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Final Examination

Student’s Name

Course

Instructor

Institution

Date
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Essay 1: Ethics Issues in the Representative of Multiple Clients

(a) Can the firm represent all three parties?

The first ethical issue that arises in this case involves the question of client agency,

whereby the lawyer represents two or more parties in a single transaction. According to ABA

Model Rule 1.7(a), a lawyer shall not represent a client if the representation is adverse to another

client of the lawyer or interferes with or prejudices other clients, except where the conditions of

paragraph (a) are fulfilled. A conflict of interest arises if at any particular time it appears that the

lawyer representing one client is likely to be prejudiced in that representation by conflicting

loyalties to or duties owed to another client.

Accordingly, it will be impossible for the firm to represent Arnie, Becky, and Chester

equally since they have different preferences. While Becky has to unload her shares in the

bakery, Arnie has to maintain his percentage equity interest in the company but needs to

introduce another person to take up the other percentage of investment, and Chester has different

scenarios of ownership ratio and his proportionate share in the business. These parties have

different appetites for money and, therefore, might have contractual fears in setting the

modalities of the deal, including the value that Becky will bring and the conditions under which

Chester will invest. The best interest of one party could in a way advance the interest of the other

parties, which is impractical in joint representation.

It also again creates conflict of interest by having them represent only Arnie and Becky.

Thus, despite the fact that partners and friends for years, free of any evident animosity that would

explain why Arnie, for example, was interested in parting the two and selling the proprietorship

stock, was not so friendly with the other when the main’s objective was to end a business

affiliation. Their interests could part ways in particular where they negotiate for the price that
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Becker should get and the buyout agreement. It may lead to a conflict of interest because the

lawyer that the couple retains would find it difficult to tell the couple the truth about the issue.

(b) Requirements for Consent and Disclosure

Rule 1.7(b) permits this only upon receipt of informed consent from all involved if the

firm wishes to go forward representing multiple parties. In other words, the lawyer and both

clients must do some spadework before getting initial consent to represent both jointly. The

lawyer needs to disclose to you that the firm cannot be an advocate for one client without

potentially disadvantaging the others, and therefore it may not be completely independent.

Before proceeding with joint representation, the firm would need to get written consent

from both Arnie, Becky, and Chester after fully disclosing these risks. But even then, the firm

must still determine it can offer competent and diligent representation to all parties under Rule

1.7(b)(1). If the possible conflicts are too great, consent may not be sufficient for correcting

ethical issues, and the firm should turn down joint representation entirely. Consent would also be

necessary if Arnie and Becky were the only clients represented by the firm. Each client should be

aware that their interests can, and likely will, diverge as the transaction proceeds and understand

that if an intractable conflict arises, the firm may have to withdraw.

(c) Assessment of How Paula Dealt with the Ethical Imperatives

I am troubled by Paula’s take on the ethics issues. A show of strength that is outlandishly

confident in a firm's ability to represent all three sides while almost ignoring the conflicts of

interest. Just because the parties seem to be playing nicely doesn't mean that a joint

representation has all but no risks involved. Paula dismissing apparent conflicts, especially

regarding Chester's prior interaction with Tom Trenton, really makes you wonder how much

attention she is paying to the ethical rules that should govern the firm.
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The firm previously represented a client in a substantially related matter, and as per Rule

1.10, that constitutes a conflict of interest. For example, Tom drafted a will for Chester in this

instance (which may not relate directly to the sale of the bakery), and so Paula should consider

whether or not privileged information from that prior representation could potentially prejudice

Chester herein. Paula should have analyzed further potential conflicts.

My own responsibilities

I would have the responsibility as a corporate associate to make that call—regardless of

what Paula happened to be telling me. For instance, under Rule 5.2, I am subject to the Rules of

Professional Conduct even when working at the direction of a partner. If I think that Paula

pursuing joint representation is violating ethical rules, then it is my duty to address this with her

and potentially others as appropriate.

