15.05. “Substantially related” matters [Rule 1.9(a)]

Identifying when a lawyer is going adverse to a client in the same matter is relatively straightforward.  However, identifying when a matter is “substantially related” to a previous matter is more complicated.  A Comment to Rule 1.9 provides that a matter is “substantially related” if the matters “involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.”[1] The only way to truly understand how to analyze these issues is to look at some examples.

Logan Lawyer represented Charlie Client – a very successful businessman – in all of his business and personal endeavors.  As part of the representation, Lawyer gained information about Client’s financial status.  Subsequently, Client fired Lawyer.  Charlie’s wife – Wendy – has approached Lawyer and wants him to represent her in a divorce action against Charlie.  Can Lawyer represent Wife in the divorce action? [ABA Rule 1.9, Comment [3]]

No.  First, notice that the prior representation of Client is not the “same” matter as the divorce action.  However, they are “substantially related.”  Why?  The test to determine whether two matters are substantially related is to ask what type of information a client would normally disclose in the prior representation and then ask whether that information would harm the former client’s interests (is “materially adverse” to the former client).  Here, the financial knowledge that Lawyer would have obtained in representing Charlie in his business and personal transactions could be very helpful to Wife in the divorce action.  Therefore, these matters are substantially related and Lawyer is disqualified from representing Wife in the divorce action unless he obtains informed consent from Charlie confirmed in writing.

Loki Lawyer specializes in environmental issues.  Danny Developer retains Lawyer to obtain environmental permits for a shopping center Danny is building.  Lawyer obtains the permits and the representation of Danny is terminated.  Subsequently, a person who owns land adjacent to Developer’s property comes to Lawyer.  She tells Lawyer that Developer has applied to the City Council to have the property rezoned to build the shopping mall.  The neighbor wants Lawyer to represent her in opposing the rezoning application based on environmental concerns.  Can Lawyer ethically take the case? [ABA Rule 1.9, Comment [3]] 

No.  Developer is a former client.  In representing Developer in obtaining environmental permits, we would expect that lawyer would have learned a great deal about the environmental condition of the property.  Some of that information could be harmful to Developer (and beneficial to the new client).  Therefore, the challenge to the rezoning application on environmental grounds would be “substantially similar” to the prior representation of Developer.

Loki Lawyer advised neighbor that he could not represent her in challenging the rezoning application.  A year later, after the shopping center was constructed, Cynthia Client comes to Lawyer.  Cynthia is a tenant in Developer’s shopping center (she has a used bookstore).  Cynthia has received an eviction notice from Developer for nonpayment of rent.  Cynthia wants Lawyer to represent her in defending the eviction action.  Can lawyer represent Cynthia? [ABA Rule 1.9, Comment [3]]

Yes.  The eviction action is not the “same” as the prior representation of Developer (which related to obtaining environmental permits).  The eviction action is also not “substantially related” to the environmental permit representation.  The question is whether Lawyer ordinarily would have learned information about Developer in the course of the environmental permit representation that would benefit Cynthia and harm Developer in the eviction case.  The answer is no.  The eviction action has nothing to do with environmental permitting (they are unrelated).  Therefore, Lawyer can represent Cynthia against Developer in the eviction action.

In evaluating a former client conflict situation, it is important that you recognize that the purpose of the prohibition is to protect the confidential information of the former client.  If the information the lawyer has from the prior representation has been made public, or if the information has become obsolete, then the subsequent matter is not considered to be “substantially related” and the lawyer can go adverse to the former client.[2]

You might notice that in the examples above, I stress that the test is the type of information that a lawyer would normally learn in the course of a representation.  A former client does not have to come into court and reveal confidential information to have a lawyer disqualified.  Instead, the test is what type of information a lawyer would ordinarily obtain in the course of representing the former client.  Therefore, even if the lawyer is completely incompetent in representing the former client and never obtains any information from the client, the lawyer would still be disqualified in a subsequent matter where a lawyer would ordinarily learn information that could be used against the former client in the subsequent action.  Here is how a Comment to Rule 1.9 puts it: 

A former client is not required to reveal the confidential information learned by the lawyer in order to establish a substantial risk that the lawyer has confidential information to use in the subsequent matter.  A conclusion about the possession of such information may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.[3]

One last area where the issue of former client conflicts arise is the organizational context.  A lawyer who represents an organization may learn a great deal about how the organization handles lawsuits.  This is sometimes called “playbook” knowledge.  Knowing the “policies and practices” of a former client could give the lawyer a real advantage when subsequently suing the former client.  Does this “playbook” information make a subsequent matter “substantially related” to the lawyer’s prior representation of the organization?  The answer is generally no – “general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation.”  However, if a lawyer learned specific facts that are relevant to the subsequent representation – those facts could be disqualifying.

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

[2] ABA Rule 1.9, Comment [3].

[3] ABA Rule 1.9, Comment [3].