One issue that comes up frequently between lawyers and clients is when *one* lawyer represents two or more interested parties at the same time. For instance, two business partners want to hire one lawyer to work on their partnership. What risks and advantages arise?
Disclaimer: The following information does NOT constitute legal advice and is only for general educational purposes. Each situation is different and specific legal issues usually require additional research and investigation, so do not rely on this article to address a particular legal issue; use this as a starting point to gain a general understanding. This article, although educational in purpose and substance, nevertheless, might be deemed attorney advertising, and prior results do not guarantee future success.
Let’s cover the advantages first
Bingo - this is the #1 reason two clients prefer one lawyer for both of them, when possible. Say, for example, it takes one lawyer ten hours to interview two different clients, map out their different needs, ensure they both agree on key “pain points” and are as aligned as they think they are, and actually write the documents. If both parties have two equally diligent and competent lawyers, you can expect to multiply that by two.
So, now both parties, in the same business are paying *twice* as much. And … that’s not all. If each side has a lawyer, you can expect both lawyers to debate and argue with each other, even if it's friendly, on how best to protect each of their client’s interests. So, really it will be more like 25-30 hours. Now, imagine if they are more than two clients!
With one lawyer representing both parties, the one lawyer will have an integrated picture of both clients. If both parties are represented by different lawyers, Lawyer #1 representing Party #1, will *never* be able to talk to Party #2 one on one. No, Lawyer #1 will only be able to communicate with Party #2’s lawyer, Lawyer #2. That means, Lawyer #1 never will get first hand info from Party #2. However, if both parties, forming a business together, can talk to the same lawyer, information will flow freely, and that one lawyer will greater understand each party’s desires, needs and fears, *and* also will have a better grasp of the whole situation (“the whole is greater than the sum of its parts”).
Most people don’t know where to start to find one lawyer. Now, imagine finding two. And, both lawyers have to be affordable. Hopefully, the two lawyers can work well together. Otherwise, costs will increase and the project could fail.
Ok, now the disadvantages…
The number one ethical issue all lawyers face is how to protect their client’s confidentiality. If one lawyer represents two people, the issue gets … complicated. For instance, one thing I make clear in simultaneous representation is that I *must* share secrets if they objectively reasonably impact the other partner - or I must withdraw from *both* parties.
For instance, if Partner A lied about something on his tax returns that I become aware of, and it impacts Partner B, I have to tell Partner A that I need to tell Partner B. If Partner A objects, I must immediately stop representing *both* of them (or as soon as possible to cause the least harm to them). On other hand, if Partner A tells me they are cheating on their spouse and I don’t reasonably think this is relevant to the partnership, I probably can keep my mouth shut.
However, the bottom line, is that with mutual representations I warn my clients not to tell me anything they don’t want the other partners to know.
Similar to Confidentiality, there are many possible conflicts of interest between different partners. For instance, if one partner wants steady income, but the other one wants to increase the overall value of the business to sell it in the future, they may have different strategies to achieve this, and every time I am brought in to analyze a potential opportunity for them, I need to tell them each and together how it will serve one but maybe not the other. Or, if one partner wants more decision making power and asks me how to get that, I need to advise the other partner about their possible loss of control over their destiny in this business.
Many times partners … well, they don’t get along. Or, they start out best of friends but then … well, things don’t go planned and they start to disagree, then complain, then fight. One partner wants to get their way, outmaneuver, outwit or even punish the other partner. They demand “their” lawyer help them, especially if they are the “managing partner” or actually pay the lawyer on behalf of the other partner, or at least write the checks.
However, this is not the way it works. The lawyer does not represent the party paying the bills alone, rather the lawyer represents whoever signed that retainer (this is a simplification, and by the way, without retainers it is still more complicated). This may be a shock to the “dominate” partner and a headache to the lawyer who thought this was going to be easy since everyone got along originally. The lawyer may diplomatically bring the parties back together to the table or may leave. Either way, the lawyer can *not* take sides if they originally represented both parties.
A lawyer can represent more than one party simultaneously and doing so saves time and money for both parties and can provide better overall representation since the lawyer will understand the entire picture. However, doing so raises ethical issues and eventually can result in the lawyer having to withdraw from both clients, at least for that project. If you ever have concerns about mutual representation, make sure you talk to your lawyer as soon as possible to address them.