When Business Decisions of a Clients Create a Current Client Conflict of Interest: Implications in a Complex Ethical Landscape

Abstract

Lawyers have an ethical duty to be loyal to their clients. Conflict of interest questions involving loyalty are increasingly at issue in the modern climate of mergers and acquisitions. When there is a traditional client conflict the courts favor disqualification, finding the risk to loyalty values too extreme. Yet, when there is a corporate affiliate situation, or when the conflict is created by client business decisions and not the law firm, the balance may and should be shifted. This Note argues that courts should follow the flexible, practical, balancing of facts and circumstances approach instead of a strict per se rule. This balancing of facts and circumstances must consider all facts that implicate loyalty, including the law firm's fault in creating the conflict. This Note concludes that a more flexible balancing approach, which includes whether the law firm is at fault in creating the conflict, adequately protects loyalty values while preventing the misuse of disqualification motions as a litigation tactic.