Legal Question in Legal Ethics in New York
Attorney acting against former client to benefit a different client
A law firm was representing a Limited Partnership and both its general partners individually for more than a decade. It was also representing the note holders who controlled all the equity in the Real Estate Deals. A dispute arose between the various parties. Is the law firm who represented both parties allowed to remain as the lawyer or must he resign for conflict of interest? If an internal memo of the law firm proves the law firm knew of the conflict but deliberately didn't tell the client because it wanted to collect legal fees, Is it considered fraud or only breach of fiduciary duty.?
1 Answer from Attorneys
Re: Attorney acting against former client to benefit a different client
The canons of ethics require that lawyers avoid all conflicts of interest between clients except to the extent that full disclosure is made and the conflict is one which is waiveable and is in fact waived by the clients affected.
For a law firm to deliberately conceal a conflict of interest to collect fees is a serious ethical violation as well as a civil violation and, if true, would be dealt with most harshly by the Bar Association.
Such actions sound more like fraud than simple breach of fiduciary duty.
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