It is widely understood that lawyers represent many different clients from all walks of life. However, as much as a lawyer might like, they can’t represent everyone. What you may not know is that the law has strict guidelines that lawyers must follow when deciding who they can represent – and lawyers who don’t abide by those guidelines may be committing legal malpractice and may face serious consequences.
The term conflict of interest typically means a situation in which a person has a duty to more than one person or organization where there are actual or potentially adverse interests of both parties. There are some situations where a lawyer might have divided loyalties and must decline representation of a party because of being unable to adequately serve the interests of all clients (or potential clients) who are involved. Here’s a closer look at the concept of conflicts of interest in connection with a claim for legal malpractice.
Conflicts Of Interest Can Take Many Forms
The idea of a conflict of interest is not limited to just a few different scenarios. There exist a multitude of situations that could present a conflict of interest for a lawyer. These legal professionals are governed by rules of professional responsibility which outline what may constitute a conflict of interest when representing clients and what must be done about it by the lawyer. Some common examples include:
- Representing both sides in a legal matter. It is not uncommon for a lawyer to represent both sides of a real estate transaction or an uncontested divorce. But what is good for one party might not be good for the other, precluding the lawyer from advocating for both parties.
- Conflicts involving former clients. In order for most lawyers to be successful, they must constantly find new clients. Unfortunately, the interests of a new client may conflict with the interests of a former client. Because the lawyer may have intimate knowledge of the former client’s business or personal matters, this can potentially create a conflict in which the lawyer might have to refrain from taking on the new client.
- Personal or romantic relationships between the lawyer and client. Several states strictly forbid a lawyer from representing a client who they are currently in a sexual relationship with. The potential conflict here is obvious and a lawyer who is found to have engaged in a sexual relationship with a client may face suspension or possibly even disbarment.
- Wearing multiple hats. On occasion, the lawyer might stand to be compensated by a client for both lawyer and non-lawyer services, deriving a potentially unreasonable financial benefit. That is to say, a lawyer might also be a real estate agent, financial advisor, insurance agent or securities broker who has not segregated their legal practice from their other profession, and their financial interest relating to their other profession could create a conflict with respect to the advice that they provide.
- Shady compensation arrangements. It is a red flag for a lawyer to have a financial stake in the outcome of the client’s case other than through an acceptable contingency fee. This is especially the case if the lawyer is seeking an ownership interest in the client’s business as an alternative to a legal fee.
Disclosure May Cure The Conflict
As a general rule, all parties who are subject to an actual or potential conflict of interest because of the lawyer must receive informed notice of the actual or potential conflict and must provide consent in writing in order for the lawyer to proceed with representation. However, in some cases, where parties are diametrically opposed to each other, a lawyer’s representation of both parties is simply not possible. Still, a large number of conflicts may be resolved with disclosure and consent as this may cure the conflict and allow the representation to move forward.
Your lawyer should not have divided loyalties or otherwise place their interests before yours. If your lawyer did not disclose a conflict of interest to you, and you proceeded with representation at your peril, then this could result in a legal malpractice claim. William F. McMurry, who has four decades of experience fighting for clients’ rights in malpractice cases, is the only attorney who is Board Certified as a legal malpractice and medical malpractice trial specialist by the American Board of Professional Liability Attorneys in Kentucky, Florida and North Carolina. Reach out to William F. McMurry & Associates at (502) 326-9000 or contact us online to consult with our experienced counsel today.