December 28, 2015

Does Your Attorney Have a Conflict of Interest?

Category: Legal Malpractice | Author: | Share:

Among attorneys’ many duties to their clients is the duty to avoid (or, in appropriate circumstances, obtain informed consent for) conflicts of interest. Conflicts of interest can arise under a variety of different circumstances and involve a variety of parties. If your attorney failed to obtain your informed consent for a conflict, or if your attorney represented you in a situation where the conflict could not be waived, you may be entitled to compensation for legal malpractice.

Understanding When Conflicts Exist

“Loyalty and independent judgment are essential elements in the lawyer’s relationship to a client.” This statement in the Indiana Rules of Professional Conduct (the “Indiana Rules”) underscores the basic premise of the obligation to avoid and disclose conflicts of interest. The Indiana Rules identify five basic types of conflicts:

  • Conflicts with prospective clients
  • Conflicts with current clients
  • Conflicts with former clients
  • Conflicts involving third parties
  • Conflicts with the attorney’s own interests

In the event of a conflict, the attorney must (i) disclose the conflict to the affected client (or clients) and (ii) either obtain the clients’ informed consent for the conflicting representation or withdraw from representing one or both clients in order to avoid the conflict.

Let’s look at a couple of examples.

Example No. 1: A Business Dispute Between Clients

Suppose you own a business and you have hired an attorney to draft and negotiate agreements for your company. One day, you find out that another company has misappropriated your company’s trade secrets; and, as luck would have it, this company is one of your attorney’s other clients. When you call your lawyer about filing a lawsuit, the first thing your lawyer should do is ask who you want to sue and then inform you that he or she has a conflict of interest.

Example No. 2: Attorney’s Self-Interest Impedes Impartiality

Suppose you buy a hammer at the hardware store and the first time you use it, the head flies off and causes you a serious injury. You do some research online and discover that you may have a claim for product liability. Unfortunately, as it turns out, the lawyer you contact owns a significant investment in the hammer’s manufacturer. Since a sizable verdict in your favor could harm the manufacturer – and reduce the value of the attorney’s investment – this is another situation where there would be a conflict of interest.

The Limits of Informed Consent

As we mentioned above, in some cases, attorneys can obtain clients’ informed consent to move forward despite the existence of a conflict. Note that we said, “some cases.” This is because there are certain situations where the risk of conflicts is perceived to be so great that attorneys cannot undertake representation even with the client’s informed consent.

Example No. 1 above is one such situation. Under the Indiana Rules, attorneys are prohibited from representing clients in cases that, “involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation.” Depending on the circumstances, the attorney may be able to represent one client or the other, but not both.

Importantly, even when informed consent is permissible, there are strict disclosure requirements in order to make sure that clients are adequately “informed.” When attorneys fail to obtain informed consent or take on clients in situations involving impermissible conflicts, they can be held liable for legal malpractice.

Price, Waicukauski, Joven & Catlin, LLC | Indianapolis Legal Malpractice Attorneys

At Price, Waicukauski, Joven & Catlin, LLC, we have extensive experience representing clients throughout Indiana in cases involving legal malpractice. If you believe that you may have been represented by an attorney with a conflict of interest, we invite you to contact us for a complimentary consultation.