Prospective Clients: Potential Conflicts

November 23, 2004

Submitted by Kimberly A. Wallis and Douglas J. Brocker

As part of the recent changes to the Revised Rules of Professional Conduct, the State Bar adopted a new Rule regarding a lawyer’s duties to a prospective client. Rule 1.18 defines a prospective client as a “person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter.” Rule 1.18(a). In initial consultations with a prospective client, confidential information almost invariably is disclosed to the lawyer. Therefore, Rule 1.18 provides some but not all the protections afforded to clients who retain the lawyer’s services. Rule 1.18, Comment [1].

Rule 1.18 provides two primary protections to prospective clients regarding confidential information and disqualification. First, even if no lawyer-client relationship develops, “a lawyer who has had discussions with a prospective client shall not use or reveal confidential information learned in the consultation, except as Rule 1.9 would permit with respect to information of a former client.” Rule 1.18(b). Thus, with respect to the receipt, use, and disclosure of confidential information, prospective clients are treated the same as any other client. However, the commentary to the new rule provides that “a person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a ‘prospective client.’” Rule 1.18, Comment [2].

Second, “if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter,” the lawyer is conflicted out of representing “a client with interests materially adverse to those of a prospective client in the same or a substantially related matter.” Rule 1.18(c). Unfortunately, neither Rule 1.18 nor the commentary to it provides any clarification regarding what is meant by “significantly harmful.” For example, if a lawyer received information from a prospective client regarding the parties’ relative income and assets, whether such information could be “significantly harmful” to the prospective client would depend on the type of case and the likelihood of disclosure in that matter. In contrast, if a prospective client in a domestic case advised an attorney that he or she had an extramarital affair; the lawyer thereafter likely would be prohibited from representing the prospective client’s spouse on any domestic matter where evidence of the affair may be relevant.

There are several ways to avoid such disqualifications. For the consulting lawyer or any members of his or her firm, the disqualification can be waived by obtaining informed consent, confirmed in writing, as with other conflicts. Rule 1.18(d). To be effective, the lawyer must obtain this consent from both the affected client and the former prospective client.

Although the conflict provision in Rule 1.18(c) imputes the disqualification arising from the prospective client to every other member of the lawyer’s firm, Rule 1.18 provides another mechanism for avoiding imputed disqualifications. The conflict can be cured by timely screening the disqualified lawyer from participation in the matter and giving the prospective client written notice. Rule 1.18(d) (1)-(2). Through screening, other lawyers in the same firm can represent the client without having to obtain informed consent. Screening can be very useful either when a former prospective client refuses to consent or cannot be located to obtain consent.

The State Bar Ethics Committee recently expounded on the two primary requirements for effective screening: (1) written notice, and (2) effective screening procedures. 2003 FEO 8. First, the firm must provide written notice to the prospective client as soon as practicable after the need for screening is identified and prior to any disclosure of confidential information to other members of the firm. Further, the notice should include “a description of the screened lawyer’s prior representation and of the screening procedures employed.” Id.

Second, the Ethics Committee suggested several screening procedures including: (1) prohibiting communication between the screened lawyer and other lawyers in the firm concerning the matter, (2) employing special procedures to ensure that the screened lawyer has no contact with personnel, firm files or other documents related to the matter, and (3) periodic reminders of the screen to all firm members. 2003 FEO 8. As a practical matter, the burden of complying with these procedures may be more difficult for small firms.

An important practical implication of the Revised Rule concerns keeping adequate information regarding prospective clients. The Ethics Committee has defined the term “representation” used in subsection (c) to include any initial consultation for the purpose of establishing an attorney-client relationship. 2003 FEO 8. Accordingly, the lawyer should limit the initial interview or discussion to only those matters necessary to determine if a conflict exists to avoid acquiring disqualifying information from a prospective client. Rule 1.18, Comment [4]. For this reason, adequate information regarding prospective clients must be maintained to identify potential conflicts that could arise with future initial consultations.

Given the number of law firms communicating with website visitors, there is a concern that conflict-causing relationships may be unwittingly established over the internet. To guard against an unintended disqualification in this and other more traditional contexts, the commentary to Rule 1.18 provides that “[a] lawyer may condition conversations with a prospective client on the person’s informed consent that no information disclosed during the consultation will prohibit the lawyer from representing a different client in the matter.” Rule 1.18, Comment [5]. Further, a prospective client may also consent to the lawyer’s use of any information received from the prospective client. Id. However, a prospective client may not be forthcoming with important information if it is made clear by the attorney that such information will not be confidential, which in turn could compromise the lawyer’s ability to provide accurate analysis and effective representation.

In sum, Rule 1.18 provides that prospective clients are entitled to at least some of the same protections afforded clients concerning confidential information and conflicts of interest. The Rule, however, also provides lawyers with several mechanisms to avoid disqualification. In adopting this new Rule, the State Bar attempted to balance the interests of prospective clients and those of the lawyers and firms with whom they consult.