June 5, 1992
A lawyer may not undertake commercial litigation against a party when the lawyer's firm previously represented the party's spouse in a divorce matter in which the respondent was ordered to make payments to the law firm's former client, and the party's ability to make those payments to the former client will be detrimentally affected by the success of the lawyer in the commercial litigation.
References: MRPC 1.9(a) and (c), 1.10(a); RI-46.
The sole shareholder and director of a closely held corporation has asked a lawyer to represent both the shareholder and the corporation as plaintiffs in commercial litigation against several individuals and a corporation. One respondent in the prospective matter is the spouse of a former client of the lawyer's firm, and against whom the law firm obtained a divorce judgment for child support and spousal maintenance. The prospective litigation could, if successful, adversely impact upon the respondent's ability to fulfill the financial obligations owed to the firm's former client under the divorce judgment, and could be used in a petition to justify a decrease in the amount of support owed to the wife.
The lawyer states that the former and current disputes are factually unrelated and that the lawyer does not anticipate using any information obtained in the divorce proceeding for any purpose in the current proceeding. The lawyer asks whether the prospective representation may be ethically undertaken.
MRPC 1.9(a) and (c) state:
"(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation.
". . .
"(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
"(1) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client, or when the information has become generally known; or
"(2) reveal information relating to the representation except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client."
If any member of the firm is disqualified under MRPC 1.9, all members of the firm would be so disqualified. MRPC 1.10(a).
MRPC 1.9 establishes that even after a lawyer-client relationship has terminated, a lawyer retains certain duties to a client. The first question presented is whether the commercial dispute involving the prospective clients is "the same or substantially related" to the earlier divorce proceeding under MRPC 1.9(a). Clearly, the two matters are not "the same." However, a more in depth analysis is required to determine whether the two matters are "substantially related."
It has been stated that where the subject matter of the representation is the same, the matters are substantially related. RI-46. The commercial dispute between the sole shareholder and director of a closely held corporation and the corporation itself as against several individuals and another corporation cannot be said to involve the subject matter (i.e., domestic relations) of the previous divorce between the husband and wife. In this regard, the matters are clearly not substantially related.
Also, where the factual or legal issues overlap, the matters are substantially related. RI-46. The inquirer states that the former and current disputes are factually unrelated. Based on this representation and the disputes involved (i.e., former domestic relations matter as opposed to prospective commercial litigation), the legal issues involved in the two matters would appear to be also legally unrelated. In this regard, also, these are not substantially related matters.
Where there is a likelihood that information obtained in the former representation will have relevance to the subsequent representation, the matters are substantially related. RI-46. The inquiry states that the lawyer does not anticipate using any of the information obtained in the divorce proceedings for any purpose in the current proceeding. Even if true, this statement is not sufficient under MRPC 1.9(c). MRPC 1.9(c) prohibits the revelation or use of information from the prior representation unless the former client consents. The law firm would not know the impact the commercial litigation had on the respondent spouse if the law firm did not have information from the divorce representation regarding the status of the respondent's assets.
The second question is whether the commercial litigation is "materially adverse" to the interests of the former divorce client under MRPC 1.9(a). Ifsuccess in the prospective commercial litigation will interfere with the divorce client's ability to collect or enforce the divorce judgment obtained by the law firm, the commercial matter is materially adverse to the interests of the divorce client.
Therefore the lawyer may not undertake the prospective commercial litigation against the respondent spouse of the former divorce client of the lawyer's firm.