Conflict of interest in a

regular lawyer-client
relationship
Problem Areas in Legal Ethics
Arellano University School of Law Arellano Law Foundation
2015-2016

COI is everywhere

Conflicts of interest are not the exclusive headache of large,

urban, multi-office law firms. Conflicts of interest arise within and
affect law practices of every size, geographical location and
discipline. The number of clients, adverse parties, and interested
non-parties with whom attorneys become involved throughout
their careers is truly staggering and invariably underestimated.

Extreme case of Conflict of Interest

The most obvious conflicts of interest are those in which the

lawyer's personal interests clash with those of the client.

Rule on Conflicting Interests

It is generally the rule based on sound public policy that attorney

cannot represent diverse interest. It is highly improper to
represent both sides of an issue.

Competitor Conflicts

Courts have found that a competitor conflict is present when the

lawyer attempts to represent two competitors on a material
aspect of their competition.

Whose interest?

It is, of course, a hornbook proposition that it is the client, and

not the lawyer, that defines the client's interests and instructs the
lawyer about them.

Degree of involvement

The greater the involvement in the client's affairs the greater the
danger that confidences (where such exist) will be revealed.

 Closed file conflicts

Involve representation adverse to a former client in the same or

substantially related matters.

Absolute prohibition from

representation
Hornilla case provides an absolute prohibition from
representation with respect to opposing parties in the
same case.
In other words, a lawyer cannot change his
representation from one party to the latter's opponent
in the same case, as in this case. Tulio v. Atty.
Buhangin, A.C. No. 7110, April 20, 2016

Doctrine of imputed knowledge

Doctrine of imputed knowledge is based on the assumption that

an attorney, who has notice of matter affecting his client, has
communicated the same to his principal in the course of
professional dealings. The doctrine applies regardless of whether
or not the lawyer actually communicated to the client what he
learned in his professional capacity, the attorney and his client
being one judicial person.

Knowledge of one member of a law firm will be imputed by

inference to all members of that firm; free flow of information
within the partnership.

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Preliminary conflict of interest check

Whenever a prospective client seeking legal assistance contacts an

attorney, the attorney should politely but firmly decline to
discuss the matter in detail until a preliminary conflict of
interest check can be performed.
As the adjective suggests, preliminary conflict of interest
checks should ideally be performed before the prospective
client divulges additional confidential information which may
conflict the attorney out of current or future representations.
Rule 15.01. - A lawyer, in conferring with a prospective client, shall
ascertain as soon as practicable whether the matter would
involve a conflict with another client or his own interest, and if so,
shall forthwith inform the prospective client.

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CANON 21 - A lawyer shall preserve the confidence

and secrets of his client even after the attorney-client
relation is terminated

Rule 21.02 - A lawyer shall not, to the disadvantage of his client,

use information acquired in the course of employment, nor
shall he use the same to his own advantage or that of a third
person, unless the client with full knowledge of the circumstances
consents thereto.

Rule 21.07 - A lawyer shall not reveal that he has been

consulted about a particular case except to avoid possible
conflict of interest.

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General Rule in a law firm

Rule 21.04 - A lawyer may disclose the affairs of a client of the

firm to partners or associates thereof unless prohibited by the
client.

An information obtained from a client by a member or assistant of

a law firm is information imparted to the firm. This is not a
mere fiction or an arbitrary rule; for such member or assistant, as
in our case, not only acts in the name and interest of the firm, but
his information, by the nature of his connection with the firm is
available to his associates or employers. Hilado v. David, et.
Al., G.R. No. L-961, September 21, 1949

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CANON 15 - A lawyer shall observe candor, fairness

and loyalty in all his dealings and transactions with
his clients
Rule 15.01. - A lawyer, in conferring with a prospective client, shall
ascertain as soon as practicable whether the matter would involve
a conflict with another client or his own interest, and if so, shall
forthwith inform the prospective client.
Rule 15.03. - A lawyer shall not represent conflicting interests
except by written consent of all concerned given after a full
disclosure of the facts.
Rule 15.04. - A lawyer may, with the written consent of all
concerned, act as mediator, conciliator or arbitrator in settling
disputes.
Rule 15.05. - A lawyer when advising his client, shall give a candid
and honest opinion on the merits and probable results of the
client's case, neither overstating nor understating the prospects of
the case.
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Rule 15.08. - A lawyer who is engaged in another profession or

occupation concurrently with the practice of law shall make clear
to his client whether he is acting as a lawyer or in another capacity.

