Attorney Y represents a small business, Client Z, in various corporate matters. Client Z's CEO asks Attorney Y to draft a prenuptial agreement for the CEO's upcoming marriage. The CEO insists that Attorney Y keep the agreement strictly confidential from Client Z's board of directors, even though the agreement involves significant personal assets that could impact the CEO's financial stability and, indirectly, the business. What is Attorney Y's ethical obligation?
- AAttorney Y may draft the agreement as long as the CEO gives informed consent to the potential conflict.
- BAttorney Y must decline to draft the prenuptial agreement due to the conflict of interest with Client Z.
- CAttorney Y can draft the agreement and keep it confidential from the board, as the CEO is an individual client in this matter.
- DAttorney Y may draft the prenuptial agreement, but must decline to keep it confidential from the board if it impacts the business.
Show answer & explanationAnswer & explanation
Correct answer: B. Attorney Y must decline to draft the prenuptial agreement due to the conflict of interest with Client Z.
This is a material limitation conflict under Rule 1.7(a)(2) because Attorney Y's representation of the CEO (as an individual client for the prenup) would be materially limited by Attorney Y's duties to Client Z (the corporation). The CEO is asking Attorney Y to keep information confidential that could be vital to the corporate client. As an attorney for the corporation, Attorney Y owes duties to the entity itself, not just its officers. The request for confidentiality from the board creates an irreconcilable conflict because Attorney Y cannot fulfill duties to both the CEO's personal confidentiality and the corporation's need for information that impacts its financial stability. This is likely a non-consentable conflict, meaning Attorney Y must decline the representation of the CEO for the prenup.
Why the other options are wrong
- A. The conflict here is likely non-consentable because Attorney Y cannot reasonably believe they can represent both the CEO and the corporation competently under these conditions, especially regarding confidentiality.
- C. This is incorrect. The CEO is an individual, but Attorney Y's pre-existing duty to the corporate client takes precedence and creates an unresolvable conflict with the CEO's request for confidentiality.
- D. This option attempts to resolve the conflict but doesn't fully address the dual representation. Declining the prenup is the safer choice.
Corporate Client vs. Officer Conflict (Confidentiality)
When a lawyer represents a corporation, a request by an officer for personal representation, where the officer demands confidentiality from the corporation on matters that could materially impact the corporation, creates a non-consentable conflict of interest for the lawyer.
- Lawyer for a corporation represents the entity, not individual officers.
- An officer's personal interests may conflict with the corporation's.
- Demanding confidentiality from the board on corporate-impacting issues creates conflict.
- This is often a non-consentable material limitation conflict.
Memory trick: CEO's Covert Choices Clash Corporate Concerns, Creating Crisis.