13.03. “Materially Limiting” Conflicts [Rule 1.7(b)]

There is a second type of conflict that a lawyer can have while representing a current client.  This conflict is concerned with situations where a lawyer would not be able to devote themselves solely and fully to the interests of the client because the lawyer has a competing obligation to someone else.  Here is how the rule identifies the conflict:  “a lawyer shall not represent a client if… there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.”[1]  In the “directly adverse” situation discussed above, the lawyer assumes an adversarial role against the client.  The “materially limiting” conflict is more nuanced – it is where “there is a significant risk that a lawyer’s ability to consider, recommend or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer’s other responsibilities or interests.”[2] 

Leland Lawyer, a sole practitioner, represents Camellia Client in a car wreck case in which Client is the plaintiff.  The attorney for the defendant is so impressed with Lawyer’s work, she wants to hire Lawyer to work at the defendant’s firm after Client’s case is terminated.  Lawyer is honored and excited because the move would be a substantial increase in pay.  Lawyer and defense counsel meet over lunch to discuss the details of the employment.  Has Lawyer acted unethically if he does not have Client’s consent to the negotiation? [ABA Rule 1.7, Comment [10]]

Yes.  This is an example where the lawyer’s personal interest in getting employment might limit how zealously he advocates on behalf of Client.  After all, if Lawyer does something in the litigation that upsets defense counsel (even if the action is in the best interest of Client), Lawyer may hesitate because he does not want to take the chance that he might lose the job. 

Another personal conflict of the lawyer that the Comment discusses is where a lawyer is going adverse to a lawyer who is related to the lawyer.  For example, a lawyer cannot go adverse (without client consent) to their own parent, child, sibling, or spouse.  The concern again is that the lawyer could be restrained in representing a client because of close relationship with opposing counsel.  As the Comment puts it:  “there may be a significant risk that client confidences will be revealed and that the lawyer’s family relationship will interfere with both loyalty and independent professional judgment.”[3]

In conclusion, a Rule 1.7(a)(2) “materially limiting” conflict arises when a lawyer is limited from fully and zealously representing one client because of obligations to someone else.  These are not situations where the lawyer is taking an adversarial position against the client – like Rule 1.7(a)(1).  Instead, they are situations where a lawyer would have an incentive not to fully represent a client because of a lawyer is pulled in a different direction in the responsibilities to another interest (including the lawyer’s own interests). 

Willey represented a company called Synergy: Projects, Inc.  Willey subsequently began representing Wieniewitz on business and tax structure issues.  Wieniewitz was looking for investment opportunities.  Without telling Wieniwitz that Synergy was a client, Willey recommended that he invest in the company.  Wieniewitz invested $100,000 which he was supposed to get back in about 60 days.  After numerous communications over a year and a half to get the investment back, Wieniewitz fired Willey and hired a new lawyer.  When the new lawyer inquired as to the issue with the repayment, Willey responded that he could not talk about the transaction because of a non-dislcosure agreement.  Did Willey act unethically in representing both Synergy and Wieniwitz? [Iowa Supreme Court Attorney Disc. Bd. v. Willey, 889 N.W.2d 647 (Iowa 2017)]

Yes.  The court says this about the conflict that Willey faced:  “Throughout the email correspondence, Willey was repeatedly caught between the interests of Wieniewitz and the interests of [Synergy].  During the entire transaction, Willey continued to represent the interests of [Synergy], charging and collecing tens of thousands of dollars in legal fees.  At the same time, Willy was unable to adequately pursue the interests of Wieniewitz in obtaining the return of this original investment….  Other than forwarding information from one client to another, Willey did nothing to advance the legal interests of Wieniewitz.”  The court noted that the fact that Willey was prohibited from giving information that could have benefited Wieniewitz because of a non-disclosure agreement further demonstrates the conflict.  The court imposed a sixty day suspension.

[1] ABA Rule 1.7(a)(2).

[2] ABA Rule 1.7, Comment [8].

[3] ABA Rule 1.7, Comment [11].