Lawyers who represent corporations and constituents must walk a fine line.

I am the attorney for a corporation. One of the directors asked me to represent him in his personal business matters. Can I do so?

Samuel C. Stretton.

Any time a lawyer represents an organization such as a corporation, a lawyer has to be very careful about a conflict of interest arising if the lawyer represents employees of the corporation. Further, the lawyer has to be careful that the constituents of the corporation such as directors, officers, employees, members and shareholders understand who the lawyer represents.

Under Rule 1.13 of the Rules of Professional Conduct, there are rather detailed instructions as to a lawyer's role and obligations when the lawyer represents an organization or corporation as their client. The lawyer represents the organization and does so through its "duly authorized constituents." Rule 1.13(d) is very clear that a lawyer must explain to the constituents of the organization such as officers, directors, shareholders, employees, who the lawyer represents. This is particularly true if the corporation or organization's interest are averse to one of the constituents, which is the classic situation if the lawyer is doing an investigation for the corporation and talking to employees. Many employees might assume that the lawyer is also representing them. The lawyer has to be very clear and very firm whom he represents and make it clear to the employees the lawyer is talking to.

There are times a lawyer can represent constituents in a corporation. That is set forth in Rule 1.13(e). That rule reads, "A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents subject to the provisions of Rule 1.7."

Rule 1.7 is the general conflict of interest rule. In essence, a lawyer can represent constituents as long as there is no conflict of interest. For instance, a constituent may have a drunk driving case. The lawyer can represent the constituent or his family in that case. Or perhaps the constituent needs a will. But the lawyer has to be very careful that there is no conflict with the corporation. Further, the more confidential information the lawyer obtains from the constituent, the more likely the lawyer could later be conflicted out if a dispute or issue arose.

The rule 1.13(e) also deals with the situation where there is a conflict, which could be waived by a letter of consent.

"If the organization's consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization, other than the individual who is to be represented or by the shareholders."

Comment 7, 8, and 9 to Rule 1.13 talk about the dual representation and clarifying the lawyer's role, but Comment 9 clearly recognizes that the lawyer, for an organization, can also represent the officers or shareholders of the corporation if there is no conflict of interest.

One of the problems a lawyer has to be careful of is if they are the counsel for a small corporation. If the corporation has three shareholders, or partners, a lawyer must clarify his role as the attorney for the organization. It can get somewhat difficult if a lawyer becomes heavily involved in representing one of the partners or shareholders in a major personal or commercial litigation. The problem becomes if there is a later corporate breakup. The lawyer might not be able to represent the corporation if he represented one of the shareholders who is raising issues because the lawyer may have too much confidential information from that prior representation. Any lawyer who has represented a small corporation knows one has to be very careful because all three partners think that the lawyer for the corporation is also their personal lawyer. That oftentimes is the case, but it can be a problem if conflicts arise, which tend to happen in these smaller corporations.

The key is to be aware that there can be conflicts. The key is to be aware that employees know who the lawyer represents in addition to the corporation. The key is to get a waiver of the conflict if the lawyer is going to represent one of the constituents of the corporation in some private matter they have. The lawyer must make sure that there is no conflict with the corporation, or a lawyer may end up being conflicted-out of both representing the corporation and representing the constituent. This can be a very difficult area and every lawyer who represents corporations and constituents must know how to walk this fine line.

Every judge should be fully aware of reporting rules.

As a judge, I am aware that there is a criminal investigation involving my conduct. Do I have any duty to report that to anyone since it is just at the investigation stage?

Although the Code of Judicial Conduct governs the ethical conduct of a judicial officer, the Pennsylvania Rules of Judicial Administration also have guidance for judges. For instance, a previous article noted the prohibition about judges appearing as character witnesses, which is found in Pennsylvania Rules of Judicial Administration, Rule 1701. That rule only allows a judge to so testify on character issues if the Pennsylvania Supreme Court gives prior approval. There is also another very important rule that every judge should be aware of. These rules are found in Pennsylvania Rules of Judicial Administration, Rules 1920 and 1921 and are titled "Criminal and Disciplinary Matters Against Judges." In essence, these rules cover when disciplinary cases are pending against the judge or if there is a criminal investigation involving the judge. Both investigations must be noticed by the judicial officer to not only the chief justice of the Pennsylvania Supreme Court, but also to the Judicial Conduct Board. This requirement is found in Pennsylvania Rules of Administration, Rule 1921. That rule reads as follows:

"Whenever a judge receives notice that he or she is the subject of any federal or state criminal investigation or prosecution through a target letter, a subject letter, a presentment, an indictment, an arrest, a summons, a complaint, or by any other legal process, the judge must report the receipt of such notice in writing to the chief justice and to the Judicial Conduct Board within five days."

Rule 1922 outlines the purpose of this rule. The purpose is to allow the Pennsylvania Court Administrator's Office to determine whether a judge may be reimbursed for the expense of attorney fees incurred in defending a criminal or disciplinary investigation. Through that reimbursement, the judge either has to be acquitted of all charges, or all charges nolle prossed, and notice has to be given on a timely basis.

Although this requirement is primarily related to whether a judge can get reimbursed for legal expenses, there is still this requirement to advise the chief justice and the Judicial Conduct Board. This is a mandatory requirement and the language of the rule indicates a judge must report the receipt of such notice.

The failure to report a disciplinary or criminal investigation might not result in professional discipline, but it could be duly noted as an aggravating factor on the underlying case if there was a prosecution and conviction.

Therefore, every judge should be fully aware of these reporting rules as should any lawyer representing the judge concerning these notice requirements for pending criminal cases and make the appropriate reporting requirements.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 47 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 103 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.