1. Conglomerate Corporation owns a little more than half the stock of Giant Company. Conglomerate's stock, in turn, is public, available on the public
... [Show More] stock exchange, as is the remainder of the stock in Giant Company. The president of Conglomerate Corporation has asked Attorney Stevenson to represent Giant Company in a deal by which Giant would make a proposed transfer of certain real property to Conglomerate Corporation. The property in question is unusual because it contains an underground particle collider used for scientific research, but also valuable farmland on the surface, as well as some valuable mineral rights in another part of the parcel. These factors make the property value difficult to assess by reference to the general real-estate market, which means it is difficult for anyone to determine the fairness of the transfer price in the proposed deal. Would it be proper for Attorney Stevenson to facilitate this property transfer at the behest of the president of Conglomerate, if Attorney Stevenson would be representing Giant as the client in this specific matter?
a) Yes, because Conglomerate Corporation owns more than half of Giant Company, so the two corporate entities are one client for purposes of the rules regarding conflicts of interest.
b) Yes, because the virtual impossibility of obtaining an appraisal of the fair market value of the property means that the lawyer does not have actual knowledge that the deal is unfair to either party.
c) No, because the attorney would be unable to inform either client fully about whether the proposed transfer price would be in their best interest.
d) No, not unless the attorney first obtains effective informed consent of the management of Giant Company, as well as that of Conglomerate, because the ownership of Conglomerate and Giant is not identical, and their interests materially differ in the proposed transaction. - d) No, not unless the attorney first obtains effective informed consent of the management of Giant Company, as well as that of Conglomerate, because the ownership of Conglomerate and Giant is not identical, and their interests materially differ in the proposed transaction.
RESTATEMENT § 131
2. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces criminal charges of discussing prices with the president of a competing firm. If found guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and criminal penalties under state and federal antitrust laws. An attorney has been representing Conglomerate Corporation. She has conducted a thorough investigation of the matter, and she has personally concluded that no such pricing discussions occurred. Both Conglomerate Corporation and Mr. Burns plan to defend on that ground. Mr. Burns has asked the attorney to represent him, as well as Conglomerate Corporation, in the proceedings. The legal and factual defenses of Conglomerate Corporation and Mr. Burns seem completely consistent at the outset of the matter. Would the attorney need to obtain informed consent to a conflict of interest from both Mr. Burns and a separate corporate officer at Conglomerate Corporation before proceeding with this dual representation?
a) Yes, the likelihood of conflicting positions
in such matters as plea bargaining requires the attorney to obtain the informed consent of both clients before proceeding with the representation.
b) Yes, because it will always be in the best interest of a corporation to blame the individual who acted in the situation, to avoid liability under a theory of respondeat superior.
c) No, because their legal and factual assertions appear identical in this case, so the risk of contradiction or adverse positions in the litigation is de minimis.
d) No, because no one else at Conglomerate Corporation would be able to provide effective consent to the potential conflict of interest on behalf of the organization, if the chief executive officer has required the dual representation to occur. - a) Yes, the likelihood of conflicting positions
in such matters as plea bargaining requires the attorney to obtain the informed consent of both clients before proceeding with the representation.
RESTATEMENT § 131
3. An attorney decides to purchase "litigation cost protection" insurance for matters she handles on a contingency fee basis. Plaintiffs' lawyers can buy this type of insurance on a case-by-case basis, for a one-time premium payment. The insurance is available for purchase up to three months after the filing of the initial complaint. Note that this policy is separate and distinct from malpractice liability insurance. The purpose of this type of insurance is to reimburse the attorney for litigation costs advanced by the attorney - only in the event of a trial loss. Do the Model Rules of Professional Conduct prohibit the attorney from purchasing litigation cost protection insurance for her contingency fee cases?
a) Yes, because the client and the attorney may have different cost-benefit calculations.
b) Yes, for an attorney may prefer that his
client accept a low settlement offer to ensure that the attorney receives his fee, while the client wants to reject a settlement offer and take his chances at trial.
c) No, insurance coverage is categorically outside the scope of the Model Rules.
d) No, the attorney may purchase litigation cost protection insurance so long as she does not allow the terms of the coverage to adversely affect her independent professional judgment, the client-lawyer relationship, or the client's continuing best interests. - d) No, the attorney may purchase litigation cost protection insurance so long as she does not allow the terms of the coverage to adversely affect her independent professional judgment, the client-lawyer relationship, or the client's continuing best interests.
