Also known as: direct adverse · adverse interest
Written by attorneys · grounded in primary & secondary sources — see below
3 senses
A concurrent conflict of interest arises when a lawyer's representation of one client is directly adverse to another client. The prohibition applies even if the matters are unrelated. Informed consent from all affected clients is required before proceeding.
A concurrent conflict of interest arises when a lawyer's representation of one client is directly adverse to another client. The prohibition applies even if the matters are unrelated. Informed consent from all affected clients is required before proceeding.
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An adverse interest is held by a person whose consent is required to revoke a trust or to exercise a power of withdrawal. The presence of such an interest prevents the settlor or beneficiary from acting unilaterally.
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An adverse interest exists when the maker of a statement of opinion stands to benefit from the transaction. The recipient's belief about that interest helps determine whether the opinion may reasonably be read as implying undisclosed supporting facts.
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An adverse interest is held by a person whose consent is required to revoke a trust or to exercise a power of withdrawal. The presence of such an interest prevents the settlor or beneficiary from acting unilaterally.
An adverse interest exists when the maker of a statement of opinion stands to benefit from the transaction. The recipient's belief about that interest helps determine whether the opinion may reasonably be read as implying undisclosed supporting facts.
Each sense below has its own examples, sources, and questions.
Dominion Capital retains a firm for general corporate work. The same firm is asked to represent Dynamic Solutions in a contract suit against Dominion Capital. The matters are unrelated and handled by different offices, yet the firm cannot accept the new matter without consent from both clients because the representation would be directly adverse.
A law firm represents Duffy Construction in a permitting dispute. The firm is later asked to defend a different client against a personal-injury suit brought by Duffy Construction. Even though the matters are unrelated, the firm cannot proceed because the representation would be directly adverse to an existing client.
Dominic Drake's brief argues that a statute permits his client's claim. He knows of controlling precedent in the same jurisdiction that directly rejects that reading but does not disclose it. Opposing counsel has not cited the case. The lawyer violates the duty of candor by omitting the directly adverse authority.
No. A lawyer may not represent one client in a matter while opposing that same client in another matter even if the matters are unrelated and handled by different offices.
Supporting sources
Yes. A lawyer must disclose controlling authority in the jurisdiction that is directly adverse to the client's position when opposing counsel has not already done so.
Supporting sources
Dorothy Daniels creates a revocable trust naming her niece as trustee. The trust instrument allows revocation only with the niece's written consent. Because the niece holds an adverse interest, the trust is not revocable by Dorothy Daniels acting alone.
Delilah Duran holds a power to withdraw principal from a trust, but only with the written consent of the trustee's CFO. The CFO's bonus depends on keeping capital reserves high. Because the CFO holds an adverse interest, Delilah Duran's power does not qualify as a presently exercisable general power of withdrawal.
An adverse interest blocks unilateral revocation when the settlor must obtain consent from a person whose own interests would be harmed by revocation.
Supporting sources
Dustin Donovan, who owns a stake in Desert Oil, tells Diane Dawson that a drilling prospect is highly promising. Diane Dawson knows of his ownership interest yet relies on the statement. A court may still treat the opinion as carrying an implied factual assertion because her awareness of his adverse interest does not automatically defeat justifiable reliance.
No. A recipient may still justifiably rely on a factual statement or opinion even when aware that the speaker has an adverse interest in the transaction.
Supporting sources