Concept
Dual Representation of Constituents
Lawyer representing an entity or other organization
Dual Representation of Constituents
Rule 1.13(a) makes the organization the client and treats its constituents as the people through whom it acts.1 A constituent does not become a client merely by dealing with the organization's lawyer, but paragraph (g) lets the lawyer take that step deliberately: a lawyer who represents the organization may also represent any of its directors, officers, employees, members, shareholders, or other constituents, subject to Rule 1.7.2 The constituent so represented becomes an additional client, and the lawyer assumes toward that person the full range of professional responsibilities owed to the organization.3
Lawyers use the paragraph because an organization and its constituents so often stand in the same legal position. In a closely held company, the owners, the officers, and the entity may all be sued over one transaction and may all want the same defense, and a single lawyer who already knows the business can serve them all with less cost and less duplicated work than separate lawyers could.
That twist illustrates the first of two weaknesses the rules must answer. Co-clients whose interests coincide today can part ways tomorrow, and the lawyer then holds confidences from both and owes loyalty to each. The second weakness belongs to the organization. An entity has no mind of its own, so it can weigh a proposal to share its lawyer only through a person, and that person may be the very constituent who stands to benefit. Paragraph (g) therefore does two things: it sends the lawyer to Rule 1.7 for the conflict analysis, and it limits who may consent on the organization's behalf.
Three questions follow. Does Rule 1.7 allow the dual representation at all? Who may consent for the organization when consent is required? What must the lawyer do if the two clients' interests diverge after the work begins? The first question comes next.
Permission Subject to Rule 1.7
Paragraph (g) permits a lawyer for an organization to represent a constituent and makes that permission “subject to the provisions of Rule 1.7.”4 The paragraph contains no conflict test of its own. Rules 1.13 and 1.7, taken together, cover the lawyer who wishes to represent both an entity and one or more of its constituents.5 A constituent who engages the organization's lawyer becomes an additional client, and the lawyer simultaneously assumes the full range of professional responsibilities to both. The arrangement is commonly called a “dual representation.”6
Each client in a dual representation is owed the lawyer's full professional duties, including confidentiality, so the lawyer may not interrogate one client to benefit the other or disclose privileged communications to third parties without the individual client's consent.7 Those duties explain why the arrangement is risky even when it is permitted. If the constituent's interests turn against the organization's, or the reverse, the lawyer may be disqualified from continuing for either client, and the size of that risk depends on the purpose of the work for the constituent and on the nature of the entity.8
Work for the constituent that has nothing to do with the organization's business carries the smallest risk, but it does not suspend the ordinary rule: while both representations are current, the lawyer may not represent one client adversely to the other.9 A will or a home purchase for an officer shows the point. Nothing the officer wants from either depends on the company's business, yet the lawyer still could not act against the officer for the company while that engagement is open.
Overlapping matters carry more risk, and the analysis becomes a prediction. A united defense of an organization and its members can be appropriate, effective, and cost-efficient. In other cases the organization may want, at some point, to jettison the officer or employee and blame that person as primarily responsible, and continued dual representation then becomes impossible.10 The kind of organization helps with the forecast: in a closely held corporation the interests of the entity and its principal run more nearly in parallel, so dual representation of that principal is less likely to provoke a conflict.11
Courts and agencies have accepted the practice where interests align. A court deciding a case about an insurer and its insured noted that house counsel commonly represent both a corporation and its officers, directors, or employees where the potential for conflict does not preclude common representation, and it said the interests of economy and simplicity justify the practice.12 Reasoning along the same lines, a court observed that nothing is inherently wrong with common representation of two parties whose interests are aligned, and that an insured and an insurer present no different situation from any other pair of commonly represented clients.13 An administrative law judge reached a similar result in a 1973 securities case, allowing one firm to keep representing a brokerage firm and 47 registered representatives under SEC investigation. Where it is not clear that a conflict will occur, the judge reasoned, the informed consent of the client or clients whose interests would more likely suffer if a conflict developed can justify continuing the multiple representations.14
Rule 1.7 treats two kinds of conflict differently, and direct adversity is the harsher. If the constituent and the organization become directly adverse in the very matter in which the lawyer represents both, because one has begun or is about to begin litigation or file a cross-claim against the other, the conflict is irresolvable and the lawyer ordinarily may not continue for either.15 Consent cannot rescue the arrangement. Consent lets a client accept a risk that the lawyer's judgment will be limited by duties to someone else; it cannot let one lawyer press a claim against a client in the very matter in which the lawyer is protecting that client.
