employment if the Interests of Another Client May Impair the Independent Professional Judgment of the Lawyer.

(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).

(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his presentation of other client, except to the extent permitted under DR 5-105(C).

(C) In the situations covered by DR 3-105(A) and ( B), a lawyer may represent multiple cl ents if it is obvious that he can adequately represent the interests of each and if each consent. to the representation after full disclosure of tle possible effect of such representation on the exe·cise of his independent professional judgment on oehalf of each.

(D) If a lawyer is required to decline employment or to withdraw from employment under DR 5-105, no partner or associate of his or his firm may accept or continue such employment.

OPINION

Attorney X requests this Committee's opinion concerning representation of multiple clients in a litigation matter. In light of such circumstance, Attorney X should not engage in such representation in the event the clients have "differing interests" within the meaning of the Code of professional Responsibility (hereinafter the "Code") 5-15. The Code defines "differing interests" as follows:

"'Differing interests' include every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest."

Ariz. R.S. Ct. 29(a), Definition (1).

Since Attorney X does not seek an answer to his inquiry with regard to specific potential clients, no facts are available from which a determination may be made that "differing interests" exist, and this Committee finds no persuasive reason to create a category of "per se" conflict encompassing representation of more than one judgment creditor against the same judgment debtor. The inquiry therefore becomes whether there are potentially differing interests between multiple judgment creditor clients. As previously stated by this Committee, it is the lawyer who must initially decide if a potential conflict exists, and "If the lawyer . . cannot in good faith determine that [his] independent professional judgment will not be affected, then there must be a full disclosure to the parties affected and their consent obtained." Arizona Opinion No. 77-27, November 8, 1977.

Attorney X does not intimate that the judgment debtor has unlimited assets, and indeed implies that the contrary is true. There would therefore appear to be a potential for differing interests where multiple creditors seek to satisfy their judgments by execution on a limited number of assets. It follows therefrom that Attorney X must conduct the following analysis with regard to each additional representation contemplated: First, Attorney X must in good faith determine whether his independent judgment will be affected by such additional representation with all doubts to be resolved against the propriety of representation; second, if Attorney X must answer the preceding question in the affirmative, he must fully disclose the potential for conflict to A, the proposed additional party (herein referred to as "B"), and any other parties properly represented by Attorney X, as a result of this analysis. If, after such disclosure, A, B, or any other party properly represented by Attorney X refuses to consent to his representation of B, X may not undertake to represent such additional party.

As a general proposition, although representation of multiple judgment creditors against the same judgment debtor does not involve conflict per se, it would appear that there is an inherent potential for conflict. It is therefore for Attorney X in the first instance to determine in good faith whether his independent professional judgment will be affected, and if he concludes that it will be mo affected, then there must a full disclosure to all parties affecte d and their consent to epresentation obtained.

Editor's Note
The opinion perhaps should have cited DR 5-106. Settling Similar Claims of Clients which provides:

"(A) A lawyer who represents two or more clients shall not make or participate in the making of an aggregate settlement of the claims of or against his clients, unless each client has consented to the settlement after being advised of the existence and nature of all the claims involved in the proposed settlement, of the total amount of the settlement, and of the participation of each person in the settlement."

See, also, ABA Formal Opinion 132 (1935), issued under the former Canons of Professional Ethics, the headnote of which reads:

"An attorney may not represent a client in a suit against a party if the attorney also has a suit in his own behalf pending against the same defendant and there is doubt that the defendant will be financially able to satisfy both judgments should both suits be successful. Such representation is proper, however, if the attorney and his client agree to divide the recovery in proportion to their judgments."

Formal opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceeding. This opinion is based on the Ethical Rules in effect on the date the opinion was published. If the rule changes, a different conclusion may be appropriate.

 © State Bar of Arizona 1985