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Confidentiality of information is not

relevant in COI

The rule on conflict of interests covers not only cases in which

confidential communications have been confided but also those in
which no confidence has been bestowed or will be used. Atty. Jalandoni v. Atty. Villarosa, AC 5303, June 15, 2006

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Unqualified opposing interest of new

and former clients

The rule prohibits a lawyer from representing new clients whose

interests oppose those of a former client in any manner,
whether or not they are parties in the same action or in totally
unrelated cases. - Atty. Jalandoni v. Atty. Villarosa, AC 5303, June
15, 2006

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Another test of the inconsistency of interests is whether the acceptance of

a new relation will prevent an attorney from the full discharge of his duty
of undivided fidelity and loyalty to his client or invite suspicion of
unfaithfulness or double-dealing in the performance thereof, and also
whether he will be called upon in his new relation to use against his first
client any knowledge acquire in the previous employment.

The first part of the rule refers to cases in which the opposing parties are
present clients either in the same action or in a totally unrelated case;
the second part pertains to those in which the adverse party against
whom the attorney appears is his former client in a matter which is
related, directly or indirectly, to the present controversy. - Atty.
Jalandoni v. Atty. Villarosa, AC 5303, June 15, 2006

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Counsel of corporation cannot represent

members of board of directors

After due deliberation on the wisdom of this doctrine, we are

sufficiently convinced that a lawyer engaged as counsel for a
corporation cannot represent members of the same corporations
board of directors in a derivative suit brought against them. To do
so would be tantamount to representing conflicting interests,
which is prohibited by the Code of Professional Responsibility.
(Hornilla v. Atty. Salunat, A.C. No. 5804, July 1, 2003)

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Degree of adverse interest, intention or

motive are not material

An attorney owes to his client undivided allegiance. After being

retained and receiving the confidences of the client, he cannot,
without the free and intelligent consent of his client, act both for
his client and for one whose interest is adverse to, or conflicting
with that of his client in the same general matter. The
prohibition stands even if the adverse interest is very slight ;
neither is it material that the intention and motive of the
attorney may have been honest- Lim Jr. v. Atty. Villarosa, A.C. No.
5303, June 15, 2006

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As to who initiate engagement

is immaterial

To negate any culpability, respondent explained that he did not

offer his legal services to accused Avila and Ilo but it was the two
accused who sought his assistance in executing their
extrajudicial confessions. Nonetheless, he acceded to their request
to act as counsel after apprising them of their constitutional rights
and after being convinced that the accused were under no
compulsion to give their confession. - Perez v. Atty. Dela Torre, AC
6160, March 30, 2006

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Retained counsel of either party cannot act as

mediator without consent

Even respondents alleged effort to settle the existing controversy

among the family members was improper because the written
consent of all concerned was still required. A lawyer who acts
as such in settling a dispute cannot represent any of the
parties to it. - Lim Jr. v. Atty. Villarosa, A.C. No. 5303, June 15,
2006

Rule 15.04. - A lawyer may, with the written consent of all

concerned, act as mediator, conciliator or arbitrator in settling
disputes.

