SBM - State Bar of Michigan

CI-1071

March 15, 1985

SYLLABUS

    A lawyer who is "of counsel" to a law firm may not undertake the representation of a law firm's corporate client in contemplated litigation where a member of the law firm, who is also a vice president of the corporate client, will testify as a witness in such litigation, unless withdrawal would work a substantial hardship on the corporate client.

    Reference: MCPR DR 5-101(B).

TEXT

A lawyer represents a corporation of which he is a vice president. The lawyer negotiated and prepared a contract on behalf of the corporation. The corporation now seeks to commence litigation for breach of the contract and desires to retain a lawyer who is of counsel to the law firm of the lawyer who negotiated and prepared the contract and who is all likelihood would be called as a witness for the corporation in both a legal and business capacity. The inquirer asks whether the "of counsel" may take the case.

MCPR DR 5-101(B) states:

    "(B) A lawyer shall not accept employment in contemplated or pending litigation if he knows or it is obvious that he or a lawyer in his firm ought to be called as a witness, except that he may undertake the employment and he or a lawyer in his firm may testify:

      "(1) If the testimony may relate solely to an uncontested matter.

      "(2) If the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony.

      "(3) If the testimony will relate solely to the nature and value of legal services rendered in the case by the lawyer or his firm to the client.

      "(4) As to any matter, if refusal would work a substantial hardship on the client because of the distinctive value of the lawyer or his firm as counsel in the particular case."

In order to avoid disqualification it will be necessary for the law firm to first determine whether or not its refusal to represent the client would constitute a substantial hardship for the client under MCPR DR 5-101(B)(4). This analysis should be undertaken with the full participation of the client. Substantial hardship means something more than inconvenience, slight delay and the like and is intended to refer to circumstances which would result in serious prejudice. It is almost inconceivable that a substantial hardship within the meaning of the Code could arise when the problem is identified before the litigation is even instituted, since at that point in time no lawyer has invested any effort in preparing the case and the corporation is free to hire anyone it chooses.

It is suggested that in all negotiations prior to the instigation of litigation and in all pre-trial proceedings after commencement of litigation that opposing counsel and the court be informed that it is contemplated that a member of the law firm representing the client may offer testimony. This will give opposing counsel the opportunity to make timely objections and to file any motions before the court.