Essay 2: Duty of Inquiry and Due Diligence Obligations for Lawyers

1. Opinion on the Duty of Inquiry Described in ABA Formal Opinion 513

ABA Formal Opinion 513 also reiterates the obligation to inquire into the facts and issues

presented during each representation, especially where there are red flags indicating possible

ethical problems. It urges that lawyers are not presumptive winners but rather should be

responsible actors who must vet potential clients and the legal matters that they bring to them to

ensure that representation is consistent with the Model Rules of Professional Conduct.

I believe the opinion strikes a wise balance of protecting attorneys from being embroiled

in such conduct both to their detriment and to the detriment of the bar. While one might quibble

that the opinion is overly demanding of lawyers who are after all practicing in a profession rife

with integrity issues, we should start from the premise that attorneys still need to be held to the

highest standards and have an affirmative obligation not just to turn a blind eye if they see red
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flags. So, lawyers act as gatekeepers; we keep people from using the law for nefarious or other

purposes, and this falls right in line with that.

But the view cannot well imply an unrealistic or overly burdensome investigative duty on

lawyers. Lawyers are lawyers, not private detectives or regulators, and cannot be required to look

meticulously into each customer's past or conditions. The free opinion, which adopts a more

contextual approach and says the duty of inquiry tracks with the seriousness of

misrepresentation, is here. The result should be to keep lawyers on their toes without additional

enforcement responsibilities.

2. Existing Model Rules and Lawyer Obligations to Identify Red Flags

The Model Rules of Professional Conduct already require American lawyers to inquire

into potential conflicts (Rule 1.7), the propriety of representation (Rule 1.2), and the morality of

a client’s goals (Rule 6.2). Model Rule 1.2(d) prohibits lawyers from assisting clients in conduct

they know to be criminal or fraudulent. Rule 1.1 mandates a lawyer shall provide competent

representation, which involves knowing the risks and ethical issues involved in litigation as well.

Rule 1.16 also states that you must decline or withdraw from any representation if to

carry it out would be a violation of the law or ethical rules. Thus, it follows that lawyers are

required to predict when client behavior might land them behind bars. Regarding conflicts, Rule

1.7 as well mandates that lawyers consider whether their loyalty or independent professional

judgment might be compromised.

The fact is most lawyers, practically, do some amount of due diligence when considering

new representations. The process of ensuring there are appropriate conflict checks, full

understanding of who the client is, and making sure that the matter to be undertaken falls

squarely within ethical guidelines. The ABA opinion agrees, in some way, arguing that client
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representations of facts should not be taken at face value by lawyers—particularly if there are red

flags pointing to potential misconduct or conflicts.

When adopting new clients, I would make sure that we complete a full conflict check and

assume whether the client's goals have any potential risks. Lawyers must determine whether they

are acting to push a transaction or decision that might require unethical behavior. For instance, if

a client suggested a business deal that appeared unusually complex or opaque, I would probe for

any concealed legal and/or ethical danger. If I see any indication that a client appears less

inclined to provide comprehensive and true information, then it is grounds for making a move

against the representation. It is this level of vigilance that protects the lawyer and the profession

from complicity in unethical conduct.

3. Attorney Due Diligence Obligations Outside the U.S.

Outside the U.S., in many countries, attorneys have similarly strict duties of due

diligence. For example, in the European Union that has anti-money laundering (AML)

regulations, it is requiring lawyers to do customer due diligence and report suspicious activities.

These areas require lawyers to conduct customer due diligence and seek assurance that they are

not used as vehicles for financial crime in support of anything from money laundering to terrorist

finance. The SRA in the UK imposes equivalent duties pursuant to its conduct rules.

Consequently, in jurisdictions where due diligence obligations are not so well outlined, a

mechanism grounded upon a formal legal framework to instruct the lawyers is missing. In these

cases, the judgment of a lawyer is more likely to depend on professional norms and individual

judgment in determining how risky it might be to accept new representations.

Then I think that, at a minimum, jurisdictions without an obligation should impose formal

attorney due diligence requirements. Encouraging lawyers to take an active role in maintaining
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the rule of law and that their services can't be used to facilitate illegal or unethical conduct.

Because attorneys are legal representatives, they have access to confidential client information

and so can act in ways that place them in a unique position to prevent or abate harm.