The second kind of conflict is a risk that has not yet become a confrontation. If the risk of a material limitation is significant but not yet concrete, or the conflict is manageable, the lawyer may continue for both clients when both give informed consent and the lawyer reasonably believes she can provide competent and diligent representation to each.16 The two conditions work separately. Consent lets the people who bear the risk accept it, and the lawyer's reasonable belief checks what consent cannot, because a client may agree to an arrangement the lawyer cannot carry out well.
A proposed dual representation can be tested in order, with direct adversity screened out before consent is considered.
The third step can end the analysis, which is why it comes before any talk of consent. A lawyer who foresees trouble may try to avoid the need to withdraw from representing the organization by asking both clients for an advance waiver. Lawrence Fox and Susan Martyn warn that such a prospective waiver “can always be challenged later as not sufficiently well informed.”17 A client can weigh only a conflict whose shape is visible, and at the start of a dual representation neither client knows which fact will split them.
Problems under paragraph (g) usually pair a company's lawyer with an officer who wants the same lawyer, and the answer turns on which conflict the facts describe. When the company has sued, or is about to sue, the officer in the very matter, the facts show direct adversity, so an answer treating consent as a cure is wrong. When the facts show only a risk that interests could separate, whether the matters are unrelated or aligned, they show material limitation, so an answer barring the arrangement outright is wrong. Who may give the organization's consent is a separate question, and the next subsection takes it up.18
Who Consents for the Organization
The second sentence of Rule 1.13(g) answers a question that Rule 1.7 leaves open when the client is an organization: who gives the consent. If Rule 1.7 requires the organization's consent to the dual representation, an appropriate official of the organization other than the individual to be represented must give it, or the shareholders must.20 The sentence is conditional. It applies only once the Rule 1.7 analysis has found a conflict that consent can cure, and it says nothing about what makes consent informed. It fixes who may speak for the entity, and it excludes one person.
The exclusion follows from how an organization decides anything. An entity can accept a risk only through a human being, and the constituent who wants the organization's lawyer is the person most likely to be at hand, to hold authority, and to gain from a yes. If that individual could sign both the request and the organization's approval, the consent would come from the person it was meant to check, and the entity would have no independent voice on the question. Paragraph (g) removes the individual from the decision, so someone without a personal stake can weigh the proposal as the organization's interest and can say no. Rule 1.13(a) says the organization acts through its duly authorized constituents,21 but paragraph (g) limits which of them may act on this question: authority to run the company's business does not reach a decision in which the signer is the beneficiary.
The rule offers two routes to valid consent. The first is an appropriate official other than the individual. The rule does not name the official, so a lawyer in practice looks to whoever holds authority under the organization's governing documents. The second route is the shareholders, which matters most when no official can stand apart from the request, as in a small company run by the people involved. South Dakota's counterpart, Rule 1.13(e), repeats the same sentence.22 A South Dakota court cited it in a footnote while reasoning that an attorney may represent both a corporation and individuals in the corporation.23
The defect in that scene lies in who signed, so the repair is to route the question to someone who can say no.
A lawyer can test the organization's consent with four questions, asked in order.
The third step restates the text of paragraph (g). The fourth follows from the purpose behind it. The text excludes only the individual to be represented, but its evident aim is an independent decision, so a lawyer who wants the consent to withstand challenge should check the signer's independence as well as the signer's title.
