Formal Opinion No. 2014-191
California Ethics Opinions
State Bar of California Standing Committee on Professional Responsibility and Conduct
August 12, 2014
ISSUE: If an attorney represents an individual as a debtor in a simple, no-asset Chapter 7 bankruptcy filing, while simultaneously representing one or more of the individual's creditors in unrelated matters, is the attorney required by rule 3-310(C)(3) to obtain informed written consent from both parties?
DIGEST: Simultaneous representation of a debtor in a simple, no-asset Chapter 7 bankruptcy filing and that debtor's creditors in unrelated matters does not create adversity triggering the informed written consent requirement of rule 3-310(C)(3), provided that the engagement is limited and certain intake procedures are employed to ensure that the Chapter 7 proceeding in which the attorney is involved is an in rem proceeding that focuses on the orderly distribution of the debtor's assets and the discharge of debts.
INTERPRETED: Rules 1-100, 1-650, 3-310 and 3-500 of the Rules of Professional Conduct of the State Bar of California.
Business and Professions Code section 6068(m).
STATEMENT OF FACTS
Attorney participates in a pro bono program sponsored by a non-profit agency ("Agency") helping individual debtors prepare for and commence Chapter 7 bankruptcy proceedings. The Agency prescreens potential clients, which includes a review of debts, assets and income, to ensure there are no facts indicating that the matter is anything other than a simple, no-asset bankruptcy. The Agency also assesses whether the potential client has any claims against any creditor, or whether any creditor may have a claim other than the debt against the potential client. Once prescreened, Attorney reviews a client's financial situation and confirms that a bankruptcy is an appropriate remedy for such client. The assessment includes reviewing the amount and nature of the client's assets, income and debts and determining if bankruptcy is the best way to resolve the financial difficulties for the client. In some cases, the engagement ends at that point. In others cases, Attorney prepares the necessary paper work to file a Chapter 7 proceeding. And in other cases, Attorney represents a client in the Chapter 7 proceeding through the section 341(a) meeting of creditors.
Attorney is engaged by one such individual ("Debtor-Client") through the pro bono program. Attorney is aware that he currently represents one of Debtor-Client's creditors in an unrelated matter ("Creditor-Client"). May Attorney proceed to represent Debtor-Client through the section 341(a) meeting of creditors despite his concurrent, unrelated representation of Creditor-Client, without securing the informed written consent of both parties pursuant to rule 3-310(C)(3)?
Attorneys are often limited in their ability to provide legal services due to conflicts of interest with their existing clients or with existing clients of their firm. Even if the matters are unrelated, an attorney generally may not represent a client in a matter adverse to another current client. Rule 3-310(C) (Avoiding the Representation of Adverse Interests); Flatt v. Superior Court (1994) 9 Cal.4th 275 [36 Cal.Rptr.2d 537]. Rule 3-310(C)(3) provides that a lawyer shall not "[represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter" without the informed written consent of each client. The question here is whether Attorney's concurrent representation of both Debtor-Client and Creditor-Client constitutes a conflict that would require the informed written consent of both clients.
The Committee recognizes that rule 3-310(C)(3) is intended to govern adversity involving concurrent client conflicts. However, there are situations in which ostensible adversity does not trigger the policies that 3-310(C)(3) is intended to promote and implement. Further, as we observed in Cal. State Bar Formal Opn. No. 1989-108, in certain adversity referred to as an "issues conflict" or "positional conflict, " where an attorney represents two clients whose interests in the issue are adverse but who are not directly adverse (within the meaning of rule 3-310), disclosure to both clients is not required but would be prudent.
Ethics opinions from other jurisdictions, as well as some provisions of the Bankruptcy Code, while not binding, are informative as to whether or not written consent is required in this specific hypothetical. The Committee is not aware of any cases or opinions directly on point in California. Ethics opinions by both the Association of the Bar of the City of New York and the Boston Bar Association addressed this question in the context of pro bono projects. Both opinions came to the conclusion that in the typical case a conflict does not arise when a pro bono attorney represents an individual on a...