The situations raised above are governed by DR 1.06, Conflict of Interest, of the Texas Disciplinary Rules of Professional Conduct. In relevant part, said Rule reads as follows:
DR 1.06 Conflict of Interest: General Rule
Each of the above questions will be considered separately in light of the above Rule and its interpretive comments.
1. May a lawyer ethically represent both a passenger and a driver in a personal injury case arising from an automobile collision with another vehicle?
DR 1.06(a) prohibits representation by a lawyer of opposing parties in litigation. However, in the situation presented by the above question, the passenger and the driver are not actually, directly adverse, but it does present a situation for potential conflict.
Notwithstanding a conflict or a potential conflict, DR 1.06(c) does provide certain circumstances under which a client may consent to multiple representation. Even though a conflict, or potential conflict, may exist by representing co-plaintiffs or co-defendants, such multiple representation is permissible if the lawyer reasonably believes that the representation of each client will not be materially affected and after each affected or potentially affected client consents to such representation, after full disclosure of the existence, nature and implications of the conflict and of the possible adverse consequences of common representation and the advantages involved, if any. [DR 1.06(c)]
As this question is posed, the answer is in the affirmative so long as the lawyer complies with DR 1.06(c). However, it should be pointed out that potential conflict could develop into an impermissible conflict. As stated in Comment 3 of DR 1.06:
An impermissible conflict may exist or develop by reason of substantial discrepancy in the parties' testimony, incompatibility in positions in relation to an opposing party or the fact that there are substantially different possibilities of settlement of the claims or liabilities in question.
If such a situation should develop after accepting multiple representation properly under Rule 1.06, the lawyer shall promptly withdraw from one or more representations to the extent necessary for any remaining representation not to be in violation of these Rules. [Rule 1.06(e) ]
2. Is the answer to the preceding questions any different depending upon whether or not the lawyer (a) reasonably believes that, or (b) does not know if, the driver of the other vehicle will allege that the driver of the first vehicle was negligent and proximately caused the collision?
DiscussionComment 7 of DR 1.06 states as follows:
A client under some circumstances may consent to representation notwithstanding a conflict or potential conflict. However, as indicated in paragraph (c)(1), when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved should not ask for such agreement or provide representation on the basis of the client's consent.
If the extent of the negligence of the driver is such that the passenger should assert a cause of action against the driver of the automobile in which he or she was a passenger, dual representation may not be permissible (e.g. both drivers disregard the stop sign at a fourway stop intersection). In such a case, it is reasonable to assume that a disinterested lawyer would conclude that the client should not agree to dual representation. However, the circumstances of each case must be examined on a case-by-case-basis. Such an examination is essential because notwithstanding the conflict, dual representation could be permitted under Rule 1.06(c) under a different set of circumstances (e.g. the passenger may be a family member of the driver, and after full disclosure, may not wish to assert a cause of action against the driver).
Each case must be examined on an individual basis; and if the circumstances are such that compliance with DR 1.06(c) can be achieved, dual representation would be permissible.
3. May a lawyer ethically represent two persons who are injured in a single accident caused by a third person, if it becomes clear that the third person has a limited amount of funds to pay a possible judgment or settlement (e.g., insurance policy limits substantially less than the likely verdict range)?
A lawyer may not represent opposing parties to the same litigation. [DR 1.06(a)] Although co-plaintiffs, technically, are not opposing parties, Comment 2 states that the "term 'opposing parties' as used in this Rule contemplates a situation where a judgment favorable to one of the parties will directly impact unfavorably upon the other party." Therefore, under the limited scope of the question presented, the more funds one party will receive from a limited amount of available funds to pay for a possible judgment or settlement, the less the other party will receive. Depending on the limited amount of funds available for payment of a possible judgment or settlement and the extent of co-plaintiff's damages, it very well may be that the representation of each client will be materially affected. Additionally, if a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved should not ask for such an agreement or provide representation on the basis of the client's consent. [(Comment 7, Rule 1.06)].
Under the limited scope of the above question as posed, it would be a violation of DR 1.06 to represent two or more persons injured in a single accident caused by a third person, when it becomes clear that the third person has a limited amount of funds to pay a possible judgment or settlement (e.g. insurance policy limits substantially less than the likely verdict range).
4. If representation is proper in any of the foregoing instances, what notices and disclosures should be provided to the client?
DiscussionComment 8 to DR 1.06 states as follows:
Disclosure and consent are not formalities. Disclosure sufficient for sophisticated clients may not be sufficient to permit less sophisticated clients to provide fully informed consent. While it is not required that the disclosure and consent be in writing, it would be prudent for the lawyer to provide potential dual clients with at least a written summary of the considerations disclosed.
Although there is no prescribed form to be used in giving notice and disclosures to potential dual clients, the lawyer should explain the matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. [(DR 1.03, Communication)] The notice or disclosure should fully disclose the existence, nature and implication of the conflict, or potential conflict, and the possible adverse consequences of the common representation and the advantages involved, if any. [DR 1.06(c)(2)].
Once the lawyer involved reasonably believes that the representation of each client will not be materially affected, the lawyer must obtain the consent of each affected, or potentially affected, clients in accordance with [DR 1.06(c)(2)].