A twilight zone of inharmonic convergence
By Diane Karpman
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Karpman |
A "twilight zone" is developing in the legal malpractice arena that you need
to understand for effective risk management and to maintain your personal equilibrium.
It demonstrates the intersection between established professional responsibility
principles of conflicts, loyalty and privilege. Generally, these ethereal concepts
are appearing out of state in federal cases. However, by understanding the theories,
maybe we can immunize California lawyers to be careful in these situations.
You enter the zone when the mistake or error occurs. Everyone makes mistakes.
Do not self-flagellate or substitute a hair shirt for the camisole beneath the
"suit du jour."
After the error occurs, there is a "repair period" when the firm can attempt
to correct the mistake and, hopefully, make the client whole. During "repair,"
you still represent the client, but you are about to encounter an inharmonic
convergence of duties.
All clients are owed fiduciary duties, whether they are individuals or organizations,
including law corporations or partnerships. Generally, a law firm is entitled
to retain counsel and receive all the benefits of attorney-client privilege,
like any other business or professional organization.
However, an attorney violates the duty of loyalty to the client by assuming
a position adverse to the client. Therefore, "when a law firm seeks legal advice
from its inhouse counsel, the law firm's representation of itself (through inhouse
counsel) might be directly adverse to . . . the law firm's representation of
another client, thus creating a prohibited conflict of interest." Sunrise Securities
Litigation (E.D. Pa. 1989)130 F.R.D. 560, 595.
The simultaneous representation of two clients requires an informed written
consent, under Rule of Professional Conduct 3-310. The
firm's interests may or may not be diametrically opposed to the client's interests.
Continued representation, when possible legal malpractice has occurred, is risky.
Yet, it is doubtful that any other lawyer in the entire world would be as motivated
to make sure the client is successful.
Often, a flurry of internal e-mails and memos are generated regarding the case.
But, wait a minute. The firm still represents the "outside" client, who is entitled
to loyalty. A claim of privilege may be denied as to internal communications
created before a malpractice claim is made, since the joint client exception
could later apply. "Permeating the documents is consideration of how best to
position the firm in light of a possible malpractice action." Koen Book
Distribs. v. Powell (E. D. Pa. 2002) 212 F.R.D. 283, 256.
Arguably, lawyers may have greater fiduciary duties. However, even in the zone,
fair boundaries must exist, because everyone is entitled to a defense. Lawyers
should not be required to "fend for themselves based on their own research and
what they can remember from a State Bar ethics program." Fox Searchlight
v. Paladino (2001) 89 Cal. App. 4th 294, 312. We should encourage lawyers
to consult with each other to remediate client harm, and it is antithetical
to penalize them for their efforts.
Ethics expert Diane Karpman can be reached at karpethics@aol.com
or 310-887-3900.
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