Conflicts of Interest
Harry I. Price, Esq.
The purpose of this article is to discuss the effect of an attorney representing several parties, and the potential "conflicts of interest" that may arise when different individuals or entities, as a group, file an action against a third party. As you know, one law firm can represent several parties, as long as there has been disclosure of, and there is a written waiver of, conflicts of interest and potential conflicts of interest. When a lawsuit is required, there is a possibility that conflicts may arise in the future if the parties who have joined together now are ever involved on opposite sides of a dispute involving the claim for money now claimed to be due to the group. It is not uncommon for law firms to represent individual clients who happen to be involved in a common venture. However any time a lawyer or law firm acts on behalf of more than one individual involved in a common venture the danger of a conflict of interest exists. In most situations this conflict will not manifest itself, but you should be fully apprised of the consequences if a conflict does arise.
Although you should discuss the particular circumstances of your case with your attorney, the most likely instance when a conflict will arise in a multiple-claimant situation is if the parties have a falling out or for any other reason are at odds with each other on an issue involving the amount of money to be distributed to each of them. In such an instance, no attorney or law firm will be able to represent either one of their former clients. This is because during the course of representation of multiple parties an attorney will learn information, including confidential information, about each of his clients. This would give the client who was represented in the matter an unfair advantage over the other, and would challenge the attorney’s loyalty to each party. For these reasons, good ethics dictate that an attorney could not represent either one party in such a dispute. Another example of a potential conflict would be during litigation against the third party, if one party’s settlement demands differ, causing some parties to want to resolve the action earlier than other parties; unless all parties have the same demands, the opposing party may be able to divide and conquer. As co-claimants, for purposes of the lawsuit, it would be ideal to have a united front when dealing with third parties.
An additional source of conflict may result from the fact that one or more parties may have claims against each other by virtue of the fact that one of you was in charge of management. In such a case, a claim of breach of duty may ensue within a group, due to an allegation that the manager caused all of the remaining parties monetary damages. That may or may not cause problems in the prosecution of the action, and may or may not cause disagreements between each of the parties as a result of the decision of the court in this matter. If a settlement is reached, naturally, that also will have an impact upon distribution of settlement funds.
We - attorneys and clients alike - must feel confident that we can represent parties in such a way that our loyalty to one party, and our efforts, are not in any way interfering with our loyalty and efforts to the other. Please rest assured, however, that the conflicts that I am addressing, while only potential, are important and should be acknowledged, so that if the conflict is waived, it would then not affect an attorney’s decision to represent all parties in an action against a defendant.
All parties considering joint employment of an attorney should discuss in detail with their prospective attorney the subject of conflicts of interest along with the particular facts relating to their claim. After discussing any questions or concerns on any of the issues contained herein with your attorney, you are then in a position to decide whether or not to authorize the attorney to represent all of you in your current matters involving a claim for compensation.