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Nature of the case is irrelevant

The claim of respondent that there is no conflict of interests in this

case, as the civil case handled by their law firm where Gonzales is
the complainant and the criminal cases filed by Gonzales against
the Gatcheco spouses are not related, has no merit. The
representation of opposing clients in said cases, though unrelated,
constitutes conflict of interests or, at the very least, invites
suspicion of double-dealing which this Court cannot allow. Gonzales v. Atty. Cabucana, A.C. No. 6836, January 23, 2006

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Dismissed employee and counsel of

record incompatible

In the instant case, quite apart from the issue of validity of the 1990
compromise agreement, this Court finds fault in respondent's omission of
that basic sense of fidelity to steer clear of situations that put his loyalty
and devotion to his client, the faculty members of UST, open to question.
Atty. Mario both as lawyer and president of the union was duty
bound to protect and advance the interest of union members and
the bargaining unit above his own. This obligation was jeopardized
when his personal interest as one of the dismissed employees of UST
complicated the negotiation process and eventually resulted in the
lopsided compromise agreement that rightly or wrongly brought money
to him and the other dismissed union officers and directors, seemingly or
otherwise at the expense of the faculty members. - Dr. Gamilla et. al. v.
Atty. Mario Jr., A.C. No. 4763, March 20, 2003

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Client of law firm is the client of every

partners and associates

Respondent further argued that it was his brother who represented

Gonzales in the civil case and not him, thus, there could be no
conflict of interests. We do not agree. As respondent admitted, it
was their law firm which represented Gonzales in the civil case.
Such being the case, the rule against representing conflicting
interests applies. - Gonzales v. Atty. Cabucana, A.C. No. 6836,
January 23, 2006

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Vicarious disqualification

Traditionally, if a lawyer is ineligible to represent a particular

client, all members of the lawyer's firm also are ineligible.
The basis for vicarious disqualification is the "presumption of
shared confidences," which seeks to prevent disclosure of client
confidences, preserve counsel loyalty, and avoid the appearance of
impropriety.

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Professional engagement starts the moment

the lawyer listens to his prospective client

An attorney is employed that is, he is engaged in his professional

capacity as a lawyer or counselor when he is listening to his
client s preliminary statement of his case, or when he is giving
advice thereon, just as truly as when he is drawing his client s
pleadings, or advocating his client s pleadings, or advocating his
client s cause in open court. - Atty. Catalan v. Atty. Silvosa A.C. No.
7360 [2012]

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Good faith is not a defense

Indeed, the prohibition against representation of conflicting

interests applies although the attorneys intentions were honest
and he acted in good faith. - Atty. Catalan v. Atty. Silvosa A.C. No.
7360 [2012]

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Consent ineffective

A lawyer may not properly represent conflicting interests even

though the parties concerned agree to the dual representation
where:
1. the conflict is between the attorneys interest and that of a client,
or
2. between a private clients interests and that of the government or
any of its instrumentalities.
3. between an accused and counsel.

Section 12. (Article III of the Constitution)

(1) Any person under investigation for the commission of an offense shall
have the right to be informed of his right to remain silent and to have
competent and independent counsel preferably of his own choice. If
the person cannot afford the services of counsel, he must be provided with
one. These rights cannot be waived except in writing and in the presence
of counsel.

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Three tests to determine conflicting

interests

The first is when, on behalf of one client, it is the attorneys duty to

contest for that which his duty to another client requires him to
oppose or when this possibility of such situation will develop
(conflicting duties).

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The second test is whether the acceptance of the new relation will
prevent a lawyer from the full discharge of his duty of undivided
fidelity and loyalty to his client or will invite suspicion of
unfaithfulness or double-dealing in the performance thereof
(Invitation of suspicion).

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The third test is whether a lawyer will be called upon in his new
relation to use against the first client any knowledge acquired in
the previous employment (use of prior knowledge obtained).

Representing conflicting interests would occur only where the

attorneys new engagement would require her to use against a
former client any confidential information gained from the
previous professional relation.
The prohibition did not cover a situation where the subject matter
of the present engagement was totally unrelated to the previous
engagement of the attorney.
- Seares, Jr. v. Atty. Gonzales-Alzate, Adm. Case No. 9058
November 14, 2012

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Remember: The test to determine whether there is a conflict of

interest in the representation is PROBABILITY, not certainty of
conflict.

