Ten Things To Know About Freelance Law: #6 Conflicts of Interest

In this post, I explore how conflict of interest rules apply in the freelance law context and offer guidelines for avoiding imputed conflicts.   It is crucial that both the freelance lawyer and hiring lawyer properly recognize and evaluate conflict of interest issues throughout their working relationship.  This is one of, if not the most, important topics in freelance law.

As discussed in the third post in this series, a freelance lawyer is bound by all of the Colorado Rules of Professional Conduct.  Thus, conflict of interest rules apply to freelance lawyers.  American Bar Association, Standing Committee on Ethics and Professional Responsibility, Formal Opinion 88-356, Temporary Lawyers, December 16, 1988; Colorado Bar Association, Formal Opinion 105, Opinion on Temporary Lawyers, May 22, 1999.

A lawyer shall not represent a client if there is a concurrent conflict of interest.  C.R.P.C. 1.7(a).  A concurrent conflict exists if the representation of one client is directly adverse to another client, even if the matters are unrelated.  C.R.P.C. 1.7(a); see also American Bar Association, Opinion 88-356; Colorado Bar Association, Opinion 105.  A concurrent conflict also exists if the representation of one client will be materially limited by the lawyer’s responsibility to another client, a third party, or the lawyer’s personal interests.  C.R.P.C. 1.7(a).   These conflicts of interest can be waived by a client who gives informed consent.  C.R.P.C. 1.7(b). 

A lawyer shall not represent a client if there is a conflict with a former client.  A lawyer who has represented a client shall not later represent another person in “the same or substantially related matter in which that person’s interests are materially adverse to the interests of the former client.”  C.R.P.C. 1.9(a).  Again, this conflict can be waived by a client who gives informed consent.  Id.

Before undertaking representation and forming an attorney-client relationship, the freelance lawyer must identify conflicts of interest, and, if necessary, obtain a waiver from the client(s).  The hiring lawyer must provide the freelance lawyer with all of the information necessary for the freelance lawyer to evaluate potential conflicts of interest, including the name of the client, opposing parties, related parties, and associated counsel. 

The real action in freelance law is the potential for conflicts of interest to be imputed between the hiring lawyer and the freelance lawyer.  If the hiring lawyer and freelance lawyer are deemed to be “associated in a firm,” then neither of them shall represent a client if either one of them practicing alone would be prohibited from doing so.   C.R.P.C. 1.10(a). 

Freelance lawyers and hiring lawyers have a co-equal interest in avoiding imputed conflicts of interest.   The stakes are high.  If the freelance lawyer is deemed associated with multiple hiring law firms, “then the current and former clients of each firm might be deemed the current and former clients of the [freelance] lawyer and all of all the other firms with which the [freelance] lawyer is associated.  In that situation, a firm could face disqualification if one of its clients were adverse to the client of another firm with whom the [freelance] lawyer is associated, even if the [freelance] lawyer did not work on any matter for any client.”  Colorado Bar Association, Opinion 105.   This situation serves no one’s interests—it doesn’t help the hiring lawyer or the freelance lawyer, and it certainly does not help the client.

Thankfully, by exercising some common sense and diligence, the freelance lawyer and hiring lawyers can avoid being deemed associated in a firm and having their conflicts imputed to each other.  

The freelance lawyer and the hiring lawyer should understand when a freelance lawyer will be deemed associated with the hiring lawyer’s firm.  There are three main factors in determining whether a freelance lawyer and hiring lawyer will be deemed to be associated in a firm. 

The first and “key factor in determining whether the [freelance lawyer] is associated with a firm” is the freelance lawyer’s “access to information regarding the firm’s other clients.”  Colorado Bar Association, Opinion 105; American Bar Association, Opinion 88-356. 

Second, “the manner in which the temporary lawyer is presented to and perceived by clients, courts, and third-parties is another important factor in determining whether the temporary lawyer is associated with a firm.” Id. 

Third, both the American Bar Association and the Colorado Bar Association have adopted the functional analysis approach, which examines “the facts and circumstances involved in the relationship between the temporary lawyer and the firm.” Id.

There are some concrete actions and best practices that the freelance lawyer and hiring lawyer can take to prevent imputed conflicts.

DO

·       Screen the freelance lawyer from any confidential information related to the hiring firm’s other clients.  Password protect files if the freelance lawyer has access to the firm’s server.  Better yet, only provide the freelance lawyer with the information necessary for the representation of each client;

·       Document the steps taken to ensure effective screening;

·       Keep accurate records of all matter and clients that the freelance lawyer has worked on;

·       Maintain separate working environments;

·       Hold the freelance lawyer out as an independent contractor working for the firm on a limited basis;

·       Issue the freelance lawyer a W-9/1099.

DON’T

·       Discuss client matters that the freelance lawyer is not working on in front of the freelance lawyer.  Don’t involve the freelance lawyer in “all firm” meetings where other clients are discussed;

·       Allow the freelance lawyer access to other clients’ files;

·       Allow the freelance lawyer to use the firm’s letterhead;

·       Hold the freelance lawyer out an employee, associate, or of counsel;

·       Imply that the freelance lawyer is associated with the firm.

By following these guidelines, the freelance lawyer and hiring lawyer should be able to avoid the appearance of being associated in a firm and prevent imputed conflicts.

In the next post, I will consider confidentiality issues in connection with freelance legal services.

Of course, rules and ethical obligations may vary by jurisdiction, and this post does not constitute legal advice.