Navigating Conflicts: A Primer for In-House Counsel

NAVIGATING CONFLICTS: A PRIMER FOR IN-HOUSE COUNSEL Katherine Pownell Moderator: David Super Environmental Litigation

CONFLICTS OF INTEREST: AN ETHICAL ISSUE • Rules of professional responsibility impose on lawyers duties of loyalty and confidentiality. • The applicable rules require us to avoid representing clients in situations that give rise to conflicts.

• Sometimes the answer is not so obvious; one size does not fit all.

• In the end, getting it right is important to you and it is important to us.

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ANALYZING CONFLICTS: THE ABA’S FOUR STEP PROCESS

Who Are Our Clients?

Can the Conflict be Resolved?

Does a Conflict Exist?

How Do We Resolve the Conflict?

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ANALYZING CONFLICTS: THE ABA’S FOUR STEP PROCESS

Who Are Our Clients?

Can the Conflict be Resolved?

Does a Conflict Exist?

How Do We Resolve the Conflict?

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THE ATTORNEY CLIENT RELATIONSHIP

Established through engagement agreement or contract

Client’s reasonable belief is relevant, although attorney’s is not

Inferred through parties’ conduct

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ATTORNEY CLIENT CONFUSION

Insurers or other third party payors

Closely held corporations Partnerships

Fiduciaries

Corporate affiliates

Corporate entities

The “accidental” client

Individuals forming business entities

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ANALYZING CONFLICTS: THE ABA’S FOUR STEP PROCESS

Who Are Our Clients?

Can the Conflict be Resolved?

Does a Conflict Exist?

How Do We Resolve the Conflict?

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CURRENT CLIENT CONFLICTS

ABA Model Rule 1.7: A lawyer may not represent a client who is directly adverse to another current client – even in an unrelated matter -- without the informed consent, confirmed in writing, of both clients.

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CURRENT CLIENT CONFLICTS Key Issue: Who is “Directly Adverse”? • In litigation • In business transactions • In serving discovery and presenting witnesses

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FORMER CLIENT CONFLICTS ABA Model Rule 1.9

• A lawyer may not represent a client who is materially adverse to a former client in a matter that is the same as, or substantially related to, the lawyer’s representation of the former client, without the former client’s informed consent. • A lawyer may not use confidential information about a former client to the disadvantage of the former client.

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FORMER CLIENT CONFLICTS • Key issues to consider: ‒ When does a current client become a former client? ‒ What is “materially adverse”? ‒ What is a “substantially related” matter? ‒ What kind of “confidential information” have we had access to?

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“MATERIAL LIMITATION” CONFLICTS Model Rule 1.7(a)(2): A lawyer may not represent a client if there is a significant risk that the representation will be “materially limited” by: • The lawyer’s responsibilities to another client, a former client, or a third person, or • The personal interest of the lawyer.

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A SIDEBAR: CONFLICTS IMPUTATION ABA Model Rule 1.10

• Current and former client conflicts of one lawyer in a firm are imputed under most circumstances to all other lawyers in the firm. • If one lawyer is prohibited, because of a current or former client conflict, from representing a client, all other lawyers in the firm are also prohibited from representing that client.

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ANALYZING CONFLICTS: THE ABA’S FOUR STEP PROCESS

Can the Conflict be Resolved?

How Do We Resolve the Conflict?

Who Are Our Clients?

Does a Conflict Exist?

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NONCONSENTABLE CONFLICTS • Threshold inquiry: Attorney must reasonably believe that she will be able to provide competent and diligent representation to each affected client.

• Representation cannot be prohibited by law.

• One attorney cannot represent opposite sides in the same lawsuit.

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ANALYZING CONFLICTS: THE ABA’S FOUR STEP PROCESS

Who Are Our Clients?

Can the Conflict be Resolved?

Does a Conflict Exist?

How Do We Resolve the Conflict?

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RESOLVING CONFLICTS • Reasonably believe that you will be able to provide competent and diligent representation to each affected client. • In most cases, obtain the informed consent of both clients. • Most jurisdictions require that the consents be in writing.

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LATERAL HIRES: MY CONFLICTS ARE YOUR CONFLICTS Under imputation rules, lawyers moving to a new firm bring their conflicts with them to that firm. This can create conflicts with the firm’s existing clients, or with the lateral’s clients, or both. The good news: these conflicts can be resolved by obtaining client consent, and (in some cases) putting an ethical wall in place.

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LATERAL HIRES Two primary areas of concern: 1. Can the firm hire this person?

a. Lateral’s former clients: is prior work related to the firm’s ongoing work? b. Confidential information: can it be used against the lateral’s former clients? 2. Can the lateral’s portable matters come to the firm? a. All related parties in portable matters are checked for conflicts in the same way as any new matter. b. However, conflicts are checked at an earlier stage – before new matter is opened – to avoid surprises in the hiring process.

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NUTS AND BOLTS: THE CONFLICTS PROCESS AT BRACEWELL • Attorney submits new matter request, identifying each related party. • Conflicts analysts search firm conflicts database for references to every party involved in the matter. • Conflicts analysts prepare a conflicts report listing the database matches.

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NUTS AND BOLTS: THE CONFLICTS PROCESS AT BRACEWELL • Conflicts attorneys review conflicts report, identify potential conflict issues, determine whether conflicts are consentable and how to resolve them. • Conflicts attorneys work with other firm attorneys to resolve any existing conflicts. • When all conflicts have been resolved, conflicts attorneys approve the new matter.

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This presentation is provided for informational purposes only and should not be considered specific legal advice on any subject matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. The content of this presentation contains general information and may not reflect current legal developments, verdicts or settlements. Use of and access to this presentation does not create an attorney-client relationship between you and Bracewell.