It is of no moment that the lawyer would not be called upon to contend for
one client that which the lawyer has to oppose for the other client, or that
there would be no occasion to use the confidential information acquired
from one to the disadvantage of the other as the two actions are wholly
unrelated. It is enough that the opposing parties in one case, one of
whom would lose the suit, are present clients and the nature or
conditions of the lawyers respective retainers with each of them would
affect the performance of the duty of undivided fidelity to both clients. Quiambao v. Atty. Bamba, Adm. Case No. 6708 August 25, 2005

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Effects of Representing Adverse Interests

1.
Disqualification as counsel of new client on petition of former
client.
2.
Where such is unknown to, becomes prejudicial interests of
the new client, a judgment against such may, on that ground be set
aside.
3.
A lawyer can be held administratively liable through
disciplinary action and may be held criminally liable for betrayal of
trust.
4.
The attorneys right to fees may be defeated if found to be
related to such conflict and such was objected to by the former client,
or if there was a concealment and prejudice by reason of the
attorneys previous professional relationship with the opposite party.

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What are the types of conflict of interest?

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Successive representation - when a lawyer or law firm seeks to

represent a client whose interests are adverse to a former
client without the former client's consent. The rule against
simultaneous representation is based principally on the duty of
undivided loyalty.

Unlike simultaneous representation, successive representation

is not prima facie improper. The duty to preserve client
confidences is the primary ethical consideration implicated by
successive representation.
Successive representation implicates both the duty of loyalty
and the preservation of the attorney-client relationship .

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Suspicion of Double-dealing even if the case

is unrelated

We do not sustain respondents theory that since the ejectment

case and the replevin case are unrelated cases fraught with
different issues, parties, and subject matters, the prohibition is
inapplicable. His representation of opposing clients in both
cases, though unrelated, obviously constitutes conflict of
interest or, at the least, invites suspicion of double-dealing. Quiambao v. Atty. Bamba, Adm. Case No. 6708 August 25, 2005

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Does the lawyer have to be the counsel-ofrecord for the other party to violate this
provision?

To be guilty of representing conflicting interests, a counsel-of-record

of one party need not also be counsel-of-record of the adverse
party. He does not have to publicly hold himself as the counsel of the
adverse party, nor make his efforts to advance the adverse partys
conflicting interests of record--- although these circumstances are the
most obvious and satisfactory proof of the charge. It is enough that the
counsel of one party had a hand in the preparation of the pleading
of the other party, claiming adverse and conflicting interests with
that of his original client. To require that he also be counsel-of-record
of the adverse party would punish only the most obvious form of
deceit and reward, with impunity, the highest form of disloyalty.
Artezuela v. Atty. Maderazo, A.C. No. 4354. April 22, 2002

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Only instance when a lawyer can

represent conflicting interest

A lawyer cannot represent conflicting interests except by written

consent of all concerned given after a full disclosure of the facts.
Santos Ventura Hocorma Foundation, Inc. v. Atty. Funk, A.C. No.
9094
August 15, 2012

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Limit of full disclosure

A lawyer is forbidden from representing a subsequent client against a

former client when the subject matter of the present controversy is
related, directly or indirectly, to the subject matter of the previous
litigation in which he appeared for the former client. Conversely, he may
properly act as counsel for a new client, with full disclosure to the latter,
against a former client in a matter wholly unrelated to that of the
previous employment, there being in that instance no conflict of
interests.
Where, however, the subject matter of the present suit between the
lawyers new client and his former client is in some way connected with
that of the former clients action, the lawyer may have to contend for
his new client that which he previously opposed as counsel for the former
client or to use against the latter information confided to him as his
counsel. - Pormento, Sr. v. Atty. Pontevedra, A.C. No. 5128. March 31,
2005

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Purpose and intention is immaterial

Respondent contends that he handled the defense of the accused

in the subject criminal case for humanitarian reasons and with the
honest belief that there exists no conflict of interests. However, the
rule is settled that the prohibition against representation of
conflicting interests applies although the attorneys intentions
and motives were honest and he acted in good faith.
Moreover, the fact that the conflict of interests is remote or merely
probable does not make the prohibition inoperative. - Pormento,
Sr. v. Atty. Pontevedra, A.C. No. 5128. March 31, 2005

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Termination of A-C relations is not a

justification

Respondent also asserts that when he accepted employment in

Criminal Case No. 3159, the attorney-client relations between him
and complainant in Civil Case No. 1648 had already been
terminated. This defense does not hold water because the
termination of the relation of attorney and client provides no
justification for a lawyer to represent an interest adverse to
or in conflict with that of the former client. Pormento, Sr. v.
Atty. Pontevedra, A.C. No. 5128. March 31, 2005

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Acquired knowledge of former clients

doings is indelible

The reason for this is that a lawyer acquires knowledge of his

former client's doings, whether documented or not, that he
would ordinarily not have acquired were it not for the trust and
confidence that his client placed on him in the light of their
relationship. It would simply be impossible for the lawyer to
identify and erase such entrusted knowledge with faultless
precision or lock the same into an iron box when suing the former
client on behalf of a new one. - Santos Ventura Hocorma
Foundation, Inc. v. Atty. Funk, A.C. No. 9094 August 15, 2012

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Good faith and honest intention is not a

defense

That the representation of conflicting interest is in good faith and

with honest intention on the part of the lawyer does not make the
prohibition inoperative. - Quiambao v. Atty. Bamba, Adm. Case
No. 6708 August 25, 2005

Although there are instances where lawyers cannot decline

representation, they cannot be made to labor under conflict of
interest between a present client and a prospective one.
Quiambao v. Atty. Bamba, Adm. Case No. 6708 August 25, 2005

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The prohibition against conflict of interest rests on

five rationales, rendered as follows:

x x x. First, the law seeks to assure clients that their lawyers will
represent them with undivided loyalty. A client is entitled to be
represented by a lawyer whom the client can trust. Instilling such
confidence is an objective important in itself. x x x.
Second, the prohibition against conflicts of interest seeks to
enhance the effectiveness of legal representation. To the extent
that a conflict of interest undermines the independence of the
lawyers professional judgment or inhibits a lawyer from working
with appropriate vigor in the clients behalf, the clients
expectation of effective representation x x x could be
compromised. - Samson v. Atty. Era, A.C. No. 6664 July 16, 2013

45

Cont

Third, a client has a legal right to have the lawyer safeguard the clients
confidential information xxx.1wphi1 Preventing use of confidential client
information against the interests of the client, either to benefit the
lawyers personal interest, in aid of some other client, or to foster an
assumed public purpose is facilitated through conflicts rules that reduce
the opportunity for such abuse.
Fourth, conflicts rules help ensure that lawyers will not exploit clients,
such as by inducing a client to make a gift to the lawyer xxx.
Finally, some conflict-of-interest rules protect interests of the legal system
in obtaining adequate presentations to tribunals. In the absence of such
rules, for example, a lawyer might appear on both sides of the litigation,
complicating the process of taking proof and compromise adversary
argumentation x x x. - Samson v. Atty. Era, A.C. No. 6664 July 16, 2013

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Informed consent must be written

A client's implied consent is insufficient to waive a potential

conflict of interest.
Rule 15.03. - A lawyer shall not represent conflicting interests except
by written consent of all concerned given after a full disclosure of
the facts.
While the respondent may assert that the complainant expressly
consented to his continued representation in the ejectment case, the
respondent failed to show that he fully disclosed the facts to both his
clients and he failed to present any written consent of the
complainant and AIB as required under Rule 15.03, Canon 15 of the
Code of Professional Responsibility. - Quiambao v. Atty. Bamba,
Adm. Case No. 6708 August 25, 2005

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COI remains after termination of

attorney-client relationship

The termination of the attorney-client relationship does not justify

a lawyer to represent an interest adverse to or in conflict with that
of the former client. The spirit behind this rule is that the clients
confidence once given should not be stripped by the mere
expiration of the professional employment. Even after the
severance of the relation, a lawyer should not do anything that will
injuriously affect his former client in any matter in which the
lawyer previously represented the client. Samson v. Atty. Era,
A.C. No. 6664 July 16, 2013

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Current observations husband and wife

lawyers in legal practice

Where both husband and wife are lawyers but they are not
practicing in association with one another, may they or their firms
represent differing interests?
Some firms apparently have been reluctant to employ one spouselawyer where that person's husband or wife is, or may soon be,
practicing with another firm in the same city or area.
Some law firms are concerned whether a law firm is disqualified,
by reason of its employment of one spouse, to represent a client
opposing an interest represented by another law firm that employs
the husband or wife of the inquiring firm's associate.

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Cont

It is not necessarily improper for husband-and-wife lawyers who

are practicing in different offices or firms to represent differing
interests. No disciplinary rule expressly requires a lawyer to
decline employment if a husband, wife, son, daughter, brother,
father, or other close relative represents the opposing party in
negotiation or litigation.
Likewise, it is not necessarily improper for a law firm having a
married partner or associate to represent clients whose interests
are opposed to those of other clients represented by another law
firm with which the married lawyer's spouse is associated as a
lawyer.

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Cont

Married partners who are lawyers must guard carefully at all

times against inadvertent violations of their professional
responsibilities arising by reason of the marital relationship.
The disqualification of married or related lawyers who oppose one
another professionally is not generally imputed to other lawyers in
the related lawyer's law offices.
Such personal disqualification is not imputed to the spouses' firms
unless the lawyers have a personal interest in the outcome of the
case.

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Special circumstances that

highlight the concern
1. whether the fee of either firm is contingent,
2. whether the disputed matter is one of negotiation or litigation, and
whether the married lawyer in question will or will not actually be
working on the particular matter.
3. Another variation of the problem is the situation in which a
governmental agency, such as a district attorney or an attorney
general, is the employer of either the husband or the wife, and the
spouse is associated with a law firm in the same community.

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Concerns about husband & wife lawyers

Yet it also must be recognized that the relationship of husband

and wife is so close that the possibility of an inadvertent breach
of a confidence or the unavoidable receipt of information
concerning the client by the spouse other than the one who
represents the client (for example, information contained in a
telephoned message left for the lawyer at home) is substantial.
Because of the closeness of the husband-and-wife
relationship, a lawyer who is married to a lawyer must be
particularly careful.

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Recommendations

Married partners who are lawyers must guard carefully at all times
against inadvertent violations of their professional responsibilities
arising by reason of the marital relationship.

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Lawyer Relatives

Ethical precepts admonish lawyers related by blood or marriage to

avoid adversarial representations without the informed consent of
the parties.
Lawyers related by blood or marriage have long been permitted to
represent adversarial interests provided that a reasonable effort is
made to anticipate and expose potential conflicts to clients before
obtaining their consent to representation.
Faced with client consent, courts have consistently required an
actual conflict of interest rather than simply the fact of adversarial
lawyer relatives before ordering disqualification.

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Personal Relationships

A lawyer is romantically involved with the opposing partys attorney,

or sexually involved with a client, the lawyers loyalty or judgment
can be impaired.
Lawyers who are dating and also representing adversaries in
litigation should disclose their relationship if it is sufficiently close
that their clients might have questions about the lawyers' ability to
represent them zealously.
Lawyers who are otherwise personally close should do likewise.
The lawyer had enjoyed an "intimate physical relationship" with the
secretary and talked with her "about significant aspects of the case,"
for which he was disqualified.
A lawyer is prohibited from having sex with a client unless a
consensual sexual relationship existed prior to the start of
professional representation.
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Duty to protect only matters acquired

during the lawyer-client relationship

The intent of the law is to impose upon the lawyer the duty to
protect the clients interests only on matters that he previously
handled for the former client and not for matters that arose after
the lawyer-client relationship has terminated. Palm v. Atty.
Iledan, Jr. A.C. No. 8242 [2009]

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Thank you for your attention!!

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