A valid consent from the right person still leaves the risk in place. Dual representation is permitted but risky: if the constituent's interests later turn adverse to the organization's, the lawyer could be disqualified from continuing for either.24 An exam stem on this clause usually says who signed. If the signer is the person to be represented, the consent fails however senior or well-meaning the signer is. If the signer is a disinterested board, the identity requirement is met, and the analysis returns to the other conditions of Rule 1.7.
When Interests Diverge
A dual representation works only while the organization and its constituent want the same things from their lawyer. When they stop, the organization is still the client Rule 1.13(a) names,26 and Griva v. Davison shows what that means for the lawyer's loyalty. Griva sought a law firm's files on its representation of Ann and Michael Maiatico in matters concerning the Maiatico Family Limited Partnership. One of her complaints rested on a firm billing entry recording a telephone conference between the firm's lawyer and Ann Maiatico “re dissolving MFLP.”27 The court judged that entry under the new Rules of Professional Conduct, and in doing so it described what a lawyer owes client-partners once the partnership's interests and theirs part.
When a lawyer represents both a partnership and one or more of its partners individually and a conflict arises between them, the lawyer must inform the client-partners of the conflict and of the fact that their discussions may not be privileged from disclosure to the partnership. The lawyer must also explain that the lawyer can no longer represent them, because the lawyer's loyalty must remain, above all, with the partnership.28 The rule language accompanying that passage adds that the person may wish to obtain independent representation, and that the lawyer must take care to assure that the individual understands the lawyer for the organization cannot provide legal representation once the interests are adverse.29
Each message answers a distinct danger. Notice of the conflict corrects an assumption that was reasonable while the interests ran together, that the lawyer is still on the individual's side. The warning about privilege matters because what a client-partner says may reach the partnership, and the individual should know that before saying more. The statement that the lawyer can no longer act for the individual places the lawyer's allegiance with the entity and sends the individual to find independent counsel.
A lawyer who has acted for both clients holds confidences from each, and the duty of confidentiality runs to the organization and the individual alike: the lawyer may not interrogate one client to benefit the other or disclose privileged communications to third parties without the individual client's consent.30 Duties that pull in opposite directions explain why divergence so often ends the arrangement. When the clients become directly adverse in the very matter, because one has begun or is about to begin litigation or file a cross-claim against the other, the conflict is irresolvable and the lawyer ordinarily may not continue.31 The instruction in Griva therefore says where the lawyer's allegiance lands. It does not promise that the lawyer can go on acting for the entity, since a lawyer whose two clients turn against each other may be disqualified from both engagements.32
The same divergence can surface in a claim against the lawyer. In a South Dakota case, the lawyer, Glover, contended that he had not represented the corporation. The court called that a question of material fact and said that, absent some indication otherwise, Glover could be deemed the corporation's attorney even if he also represented Dahl personally, because an attorney may represent both a corporation and individuals in it.33 The court also pointed to an Alaska decision, Willner's Fuel Distributors v. Noreen, in which summary judgment for an attorney was improper in an action by a creditor of the corporation. The attorney there represented both the dissolved corporation and a director and knew or should have known that the director may have intended to interfere with creditors' claims through improper distribution of assets.34
The two lines of authority teach different halves of the problem. Griva says what the lawyer must tell the constituent once the split appears and where loyalty lands. The South Dakota and Alaska decisions show what the lawyer risks by missing the signs, since a lawyer who represents the corporation cannot rest on the relationship with a director who may be draining it. Behind both stands a professional duty that exists even apart from Rule 1.13: the lawyer must protect the entity against its constituents' wrongful acts, and failing to do so exposes the lawyer to discipline and to civil liability.35
Not every disagreement is divergence, and exam stems often test whether a candidate can tell a real split from friction between co-clients.
A united defense of an organization and its constituent can be appropriate, effective, and cost-efficient, and what matters is how likely their interests are to diverge, so a bare possibility of conflict does not end the engagement.36 The lawyer watches for the facts that turn possibility into adversity: a claim by one client against the other, a defense that blames the constituent, or evidence that the constituent has taken the entity's property. Once adversity is real, the response runs in order, because the first step decides whether the others are triggered.