N.C Formal Ethics Op. 2018-6
4. An attorney purchased "litigation cost protection" insurance at the outset of representing a plaintiff in a personal injury case. When the attorney recovered funds for the client through a settlement or favorable trial verdict, the attorney proposed to receive reimbursement for the insurance premium from the judgment or settlement funds. The attorney disclosed the cost of the insurance to the client as part of the representation agreement. Was it proper for the attorney to include in a client's fee agreement a provision allowing the attorney's purchase of litigation cost protection insurance and requiring reimbursement of the insurance premium from the client's funds in the event of a settlement or favorable trial verdict?
a) Yes, because the Model Rules do not purport to regulate insurance for lawyers, which is a matter of state statute.
b) Yes, if the amount charged to the client is fair and reasonable, and the lawyer fully explains to the client what litigation cost protection insurance is, why the lawyer believes a litigation cost protection policy will serve the client's best interests, that the client should get the advice of independent legal counsel regarding the arrangement, that other lawyers may advance the client's costs without charging the client the cost of a litigation cost protection policy; and the client gives informed consent in writing, while the lawyer maintains independent professional judgment.
c) No, because the client and the lawyer have different cost-benefit calculations in this scenario.
d) No, lawyer may not include in a client's fee agreement a provision allowing the lawyer's purchase of litigation cost protection insurance and requiring reimbursement of the insurance premium from the client's funds in the event of a settlement or favorable trial verdict. - b) Yes, if the amount charged to the client is fair and reasonable, and the lawyer fully explains to the client what litigation cost protection insurance is, why the lawyer believes a litigation cost protection policy will serve the client's best interests, that the client should get the advice of independent legal counsel regarding the arrangement, that other lawyers may advance the client's costs without charging the client the cost of a litigation cost protection policy; and the client gives informed consent in writing, while the lawyer maintains independent professional judgment.
N.C Formal Ethics Op. 2018-6
5. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces criminal charges of discussing prices with the president of a competing firm. If found guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and criminal penalties under state and federal antitrust laws. An attorney has been representing Conglomerate Corporation. She has conducted a thorough investigation of the matter, and she has personally concluded that such pricing discussions did in fact occur. Both Mr. Burns and Conglomerate Corporation have stopped their denials, and they now concede that the pricing discussions took place. One of Mr. Burns' defenses will be that the former general counsel of Conglomerate Corporation had advised Mr. Burns that a discussion of general pricing practices with a competitor would not be illegal. In contrast, Conglomerate Corporation denies that this was the legal advice given, and instead asserts that Mr. Burns acted without authority. Given these facts, would it be proper for the attorney to proceed with the dual representation, if both Mr. Burns and a separate corporate officer at Conglomerate provide written consent to any potential conflict of interest between them?
a) Yes, because their legal and factual assertions appear identical in this case, so the risk of contradiction or adverse positions in the litigation is de minimis.
b) Yes, although the likelihood of conflicting positions in such matters as plea bargaining requires the attorney to obtain the informed consent of both clients before proceeding with the representation, dual representation is permissible if each party consents.
c) No, because it will always be in the best interest of a corporation to blame the individual who acted in the situation, to avoid liability under a theory of respondeat superior.
d) No, the conflicting positions between Conglomerate and Mr. Burns are so great that the same lawyer cannot provide adequate legal representation to both, so consent to the conflict is ineffective. - d) No, the conflicting positions between Conglomerate and Mr. Burns are so great that the same lawyer cannot provide adequate legal representation to both, so consent to the conflict is ineffective.
N.C Formal Ethics Op. 2018-6
6. Big Firm represents hundreds of corporate clients out of a dozen offices in different states. The firm has no formal procedures in place to check for conflicts at the outset of representation for new clients, but the managing partner of the firm has an incredible memory and has never failed to spot a potential conflict of interest in the past. An attorney agrees to represent a new corporate client that owns many subsidiaries, and checks with the managing partner, who assured Attorney there are no potential conflicts. After the new corporate client had disclosed a substantial amount of confidential information, it emerged that some of its subsidiaries were directly adverse to other clients of Big Firm. The attorney was completely unaware of the potential conflicts at the time he agreed to the representation, despite asking the corporate client a few questions about the opposing parties in pending litigation it might have. Will the attorney be subject to discipline for not declining representation in this case?
a) Yes, because ignorance caused by a failure to institute reasonable procedures, appropriate for the size and type of firm and practice, will not excuse a lawyer's violation of the Rules regarding conflicts of interest.
b) Yes, because there is a presumption that a company owning several subsidiaries will have at least one adverse interest to other clients of a Big Firm.
c) No, as he was unaware of the conflict at the time, but now that the conflict is apparent, Attorney must withdraw from representation.
d) No, because the attorney at least partly relied upon the managing partner's prowess in identifying conflicts, given that the managing partner had never before made a mistake. - a) Yes, because ignorance caused by a failure to institute reasonable procedures, appropriate for the size and type of firm and practice, will not excuse a lawyer's violation of the Rules regarding conflicts of interest.
7. An attorney sued Giant Company on behalf of a client in a personal injury matter. During the protracted litigation that ensued, Conglomerate bought Giant Company. The attorney was already representing Conglomerate in a regulatory compliance matter before a federal administrative agency. Assuming this development was unforeseeable at the outset of representing the client against Giant Company, will the attorney have the option to withdraw from one of the representations to avoid the conflict?
a) Yes, because one matter is in state court and the other matter is a completely unrelated federal administrative proceeding.
b) Yes, but the attorney must seek court approval where necessary and take steps to minimize harm to the clients, and he must continue to protect the confidences of the client from whose representation the lawyer has withdrawn.
c) No, if a conflict arises after representation is underway, the lawyer ordinarily must withdraw from the representation of both clients, unless the lawyer has obtained the informed consent of each client at the outset of the representation. [Show Less]