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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

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Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Kentucky Legal Ethics

1.7  Rule 1.7 Conflict of Interest: General Rule

1.7:100 Comparative Analysis of Kentucky Rule

1.7:101 Model Rule Comparison

In 1989, the Kentucky Supreme Court adopted KRPC 1.7.  The Kentucky rule is substantially the same as MR 1.7.  KRPC 1.7(a) identifies the occasions upon which a lawyer can represent a client even where the representation is "directly adverse" to another client. KRPC 1.7(b) explains when a lawyer may represent a client even where "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."  MR 1.7(a), on the other hand, defines a "concurrent conflict of interest."  Subsection (b) {MR 1.7(b)}contains a requirement that in order to properly consent to a conflict, the client must give "informed consent, confirmed in writing."  KRPC 1.7(a)(2) and (b)(2) require only that the client "consent[] after consultation."

Many of the comments to KRPC 1.7 and MR 1.7 contain similar information if not always the same language.  MR 1.7, Comment [2], for example, includes a list of steps to properly handle a conflicts situation; there is no such list in the comments to KRPC 1.7.  Further, the comments to KRPC 1.7 contain no counterpart to MR 1.7, Comment [12] which forbids sexual relationships between lawyer and client unless that relationship began before the lawyer-client relationship began.  Notably, KRPC 1.7, Comment [4] explains that the standard a lawyer must use to determine whether a conflict is consentable revolves around whether a "disinterested" lawyer would say that the representation is appropriate.  MR 1.7, Comment [15], on the other hand, requires the lawyer to decide whether he or she can "reasonably conclude" that the representation will be "competent and diligent."  MR 1.7 comments which have no counterpart in the KRPC 1.7 comments include Comment [20] {MR 1.7, Comment [20]}regarding consent in writing, Comment [21] {MR 1.7, Comment [21]} regarding revocation of consent, and Comment [22] {MR 1.7, Comment [22]} regarding client consent to future conflicts.  Where a lawyer takes inconsistent legal positions in different cases, KRPC 1.7, Comment [8] explains that neither client should be "adversely affected."  By way of illustration, Comment [8] {KRPC 1.7, Comment [8]} says that "it may be improper" to argue for conflicting legal positions in "cases pending at the same time in an appellate court."  MR 1.7, Comment [24] handles the problem more broadly by explaining that "[a] conflict of interest exists . . . if there is a significant risk that a lawyer&'s action on behalf of one client will materially limit the lawyer&'s effectiveness in representing another client in a different case;  for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client."

1.7:102 Model Code Comparison

DR 5-101(A) provided that "[e]xcept with the consent of his client after full disclosure, a lawyer shall not accept employment if the exercise of his professional judgment on behalf of the client will be or reasonably may be affected by his own financial, business, property, or personal interests." DR 5-105(A) provided that a lawyer "shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involved him in representing differing interests, except to the extent permitted under DR 5-105(C)."  DR 5-105(C) provided that "a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."  DR 5-107(B) provided that a lawyer "shall not permit a person who recommends, employs, or pays him to render legal services for another to direct or regulate his professional judgment in rendering such services."

KRPC 1.7 clarifies DR 5-105(A) by requiring that, when the lawyer&'s other interests are involved, not only must the client consent after consultation but also that, independent of such consent, the representation reasonably appears not to be adversely affected by the lawyer&'s other interests.  This requirement appears to be the intended meaning of the provision in DR 5-105(C) that "it is obvious that he can adequately represent" the client, and was implicit in EC 5-2, which stated that a lawyer "should not accept proffered employment if his personal interests or desires will, or there is a reasonable probability that they will, affect adversely the advice to be given or services to be rendered the prospective client."

1.7:200 Conflicts of Interest in General

The Restatement explains that there are four types of conflicts issues between attorney and client.  First, the lawyer may have responsibilities to other clients that could conflict with the needs of the client in question.  Second, the lawyer may have responsibilities due a former client that conflict with the needs of the client in question.  Third, the lawyer may owe responsibilities to a third party that cause the conflict.  Last, the lawyer may have personal interests that cause the conflict.  LGL-ALI § 121.

