July 19, 1994
A lawyer who receives a personal injury referral from a current client health provider and later discovers that the health provider and the personal injury client have a dispute concerning the health provider's services and bills which affects the lawyer's ability to settle the personal injury case with an insurance company must withdraw from the personal injury representation.
References: MRPC 1.7, 1.13(a); RI-155.
The director of a rehabilitative treatment facility referred a patient who had sustained a closed head injury in a traffic accident in another state to a local lawyer. The lawyer contacted a lawyer in the other state to act as cocounsel in a personal injury lawsuit to be filed in the other state. The lawyer also petitioned for the victim's spouse to be appointed conservator and guardian for the victim's estate because of psychiatric problems following the closed head injury.
Subsequently, in an unrelated matter, the lawyer represented the rehabilitative treatment facility in a case resulting in a jury verdict in excess of $100,000 which is on appeal.
Both counsel in the personal injury lawsuit concluded that the principal defendant was bankrupt and the case should be settled with the insurance company. Since the amount of the medical bills incurred by the client would be a factor in determining the dollar amount of any settlement, the lawyer consulted with the victim and the guardian regarding services rendered by the rehabilitative treatement facility. The victim had been discharged from the facility for aggressiveness with staff and damaging facility property. The victim and the guardian disputed the bill and displayed animosity toward the facility's director.
The lawyer proposes to advise the victim, the guardian, and the director that the lawyer will not represent the interests of the estate against the facility or the facility against the estate. The lawyer proposes to withdraw from matters in the probate court involving the estate but to continue as co-counsel in the personal injury action if the victim, the guardian and the director consent. The lawyer asks whether ethics rules require different actions based upon the circumstances.
The lawyer represents the rehabilitative treatment facility in the case on appeal, MRPC 1.13(a), and represents the victim in the personal injury action. Concurrent clients are covered by MRPC 1.7, which states:
"(a) A lawyer shall not representant a client if the representation of that client will be directly adverse to another client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
"(2) each client consents after consultation.
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the complications of the common representation and the advantages and risks involved."
In RI-155 we opined that a lawyer pursuing third-party claims on behalf of a decedent's estate may also represent medical providers seeking payment for services rendered to the decedent, but the lawyer may not represent either client in a dispute concerning the existence or amount of the medical providers' claim. In determining whether there was a conflict of interest, we reasoned:
"If there is a dispute as to the existence of a debt or the amount of the debt owed, then there is an adverse relationship between the personal representative and the medical providers. In such a case, the lawyer could not represent the medical providers unless a disinterested lawyer would reasonably believe the representation of the personal representative would not be adversely affected and both clients consent. The facts provided state that the estate is "uncollectible." A successful recovery in the wrongful death action would benefit the estate by increasing its assets, and would benefit the medical providers by creating assets against which the medical providers may claim. A successful claim for no-fault benefits would similarly benefit both the personal representative fiduciary and the medical providers. Any recovery which the medical providers receive necessarily reduces the proceeds available to the estate. But the lawyer's pursuit of the claims would not be affected, would not be less diligent or tactically changed, because of the interest of the medical providers in the expected proceeds. Therefore, a disinterested lawyer could reasonably believe that representation of the medical providers would not adversely affect the representation of the personal representative, and the lawyer may seek the consent of all clients regarding the representation, the sharing of confidences and secrets among the clients [MRPC 1.6(b)], and the charging of the lawyer's fee [MRPC 1.4, 1.8(f)]. The lawyer would not be able to represent the personal representative or the medical providers in any later attempt to resolve the dispute among them regarding the existence or amount of the bill claimed by the medical providers." Emphasis added.
In the present inquiry the lawyer, the lawyer discovered a dispute between the concurrent clients regarding the billing for services received from the treatment facility and the damages allegedly caused by the victim while resident at the facility. The inquirer has properly noted that the dispute triggers MRPC 1.7(a), in that representation of either party in the dispute will be directly adverse to a current client of the lawyer. The lawyer may not represent either client unless a disinterested lawyer would reasonably believe the relationship with the other client would not be adversely affected and the clients consent. In accord, RI-155.
In the facts given, the lawyer contacted the director on behalf of the victim to determine a range of settlement options in the personal injury case. Whereas in RI-155 the lawyer was attempting to obtain recovery for both the medical providers and the estate from the opposing party, in this inquiry the lawyer, acting on behalf of the victim only, is in contact with the director to attempt to facilitate settlement of the case by persuading the director to compromise the billings. Therefore the ethics question becomes whether the personal injury representation, including negotiation of the health care bills, would adversely affect the lawyer's relationship with the rehabilitative treatment facility, i.e., the "other client." The lawyer and the facility have an existing relationship; not only does the lawyer represent the facility in the court of appeals matter, but the lawyer also receives personal injury case referrals from the director of the facility. Without the cooperation of the health care providers, settlement of the personal injury case will be more difficult. The director's refusal to compromise the billing would mean less recovery dollars for the victim. Despite the lawyer's intent to advise both clients that the lawyer will not represent them in claims against each other, the lawyer cannot, in the context of the personal injury representation, avoid addressing the apparent dispute between the clients. Contrary to the situation in RI-155, in this inquiry the lawyer cannot proceed as successfully on the personal injury matter without an accommodation from the facility on the billing, the very matter in which the lawyer cannot represent either disputing party.
If may be possible for the facility and the victim to resolve their disputes independently of the personal injury litigation, with separate counsel representing the disputing parties. Whether this is a feasible option depends upon the stage of the personal injury case, the willingness of the victim and the facility to resolve their dispute, the timing of any resolution, etc. We have not been provided facts which would allow evaluation of this option. If an option of this type cannot be reasonably pursued, it appears that a disinterested lawyer could not reasonably believe the relationship with the facility would not be adversely affected by the lawyer's pursuing compromise of the facility's bills in order to pursue settlement of the personal injury case. Consent of the clients would not vitiate the conflict.
We must also address whether MRPC 1.7(b) is implicated. The lawyer may not continue in the personal injury representation if the representation would be materially limited by other duties owed by the lawyer. For instance, the lawyer cannot refrain from pursuing compromise of the health providers' bills because the lawyer represents the rehabilitative facility in the court of appeals matter, since refraining from such action materially limits the lawyer's ability to properly represent the personal injury client. As discussed above, a disinterested lawyer could not reasonably believe the personal injury representation would not be adversely affected.
Therefore, the lawyer must withdraw from the personal injury representation and the probate representation.