13.08. Identifying the Client in the Organizational Context

Recall that under Rule 1.13(a), a lawyer who represents an organization represents only the interests of the organization.  Thus, when identifying who is the “client” for purposes of conflict of interest rules, the Comment to Rule 1.7 makes clear that the lawyer ordinarily only represents the organization: “A lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary.”[1]  Therefore, a lawyer is ordinarily not prohibited from going adverse to constituents of the client organization or the employees of an organizational client unless “the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client’s affiliates, or the lawyer’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client.”[2]

This makes the engagement letter very important.  The lawyer needs to make sure that it is clear exactly which organizational entity the lawyer represents (and perhaps which entities the lawyer does not represent).  It is inevitable that if a lawyer who represents an organization attempts to go adverse to an affiliate organization in an unrelated matter, the client will seek to have the lawyer disqualified.  A strong engagement letter can protect the lawyer in these situations.  Of course, if the situation is such that, regardless what the engagement letter says, the lawyer is acting as the lawyer for the affiliate, a court will hold that the affiliate is also the lawyer’s client – and therefore, the lawyer would not be able to adverse to the affiliate.

[1] ABA Rule 1.7, Comment [34].

[2] ABA Rule 1.7, Comment [34].