90-1.

Case DateJanuary 19, 1990
CourtAlaska
Alaska Ethics Opinion 1990. 90-1. Ethics Opinion No. 90-1 Attorney Representing Dissenting Shareholders/Directors Communicating with Board of Directors Without Consent of Corporation's Attorney.The Committee has been requested to give an opinion as to whether it is improper for an attorney who represents two corporate directors, in their individual capacity, in a shareholder derivative action to discuss matters relating to the pending litigation with other board members when the corporation is represented by both corporate counsel and retained litigation counsel who have not consented to the communication. It is the opinion of the Committee that the communication is in violation of Disciplinary Rule 7-104(A)(1) of the Code of Professional Responsibility. Disciplinary Rule 7-104 (A)(1) provides as follows: During the course of his representation of a client, a lawyer shall not: (1) communicate or cause another to communicate on the subject of the representation with a party he knows to be represented by a lawyer in that matter unless he has prior consent of the lawyer representing such party or is authorized by law to do so. Attorney originally represented three dissenting shareholders who sued a corporation, three board members, and a corporate employee, on their own behalf and in the form of a shareholder's derivative suit, to set aside a corporate transaction. Two of the plaintiffs and the daughter of a third plaintiff were subsequently elected to the board of directors, along with other directors who shared their view. At the time in question, the board was deeply and approximately evenly divided on the propriety of the corporate transaction. The lawsuit was active. The corporation had a corporate attorney, and had also retained a separate litigation attorney to represent the corporation in the lawsuit. The board had also created a special litigation committee to determine what the corporation's position should be on the transaction in question. The committee's membership consisted of all available disinterested directors. At a point when the litigation was very active, and important decisions needed to be made quickly, the attorney met with seven of the thirteen corporate directors. The attorney received a request to so meet from his client, who was one of the corporate directors and a plaintiff in the derivative lawsuit. This plaintiff/director was present at the meeting. The other six directors present at the meeting consisted of the director/corporate president who was the daughter of a plaintiff, an additional client/plaintiff/director, and four disinterested directors who were eligible for and subsequently appointed to the litigation committee. The attorney did not seek the consent of the corporate counsel or the litigation counsel prior to the meeting, nor did the attorney notify either one that the meeting would take place. (endnote 1) The specific issue presented by this opinion request is the extent to which corporate directors are parties in litigation involving the corporation. A related question is how the ethical conduct of the attorney is affected by the principle that factions of a corporate board, such as dissenting directors or minority shareholders, have the right to obtain legal counsel of their own choosing to advise them or to represent their own interests.(endnote 2) The corporation was an opposing party in the litigation. Therefore, so were its officers and directors, except those who chose to be plaintiffs. ABA Informal Opinion 1410 (2/14/78) states: If the officers and employees that you propose...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT