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| Counsel for the Organization: Employee Conflicts Representing
organizations requires daily vigilance to avoid conflicts of interest
between the organization and its constituents (e.g.,
officers, managers, supervisors or other employees).
Although ethics rules make it axiomatic that a lawyer represents
“the organization” and not its individual constituents, this entity
theory of client identification is at times overly legalistic.
Some have argued that it tends to ignore or overlook the personal,
social and human relationships that often develop between the organization’s
counsel and its constituents. This
is especially true where the organization’s counsel is “in-house.” In many organizations it is difficult to
distinguish in-house counsel from other employees in the organization. Like other employees, they may take their daily
direction from those authorized to manage the organization. They are often subject to the same employment
policies, procedures, and benefits generally applicable to all organization
employees. And like many employees,
they may form close working relationships and even friendships with
others in the organization. As long as the interests of the organization
and its constituents are harmonious, the dissimilarity between counsel’s
relationships with the organization and with other employees remains
somewhat transparent. This
disparity comes to the forefront, however, any time the interests
of an officer, manager, supervisor or other employee become adverse
to or conflict with those of the organization.
JOINT REPRESENTATION For example, employment-related lawsuits
against organizations sometimes include separate claims against individual
officers, supervisors or other employees as codefendants. When the organization and one of its constituents
are both named as defendants, counsel for the organization is confronted
with the issue of whether joint representation of the organization
and the individually sued employee is ethically appropriate. Although joint representation may serve the
financial interests of both the organization and the employee, economics
is only one of many considerations.
The more compelling question is whether the interests of the
organization and the employee with respect to the pending employment
suit are sufficiently in accord to permit joint representation.
If they are not, and joint representation is undertaken, the
organization may incur increased legal costs should the conflict develop
and counsel for the organization be disqualified or forced to withdraw. Counsel could also face discipline or malpractice
consequences stemming from the conflict. Evaluating whether the interests of the
organization and employee are sufficiently congruous requires more
than a cursory or superficial review of the employment claim. Counsel for larger organizations may have the
benefit of an internal investigation report prepared by the human
resources department. In smaller
organizations, however, the organization’s counsel is often required
to undertake some role in the investigative function as well.
Performing both the legal and investigative roles can present
a quandary for counsel. In
employment suits, the named employee defendant is typically alleged
to have done or not done some act creating liability.
Oftentimes the sued employee is the only person in the organization,
other than the plaintiff, who is privy to the facts, circumstances,
or communications that form the basis for the lawsuit.
The dilemma for counsel is how to go about obtaining enough
information to determine whether there is a conflict without establishing
an attorney-client relationship with the employee defendant and without
chilling the employee’s desire or willingness to provide the information. Under Rule 1.13(d), Minnesota Rules of Professional
Conduct (MRPC), counsel for the organization is required to “explain
the identity of the client” when it appears to counsel that the organization’s
interests are adverse to those of the employee. In addition, Rule 4.3, MRPC, obligates counsel
when dealing with an “unrepresented person” to clearly disclose whether
the organization’s interests are adverse to those of the employee;
the rule also prohibits giving advice to the employee on issues as
to which of the interests of the organization and the employee “have
a reasonable possibility of being in conflict.”
See Rules 4.3(a) and (c). Although these obligations obviously complicate
investigative discussions with employees, they do not prevent counsel
from negotiating or settling a claim with an unrepresented employee.1 DECIDING JOINT REPRESENTATION Until a decision about joint representation
has been made, counsel should advise the employee that counsel represents
the organization and not the employee. The subject of confidentiality and privilege
should also be addressed. Counsel
should explain that discussions with the employee might be privileged
and/or confidential, but that any privilege or confidentiality protections
belong to the organization and not the individual employee.
If at any time during these discussions it appears the organization’s
interests are adverse to the employee, counsel must remind the employee
that counsel represents the organization (Rule 1.13(d)) and refrain
from giving the employee legal advice about the matter (Rule 4.3).
The comment to Rule 1.13 also recommends telling the employee
that he or she may wish to obtain independent representation.2 Before deciding whether to represent an
employee, due diligence may also require counsel to explore whether
adversity with the employee exists outside of the litigation in which
the organization and employee have been named as codefendants.
Specifically, does the employee have his or her own unrelated
claims or disputes with the organization?
The In Felix,
the plaintiff brought a hostile environment sexual harassment claim
against the employer and his female supervisor, Morales, claiming
that the harassment had been reported to Morales and she had failed
to take any action. Counsel for the employer,
Steer, agreed to jointly represent Morales and the employer. After a joint answer was filed denying the harassment,
Morales filed her own sexual harassment complaint against the employer
with EEOC. Morales’ EEOC complaint
contradicted the joint answer denying the plaintiff’s hostile environment
claim, thereby forcing Steer to withdraw as Morales’ counsel and also
from representing the employer. The
employer was also forced to hire other counsel to handle the Morales
EEOC complaint. Later, several of Morales’ coemployees filed their own hostile environment sexual harassment
suits against the employer. Steer
and his law firm agreed to defend the employer against these claims.