1.7:210 Basic Prohibition of Conflict of Interest

KRPC 1.7 is the general rule governing conflicts of interest.  At the base of the rule is the lawyer&'s duty of loyalty to the client.  KRPC 1.7, Comment [1].  First, a lawyer may not take on a representation that is directly adverse to another client unless both clients consent.  KRPC 1.7(a).  In addition, a lawyer may not represent a client if the quality of that representation "may be materially limited" by the lawyer&'s responsibilities to parties other than the client, unless the lawyer "reasonably believes the representation will not be adversely affected," and there has been client consent.  KRPC 1.7(b).

In general, two firms that often represent clients with adverse interests should arguably not even employ the same legal secretary or other nonlawyer employees.  The same would be true for law firms that share office space.  In order to safeguard client confidences, the firms would have to develop policies to ensure the secretary or other employee would not be assigned work involving conflicting interests and would not have access to confidential information involving clients with conflicting interests.  KBA E-406 (Nov. 1998).

1.7:220 Material Adverse Effect on Representation

In Kentucky, KRPC 1.7(b) requires that a lawyer not represent a client when that representation "may be materially limited by the lawyer&'s responsibilities to another client or to a third person, or by the lawyer&'s own interests."  However, the lawyer may go ahead with the representation if two requirements are satisfied.  First, the lawyer must reasonably believe that "the representation will not be adversely affected."  This is an objective standard.  Second, the client must "consent[] after consultation." 

In discussing a question under Rule 1.7(b), Kentucky ethics opinion KBA E-355 (1993) explains that where there is a question about whether a representation will be materially limited by a lawyer&'s other responsibilities, the first judgment must be made by the lawyer involved:  "The identification and resolution of conflicts is primarily the responsibility of the lawyer undertaking the representation."  However, the opinion goes on to "strongly suggest" that where there are questions about the effect of a lawyer&'s other interests on a particular representation, the client(s) should be consulted. 

[See Relevance of Appearance of Impropriety Standard, infra, at 1.9:230.]

1.7:230 Perspective for Determining Conflict of Interest

KRPC 1.7 adopts an objective standard for measuring conflicts of interest.  A conflict may be cured, in most cases, with client consent, and with the "reasonable belief" of the lawyer that the representation will not be adversely affected.  However, in addition to the objective standard, Kentucky has explicitly condoned the "appearance of impropriety" test.  In Lovell v. Winchester, 941 S.W.2d 466, 469 (Ky. 1997), the Kentucky Supreme Court explained that "[a]lthough the appearance of impropriety formula is vague and leads to uncertain results, it nonetheless serves the useful function of stressing that disqualification properly may be imposed to protect the reasonable expectation of former and present clients.  The impropriety standard also promoted the public&'s confidence in the integrity of the legal profession."  [See Relevance of Appearance of Impropriety Standard, infra, at 1.9:230.]

The Restatement expressly rejects the "appearance of impropriety" standard, warning that it may create the possibility that a court could label as "conflicted" "a situation that might appear improper to an uninformed observer or even an interested party."  The Restatement prefers the "objective" standard set out in the ethics rules.  LGL-ALI § 121, Comment c(iv).

1.7:240 Client Consent to a Conflict of Interest; Non-Consentable Conflicts

According to KRPC 1.7, Comment [4], clients may not consent to conflicts when a "disinterested lawyer would conclude that the client should not agree to the representation under the circumstances." 

While Rule 1.7 does not specifically use the term "informed consent," the Restatement provides that in order to have effective client consent the client must be capable of giving informed consent.  Where a client is legally unable to give consent, the lawyer must obtain consent from a guardian or other responsible party.  LGL-ALI § 122(c)(ii)

Another difficult question is whether clients may consent to future conflicts of interest.  Generally, under the Restatement, agreements that a client will consent to any future conflicts are ineffective.  However, depending on the situation, the sophistication of the client, and the availability of independent legal advice, agreements to waive future conflicts may be effective.  LGL-ALI § 122(d).

[See Conflicts of Interest in Criminal Litigation, infra, at 1.7:320].

1.7:250 Imputation of Conflict of Interest to Affiliated Lawyers [see 1.10:200]

[See Imputed Disqualification Among Current Affiliated Lawyers, infra, at 1.10:200.]

