Conflicts of Interest: What a Lawyer Hears from a Declined Client

Lawyers frequently conduct initial consultations with prospective clients who decide not to hire the lawyer, or whom the lawyer declines to work with. Some amount of discussion of facts about the prospective client and his or her legal issues must take place before the decision not to proceed is made. Can what the lawyer hears during this initial consultation later create a conflict of interest requiring disqualification? Consider the following scenario:

A Meeting with a Prospective Client

A small business is opening a new branch. It is looking for a lawyer with labor and employment experience, so it contacts Attorney Smith. The business owner and Smith meet at the new branch, primarily to discuss the getting a work visa for one of the business’s workers. They also discuss other aspects of the business and the labor and employment issues that have arisen as a result of its business model, including the classification and compensation of its work force and the policies and procedures that it employs with respect to its work force. As a part of this meeting, the business owner and Smith review and discuss confidential company documents that are pertinent to the visa issue and that are related to other aspects of the business’s employment needs. Although Smith sends the business owner a proposed retainer agreement, it is not signed, and Smith is never hired by the business.

Four years later, the business is defending a class action brought by current and former workers, who allege that the business has misclassified them as independent contractors rather than employees, leading to violations of the state’s wage and hour laws. Among co-counsel at the firm representing the plaintiffs is none other than Attorney Smith. He deposes the business owner, using information that he gathered from the consultation years earlier. Should Smith be disqualified based on his prior contact with the business owner? What about his co-counsel at the firm?

Approaches to Disqualification

The answer varies by jurisdiction. Many strictly disqualify the attorney who conducted the initial consultation, along with anyone else in that attorney’s firm. For a comprehensive discussion of the issue and a leading authority for this view, see ABA Op. 90-358 (1990).

Other authority will allow other attorneys in the firm to undertake representation adverse to the declined client, so long as the attorney who conducted the consultation is screened away from the case. This view is reflected in Restatement of the Law Third, The Law Governing Lawyers section 15(2)(a) and ABA Rules of Model Professional Conduct, Rule 1.18.

Treatment of this issue by the courts is not uniform. Some courts base their disqualification decision on whether a lawyer-client relationship was established at the initial meeting. If discussions at the initial consultation were substantive enough, the person who approached the lawyer may be considered a "former client." Under Model Rule 1.9(a), a lawyer cannot represent another person with interests materially adverse to a former client in a substantially related matter unless the former client gives informed consent, confirmed in writing. Generally, the case against disqualification will be stronger if it appears the declined client will not, or reasonably could not, be harmed by what was said at the initial consultation.