Eventually, Morales brought her own harassment suit against
the employer and the cases were consolidated. Morales then moved to disqualify Steer and his
firm from defending the employer against the harassment claims that
had been brought by her coemployees and
consolidated with her suit. In disqualifying Steer and his law firm,
the court was extremely critical of how Steer went about undertaking
the joint representation of Morales and her employer.
Specifically, the court criticized Steer’s failure to meet
separately with Morales, failure to conduct a detailed study of the
facts underlying the harassment claim, and reliance upon a “brief
recitation” of the facts from the employer’s HR manager.
Steer was also condemned for failing to prepare “an engagement
letter … defining what might happen if a conflict between his two
clients were to arise.”4 More importantly, the court denounced
Steer’s failure to ask Morales if she had her own claims or disputes
against the employer and held that Steer and his firm had failed to
“discharge their professional obligations.”
It was this failure that permitted the court to overlook Morales’
concealment of her own claim from Steer and determine that Steer and
his firm should be disqualified from representing the employer in
the companion harassment cases that had been consolidated with Morales’
suit.5 CONSENT TO JOINT REPRESENTATION Once a decision has been made to jointly
represent the organization and an employee, counsel should obtain,
in writing,6 the informed consent of both clients.7 “Informed consent” is defined by the Model Rules
as client agreement to a proposed course of conduct after the lawyer
“has communicated adequate information and explanation about the material
risks of and reasonably available alternatives.”8
In joint representations, adequate information
and explanation necessarily include advising both clients that if
a conflict develops between them, ordinarily the lawyer will be forced
to withdraw and both clients will need to obtain independent representation.9 Both clients should be apprised that as between
joint clients the attorney-client privilege does not attach and if
litigation ensues between the joint clients the privilege will not
protect client communications with the lawyer.10
The effect of joint representation upon confidentiality should
also be discussed. Joint clients
should agree that information received from either client will be
shared with the other because of the lawyer’s equal duty of loyalty
to both clients. Absent such a waiver or understanding, the lawyer
will be forced to withdraw if one client decides that information
material to the representation is to be kept from the other. Agreement between the organization and employee
should also be reached about how disagreements over strategy or litigation
decisions, including whether to settle, will be resolved. Officers, managers and supervisors understandably
prefer litigation results exonerating their behavior, whereas settlement
agreements, including apology or continuing reference letters, may
better serve the organization’s interests.
Finally, the jointly represented employee should be required
to affirm in writing that he or she has no known claims against the
organization or any other named defendants.11 c NOTES 2. The Comment to Rule 1.13 is silent about
the types of facts or circumstances that would trigger counsel’s obligation
to issue the warning to obtain independent counsel. Although the Model Rule Comment addresses this
issue, its guidance is not very enlightening; “Whether such a warning
should be given by the lawyer for the organization to any constituent
individual may turn on the facts of each case.” 3. 49 F. Supp. 2d 260 (S.D.N.Y. 1999). 4. 5. Morales’ plaintiff counsel may have won
the battle, but lost the war. The
court also sua sponte
disqualified Morales’ counsel because it determined that counsel must
have known that Morales was a codefendant in a sexual harassment claim
against the employer and was being represented by the employer’s counsel
while Morales was in the process of putting together her own harassment
claim against the employer. 6. Rule 1.7 of the Model Rules of Professional
Conduct, currently under consideration for adoption in 7. The consent to joint representation given
by or on behalf of the organization must be obtained from an appropriate
organization official other than the employee who is to be jointly
represented, or by the shareholders.
Rule 1.13(g), 8. See Rule 1.0(g), 9. The absence of privilege between joint
clients would permit either client to use privileged communications
against the other. It would
not, however, vitiate the privilege as to third parties or others
not privy to the communications within the joint representation. 10. Under certain circumstances, courts
may permit the employer’s counsel to continue representing the employer
when a conflict later develops with the represented employee.
However, advance consent from the employee is required and
counsel bears the burden of “showing that circumstances exist to warrant
an inference of understanding and implied consent.”
Section 132, Comment (i), Restatement
of the Law Third: The Law Governing Lawyers (ALI 2000). See e.g., Rymal v.
Baergen, 2004 WL 1260260, (Mich. App., 11. Requiring represented employees to affirm
they have no claims against the organization as a precondition to
joint representation may also benefit the organization if the employee
later asserts a claim. KENNETH L. JORGENSEN is director
of the Office of Lawyers Professional Responsibility.
He has served the cause of lawyers' self-regulation in |