1.7:260 Sanctions and Remedies for Conflicts of Interest

In order to remain independent of other disciplinary agencies, the judiciary must adequately police itself.  Courts retain the power to disqualify lawyers where conflicts of interest arise. Fortune, Underwood & Imwinkelried, Modern Litigation and Professional Responsibility Handbook:  The Limits of Zealous Advocacy § 3.9.6 (2nd Ed. 2001) Attorneys may also challenge the actions of other attorneys through the processes of the local disciplinary authority.  Fortune, et al., § 20.1.

[See Representing Parties with Conflicting Interests in Civil Litigation, infra, at 1.7:310].

1.7:270 Positional Conflicts

A positional conflict occurs when "clients have opposite interests, but not in the same litigation or ‘matter.&'"  For example, a conflict might occur where one client wishes to argue for a particular reading of a law in one case, and another client wishes to argue for a different interpretation in another case.  In this case, the attorney should "analyze the potential harm to each client, refuse representation (or withdraw) when it appears likely that a ruling in favor of one client will probably harm the other, and otherwise obtain informed consent."  Fortune, Underwood & Imwinkelried, Modern Litigation and Professional Responsibility Handbook:  The Limits of Zealous Advocacy § 3.4.3 (2nd Ed. 2001).

1.7:280 Relationship to Other Rules (e.g., MRs 1.13, 2.2, 5.7, 6.3, 6.4)

KRPC 1.13 explicitly incorporates KRPC 1.7 at subsection (e), where it provides that a lawyer who represents an organization "may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7."  Thus, where the representation of a constituent would be directly adverse to the interests of the organization, or the representation may be materially limited by that relationship, the conflict may be cured by client consent after consultation, and a reasonable belief by the lawyer that the representation will not be adversely affected.  This, of course, is subject to the rule that where a disinterested lawyer would find that the client should not consent to a particular conflict, the conflict is not consentable.  KRPC 1.7, Comment [4].

KRPC 2.2 governs lawyers acting as intermediaries for clients.  It incorporates an objective standard similar to that in Rule 1.7 as it asks that lawyers "reasonably believe" that they can settle disputes in the best interests of all parties (KRPC 2.2(a)(2)), and that "the common representation can be undertaken impartially and without improper effect on other responsibilities" (KRPC 2.2(a)(3))

KRPC 6.3 governs membership in a legal services organization.  It allows a lawyer to participate in such an organization to the extent that service does not cause a non-consentable conflict under KRPC 1.7KRPC 6.3(a).

KRPC 6.4 provides that a lawyer&'s efforts to reform the law may cause a conflict with a client&'s interests.  Where the lawyer "knows that the interests of the client may be materially affected by a decision in which the lawyer participates, the lawyer shall disqualify himself from the matter."  While KRPC 6.4 requires that the lawyer "know" that a conflict may be imminent, it also requires only that the lawyer know that there "may be" a material effect on the representation.  The Comment specifically invokes Rule 1.7.

1.7:300 Conflict of Interest Among Current Clients (Concurrent Conflicts)

  •   Primary Kentucky References:  KRPC 1.7
  •   Background References:ABA Model Rule 1.7, Other Jurisdictions
  •   Commentary:  ABA/BNA §§ 51:101, 51:301, ALI-LGL §§ 128-131, Wolfram §§ 7.1-7.3
  •    Kentucky Commentary: 

1.7:310 Representing Parties with Conflicting Interests in Civil Litigation

A lawyer may not represent one client against another in a related matter.  In Kentucky Bar Ass&'n v. Roberts, 579 S.W.2d 107, 109 (Ky. 1979), an attorney undertook to represent a client, Mr. Akin, in a suit to recover money owed from a Mr. Jackson, while simultaneously representing Mr. Jackson in a related, but different, matter.  The Kentucky Supreme Court held that "[r]egardless of whether [the lawyer&'s] actions created an actual conflict of interest, they created a potential conflict between the interests of Akin and those of Jackson" and suspended the lawyer for 90 days.

Conflicts can also arise when lawyers switch firms.  KRPC 1.10, Comment [13], states that "if a lawyer while with one firm acquired no knowledge of information relating to a particular client of the firm, and that lawyer later joined another firm, neither the lawyer nor the second firm is disqualified from representing another client in the same or a related matter even though the interests of the two clients conflict."  However, according to KBA E-354 (1993), if prior to changing firms a lawyer performed substantial work on the same or a substantially related matter on behalf of a client, or otherwise obtained actual knowledge of information protected by Rules 1.6 and 1.9, then the lawyer and all other members of his or her new firm have a conflict. The conflict is resolved, however, with consent of the client under Rule 1.9. Manning v. Waring, Cox, James, Sklar & Allen, 849 F.2d 222 (6th Cir. 1988).

