Who is the Client?

The above question is one that is of paramount importance. Attorney privilege only applies to client communication and files (confidentiality). As an attorney, you owe your clients the fiduciary duties of confidentiality (stated previously), loyalty (to put the clients’ interests ahead of your own, to do nothing to harm the client), and care (to act reasonably and uphold the standard of care of a reasonable attorney doing similar work under similar circumstances.)

At times attorneys have to carefully navigate the Rules of Professional Conduct to ensure they don’t violate the aforementioned duties and conflicts of interest. Where does one start? Let’s start with an example.

Picture the scenario where Brenda and Priya would like to start a business together. They come to you asking if you can set up their business for them. Further, let’s assume that Brenda will contribute services and Priya will contribute monetary capital. Of note, Priya is assuming the monetary risk if the business fails, but Brenda is not. Brenda is assuming the risk of lost time. Can you represent both of them while creating the organizational documents for their business? If you have recommended a Limited Liability Company (LLC), and will be drafting the Operating Agreement, who do you represent? The business being created? Priya? Brenda? All? How you answer these questions will guide you in how you move forward with advice. If you represent Priya, you would make her aware of the ramifications of having equal voting, governance, and profit-sharing. If you represent Brenda, you would likely advise her that having equal voting, governance, and profit-sharing is desirable and will protect or benefit her more than if she was in a minority position. You would also need to tell her about the tax ramifications of only contributing her services to the start-up.

Additionally, when drafting that Operating Agreement, how do you structure the buy-sell arrangement? Brenda and Priya need to understand that such documents are customized to fit their needs, but how it affects each of them is different. Any time that you are drafting, you are likely benefiting one owner over the other. These topics are covered in Unit 10, but it is good to start thinking about them now.

💡You can see from this example that there are important reasons for determining who you represent. Consider other reasons why and then review the following rules and comments.

The ABA’s Model Rules of Professional Conduct and accompanying comments provide assistance to business attorneys. A look at Rule 1.7 “Conflict of Interest: Current Clients” is a great place to start.

Rule 1.7: Conflict of Interest: Current Clients

Client-Lawyer Relationship

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.


The comments are helpful.

General Principles, Comment 2

Directly Adverse, Comment 7

Material Limitation, Comment 8

In the above example, an attorney’s ability to advise could be materially limited. But see,

Nonlitigation Conflicts Comment 28

When it comes to fiduciary duties in representing multiple clients, the Special Considerations in Common Representation comments provide a great source of information.

Comment 29

Comment 30

Comment 31

Consideration as to who your client is should include knowledge of Rule 1.13 that addresses “Organization as Client.”

Rule 1.13: Organization as Client

Client-Lawyer Relationship

(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.

(c) Except as provided in paragraph (d), if

(1) despite the lawyer’s efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and

(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

(d) Paragraph (c) shall not apply with respect to information relating to a lawyer’s representation of an organization to investigate an alleged violation of law, or to defend the organization or an officer, employee or other constituent associated with the organization against a claim arising out of an alleged violation of law.

(e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer’s actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization’s highest authority is informed of the lawyer’s discharge or withdrawal.

(f) In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

(g) 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. 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.


In looking at the entity as the client, the comments prove helpful:

Comment 1

Comment 2

Comment 3

One can imagine ways that a business’s interest may be, or become, adverse to the interests of its owners or other constituents. At this time, you must disclose this information to the person whose interests are adverse and ensure they understand that you do not represent them. You should also recommend that they seek their own, independent counsel. Following the conversation with a signed acknowledgment is a good idea to establish further that the constituent understands your warning. However, understand that there could be times that it is acceptable to represent, say, a majority owner and the business entity dually.

💡Consider examples of where an owner’s interests could be adverse to the business entity’s interests.

💡What if Brenda and Priya had come to you after having already done business-related things together for a year? Even though they have not drafted or filed any organizational documents, do they have an entity? How does that impact your thinking above?

Consider Rule 1.6: Confidentiality of Information

Consider Rule 1.4: Communications

Consider Rule 4.1: Truthfulness in Statements to Others

Consider Rule 4.3: Dealing with Unrepresented Person

💡How do these rules add to your thoughts?



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To the extent possible under law, Samantha Prince has waived all copyright and related or neighboring rights to Entrepreneurship Law: Company Creation, except where otherwise noted.