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Ethics and Corporate Conflicts Open Article in Another Window
November 2006
Gaps in case law and ethics rules force lawyers to navigate uncharted waters when representing corporate clients with potentially adverse interests.
Special Credit -- Legal Ethics
1. The California Rules of Professional Conduct unambiguously prohibit lawyers from representing in separate matters two clients who may have adverse interests.  True  False
2. A lawyer or firm is generally prohibited from representing opposing parties in a single action.  True  False
3. Rule 3-310 broadly prohibits lawyers from taking conflicting legal positions in different actions for different clients.  True  False
4. State law allows corporations to organize as parents and subsidiaries to take advantage of rules that may limit liability, offer tax advantages, and create other benefits.  True  False
5. In the <i>Brooklyn Navy Yard</i> case, the court held that any legal representation that raises even indirect adverse consequences to an existing client is suspect under the ethics rules.  True  False
6. In reaching its decision in <i>Brooklyn Navy Yard</i>, the appellate court was attuned to practical difficulties in screening for conflicts among present and potential corporate clients.  True  False
7. The appellate court in <i>Brooklyn Navy Yard</i> tacitly adopted the “unity of interest” standard in deciding whether affiliated entities could be deemed to have directly related interests giving rise to disqualification.  True  False
8. The appellate court in <i>Morrison Knudsen Corp.</i> explicitly defined the “unity of interest” test for the first time.  True  False
9. In <i>California West Nurseries v. Superior Court</i>, the court held that an attorney could not avoid disqualification by arguing that any adversity between its two clients—opponents in the same action who filed cross-complaints against one another—was merely indirect.  True  False
10. In <i>Morrison Knudsen</i>, the appellate court held that lawyers are barred from representing the interests of a parent corporation and its insurers because of the duty of confidentiality set out in Rule 3-310(d).  True  False
11. Rule 3-310(d) mandates that a lawyer shall not, under any circumstances, accept employment adverse to a client when, by reason of representing a client or former client, he or she has obtained confidential information material to the employment.  True  False
12. The duty of confidentiality may preclude a lawyer’s involvement on behalf of a party who is adverse to a current or former client in a matter “substantially related” to the representation of the adverse party.  True  False
13. Both <i>Morrison Knudsen</i> and <i>Brooklyn Navy Yard</i> based their disqualification decisions on the duty of confidentiality set out in the state rules controlling ethical representation.  True  False
14. A corporation attempting to disqualify counsel under recent case holdings may be forced to pierce its own veil to do so.  True  False
15. The recent appellate decision in <i>California West Nurseries</i> is a boon to lawyers in resolving conflicts about ethical corporate representation set out in other cases.  True  False
16. Representing one entity won’t necessarily preclude an attorney from representing adverse interests of a parent, subsidiary, or other affiliated entity.  True  False
17. A clarification to Rule 3-310 specifies that only “direct” conflicts create a concurrent representation problem for lawyers.  True  False
18. In considering a disqualification motion, a court may consider the possibility that tactical abuse underlies the motion.  True  False
19. When a lawyer is hired by a carrier to represent its insureds in one action, accepting representation of a party who is adverse to a different carrier in another action is not “undertaking representation directly adverse to the carrier.”  True  False
20. The issue of whether an attorney may represent a carrier as the party in one case, while concurrently representing interests adverse to the carrier’s insured in an unrelated action, is still undecided.  True  False