In addition, KBA E-350 (1992) holds that a prosecutor (and his partners and associates) should not try defendants with whom the prosecutor is embroiled in civil ligitgation. Kentucky Bar Ass&'n v. Lovelace, 778 S.W.2d 651 (Ky. 1989).

1.7:315 Insured-Insurer Conflicts [see also 1.8:720]

Arguably, the Model Rules support a "one-client model" for lawyers who represent insureds while the insurance company pays the bill.  The competing rule, the "two-client model," holds that both the insured and the insurance company are clients.  The "one-client model" insists that there is but one client, the insured.  Under this interpretation, the insurance company becomes a "third person" under the language of Rule 1.7(b)Comment [9] to Rule 1.7 holds that when an insurer and its insured have conflicting interests in a matter arising from a liability insurance agreement, and the insurer is required to provide special counsel for the insured, the arrangement should assure the special counsel&'s professional independence.  Under Rule 1.8(f), a third party payor must not interfere with the representation of a client. Fortune, Underwood & Imwinkelried, Modern Litigation and Professional Responsibility Handbook:  The Limits of Zealous Advocacy § 15.2 (2nd ed. 2001).  In Kentucky, according to KBA E-378 (1995), a lawyer may not represent both the insured and the insurer if the two have a conflict of interest. However, an attorney may represent both insurer and insured on unrelated matters. Continental Ins. Co. v. Hancock, 507 S.W.2d 146 (Ky. 1974).

According to ethics opinion KBA E-331 (1988), in the relationship between a lawyer, an insurance company, and the insured, a lawyer must keep in mind that his or her client is the insured.  Where the budget of the insurance company is limited, a lawyer may be required to withdraw if he or she cannot zealously represent the client.  See also KBA E-197 (1978), KBA E-340 (1990).

1.7:320 Conflicts of Interest in Criminal Litigation

Balancing the right of the accused to counsel provided in the Sixth Amendment is the judicial system&'s interest in preserving the integrity of the attorney-client relationship.  In Wheat v. United States, 486 U.S. 153, 108 S.Ct. 1692, 100 L.Ed.2d 140 (1988), the Supreme Court held that while representation of multiple defendants is not per se a violation of ethics rules, a court may refuse to accept an accused&'s waiver of a conflict problem where there is an actual conflict of interest and where there is a potential conflict of interest.  In reaching its decision, the Court pointed out other limitations on the client&'s right to choose his attorney.  For example, an accused may not choose an attorney "who has a previous or ongoing relationship with an opposing party." 

Co-defendants present another problem for defense attorneys.  Kentucky KRPC 1.7, Comment [6] warns of the dangers of representing co-defendants, suggesting that "[t]he potential for conflict of interest in representing multiple defendants in a criminal case is so grave that ordinarily a lawyer should decline to represent more than one codefendant."  Professors Fortune, Underwood, and Imwinkelried likewise advise that "[t]he wisest course is to refuse to represent more than one defendant unless ordered to do so by a court." Fortune, Underwood & Imwinkelried, Modern Litigation and Professional Responsibility Handbook:  The Limits of Zealous Advocacy § 14.3.1 (2nd Ed. 2001).

1.7:330 Multiple Representation in Non-Litigated Matters

KRPC 1.7(b)(2) requires that where more than one client is being represented, the lawyer must consult with those clients, explaining "the implications of the common representation and the advantages and risks involved." KRPC 1.7, Comment [11] explains that where the interests of the parties are "fundamentally antagonistic," the lawyer may not represent those parties against each other.  Where consent is required of multiple parties, it must be obtained from each individual party involved.  A conflict may arise where one party refuses to allow the lawyer to reveal confidential information necessary to reasonably inform another client to the extent necessary to obtain that client&'s consent.  KRPC 1.7, Comment [4].

