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Conflicts of Interest – An Ethical Dilemma Harming Both Attorneys & Clients

By March 19, 2019 No Comments

If I taught Professional Responsibility in law school, I would enjoy torturing my students with an ethics final exam in which I first showed them an episode of one of my favorite television shows, Suits, and then required them to analyze all of the ethical dilemmas presented. Since each episode presents a plethora of unethical behavior from the show’s attorneys, it would be challenging to pick which episode would be the best. Season 8, Episode 15 would certainly be a good one.

In this episode, the law firm of Zane Spector Litt Wheeler & Hill represents two business clients – Thomas Kessler, the owner of furniture stores, and Simon Lowe, the owner of a shopping mall chain. Lowe offered Kessler a fabulous-sounding deal to anchor his shopping centers. The offer almost sounded too good to be true! And, indeed, it was. The offer was merely a ploy by Simon to bring another party back to negotiate a more lucrative deal and then leave Kessler high and dry. And, of course, the always entertaining but perpetually ethically challenged lawyers of Zane Spector Litt Wheeler & Hill represented both parties to the potential commercial leasing transaction. To further complicate matters the firm’s Chief Operating Officer Donna Paulsen, who is also Kessler’s girlfriend, spilled the beans and told Kessler about Simon’s nefarious plot. Although Paulsen is not an attorney, nonetheless, the firm is still responsible for her actions pursuant to the New York equivalent of Rule of Professional Conduct (RPC) 5.3, which outlines the responsibilities of attorneys to ensure that their nonlawyer staff members comply with the ethical rules. And, of course, one of the firm’s former main partners, Daniel Hardman, immediately became Lowe’s new attorney of record, and filed a lawsuit against his former firm for its ethical misdeeds. Stay tuned to find out how it all turns out!

Although it would not have been nearly as fun to watch, the firm could have avoided all of this mess if the attorneys had paid attention to RPC 1.7 which governs a conflict of interest between current clients. Note the general rule that “a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if the representation of one client will be directly adverse to another client.” It’s hard to see how representing both the landlord and tenant in relation to a commercial leasing transaction would not be “directly adverse.” The rule does provide various exceptions that would allow representation. But, of course, Zane Spector Litt Wheeler & Hill did not bother to ensure that one of these exceptions applied prior to proceeding forward with the dual representation.

When you approach your business attorney to request that they represent you in a transaction, in all likelihood, the first question they will ask you is “Who are the other parties to the transaction?” The firm will then check its database for any conflicts of interest, precisely to avoid the Kessler – Simon scenario. So, next time you get that question, you’ll know it’s a good question and you should answer it promptly! Otherwise, you never know, perhaps someone’s girlfriend will “spill the beans” on information that you assumed that you told your attorney in confidence.

 

This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.

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