Direct Adversity Versus Material Limitation

Direct Adversity Versus Material Limitation

Rule 1.7(a) bars a lawyer from taking a representation that involves a concurrent conflict of interest, and it defines that conflict in two ways.¹ Paragraph (a)(1) finds a conflict when the representation of one client will be directly adverse to another client.² Paragraph (a)(2) finds one when there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.³ Set the two side by side and one difference stands out: only the second mentions risk.

The first definition asks what the lawyer's work will be. If the representation itself runs against another client, the conflict exists, and the text offers no probability to estimate. The second definition asks for a forecast: how likely is it that an outside pull will interfere with what the lawyer owes a client? One court, quoting Hazard and Hodes, described the material-limitation provision as governing "the myriad of situations in which the conflict is muted or indirect" and as requiring "a subtle calculus to determine the likelihood that the quality of the lawyer's representation will be affected."⁴ That opinion calls the provision Rule 1.7(b). In the Model Rules text quoted above it is paragraph (a)(2), and paragraph (b) is the exception the lead-in mentions.⁵

Take a lawyer who gives general business advice to Earl's Rooter, a company that clears tree roots out of drain pipes, but who never represents it in litigation. A prospective client, injured when his car collided with an Earl's Rooter truck driven by an employee, asks the lawyer to take his personal injury case, and the lawyer is tempted. The answer is no. Suing the company would be directly adverse to a current client, and it is immaterial that a personal injury suit has nothing to do with the business advice.⁶

The tempting counterargument is that the suit will not impair the business advice, so no significant risk exists. That argument imports the (a)(2) test into an (a)(1) problem. Paragraph (a)(1) contains no risk threshold, and relatedness is irrelevant to it, so the conflict arises as soon as the lawyer would act against a current client.⁷

Relatedness does not vanish from the analysis; it moves to a later question. The test for non-consentable conflicts does ask whether the lawyer is representing parties on opposite sides of the litigation, but on the threshold question whether a conflict exists, relatedness is immaterial.⁸ Comments [6] and [8] to Rule 1.7 supply further examples of direct adversity and material limitation, respectively.⁹

The error also runs the other way. Suppose a lawyer reviews a contract for a supplier and handles an unrelated tax matter for a small manufacturer. The two clients sometimes trade with each other, but the lawyer acts against neither, and nothing in either matter depends on the other. Calling this direct adversity fails, because no one is being opposed. Only paragraph (a)(2) remains, and it asks about likelihood, so interests that might someday diverge do not create a conflict by themselves.¹⁰

Some fact patterns fit both definitions. A lawyer is asked to defend a company and one of its managers in a sexual harassment suit. The company may want to argue that the manager ignored its policies, and the manager may want to argue that higher-level managers tacitly condoned the behavior. Each client's best argument damages the other. There is a significant risk that the lawyer's responsibilities to one client will limit what the lawyer can do for the other, which is a material limitation, and the positions are so opposed that the representation can also be called directly adverse.¹¹ Choosing a label gains nothing. Either way the conflict exists, and either way the next question is whether it can be consented to.¹²

The two classification mistakes mirror each other. Demanding a showing of risk before treating a suit against a current client as a conflict misses a conflict that the text creates without one. Finding direct adversity in a mere possibility of future disagreement invents a conflict that the text does not reach.