In the context of divorce, Kentucky&'s ethics opinions provide guidance as to when an attorney may properly represent multiple clients.  KBA E-290 (1984) warns that an attorney should represent both sides in a "no fault" divorce, only in "rare cases."  While the opinion stops short of issuing a per se rule, it notes problems such as the tendency of a lawyer to be less zealous in pursuit of the best result for each client when the lawyer represents both, and the possibility that a conflict will arise that might send the case to litigation and cause the lawyer to withdraw from the representation altogether. 

In a related opinion, KBA E-245 (1981) provides that where a husband and wife have used the same attorney to complete their estate plan, that attorney may represent one of the parties in a later divorce action.  As a consequence of the joint estate plan, the parties must waive their privileges and confidentiality protections; therefore, there will be no privilege or confidentiality problem in a later representation.

1.7:340 Conflicts of Interest in Representing Organizations

KRPC 1.7, Comment [13] warns that where a lawyer represents a corporation or other entity and also serves on the board of directors, that lawyer must take care to weigh the benefits against the  risks of potential conflicts of interest.  The Comment suggests that if a lawyer feels his "independence of professional judgment" might be hampered by the dual roles, the lawyer should not serve on the board of directors.  See KBA E-391 (1996).

Kentucky ethics opinion KBA E-148 (1976) explains that a lawyer who was formerly employed by a bank may represent a new client against the bank in a matter unrelated to any that he handled for the bank previously.  Likewise, according to KBA E-42 (1971), a lawyer who represented a corporation and was an officer of the same when the corporation transferred its assets to a new corporation, may not represent the new corporation against the prior owner of the assets in a matter related to the transfer.

Another conflict that may develop in the context of representation of corporations or other entities is the question of who a lawyer represents.  Rule 1.13 explains that the attorney represents "the organization acting through its duly authorized constituents."  Further, when it appears to the lawyer that one of the constituents might misconstrue the nature of the representation, the lawyer&'s duty is to explain that he or she represents the entity and not the individual constituent.  See the discussion of Rule 1.13 for a more detailed analysis.

1.7:400 Conflict of Interest Between Current Client and Third-Party Payor

According to KRPC 1.7, Comment [9], if a client is informed of the third-party payor, and consents, the lawyer may accept payment from one other than the client.  [See Rule 1.8 et seq.].

[See Insured-Insurer Conflicts, supra, at 1.7:315.]

1.7:410 Insured-Insurer Conflicts [see 1.7:315 and 1.8:720]

[See Insured-Insurer Conflicts, supra, at 1.7:315].

1.7:420 Lawyer with Fiduciary Obligations to Third Person [see 1.13:520]

As an example of a lawyer&'s obligations in this regard, in representing a fiduciary of an estate or trust, the lawyer&'s client is the fiduciary, and not the estate, trust, or beneficiaries.  The fact that a fiduciary has obligations to the beneficiaries does not in itself either expand or limit the lawyer&'s obligations to the fiduciary, nor does it impose on the lawyer obligations toward the beneficiaries that the lawyer would not have toward other third parties. The lawyer has a duty to advise parties who are involved with the estate or trust regarding the identity of the lawyer&'s client and the lawyer&'s obligations to that client.  In such a situation the lawyer may represent the fiduciary and the beneficiaries provided the lawyer obtains the consent of all parties after consultation. KBA E-401 (1998).

1.7:500 Conflict of Interest Between Current Client and Lawyer&'s Interest [see also 1.8:200]

KRPC 1.7(b) requires that a lawyer must not allow his or her own interests to materially affect the representation of a client.  See also KRPC 1.7, Comment [5] (illustrating that a lawyer&'s business interests must not affect representation of a client).

The Kentucky Supreme Court handed down a one-year suspension in 1988 to an attorney who filed a divorce settlement in which he had a personal economic interest without disclosing that interest to the clients.  He also failed to obtain consent after consultation from the clients.  Kentucky Bar Ass&'n v. Hibberd, 753 S.W.2d 547 (Ky. 1988).

Unlike the Model Rules, Kentucky has no explicit prohibition against lawyers engaging in sexual relationships with their clients.  [See Model Rule Comparison sections, infra, at 1.7:101 and 1.8:101.]  MR 1.7, Comment [12] prohibits lawyers from having sexual relations with clients unless the relationship began before the representation.  [See Sexual Relations with Clients, infra, at 1.8:210.]