Thursday, March 14, 2013

Washington DC to decide whether there is a civil liability duty to non clients

Under what circumstances should an attorney have a duty in tort toward the affiliates of an entity client? 

The question is now before the District of Columbia Court of Appeals.  The case involves a claim by Boston-Maine Airways Corp. against a law firm that represented its sibling companies and a shared owner.  After a District of Columbia Superior Court judge granted the law firm's motion for summary judgment, finding that Boston-Maine failed to prove that Sheppard owed them any care, it appealed arguing that the firm's representation of its sibling companies meant the firm couldn't take actions that would harm members of the corporate family. For a more detailed summary of the case and the issues go here.

My guess is that the court will follow the analysis suggested in the comment to Model Rule 1.7 on conflicts of interest.  Even though the issue is different, the analysis is helpful.  According to the Rule's approach, lawyers who represent entities do not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary of the entity.  For this reason, an attorney for an entity is not barred from accepting a client whose interests are adverse to an affiliate of the entity client in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, or there is an understanding between the lawyer & the entity client that the lawyer will avoid accepting new clients in those circumstances, or if the lawyer’s obligations to either the entity client or to the new client are likely to materially limit the representation of the other client.

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