11.21 Acting for Business Competitors
Sometimes lawyers have clients who are in the same industry and who are economic competitors. While they may compete with one another in a business context, their legal interests are not directly adverse. The Code of Conduct expressly permits lawyers to act for economic competitors in these circumstances--see Rule 3.4-4.
This rule is referred to in the Code as the concurrent client rule. It requires that the lawyer treat any information disclosed by one client as confidential and not disclose it to other clients.
It is possible that a law firm may have more than one client competing for the same business opportunity. Rule 3.4-4 (b) states that a law firm can act for both clients provided that the firm takes the following steps:
- Disclose to all impacted clients that the firm is acting for competitors and the risks associated with the concurrent representation.
- Give the clients the opportunity to seek independent legal advice—at a minimum, do not force them to make the decision to retain you without time to consult another lawyer.
- Ensure that each client is represented by a different lawyer or team within the firm.
- Implement ethical screens to ensure that confidential information is not inadvertently disclosed.
- Withdraw from representing all clients if a dispute arises with respect to the subject matter of the representation.
Note that while an individual lawyer may act for clients with indirect competing interests (Rule 3.4-4 (a)), an individual lawyer cannot act for two clients who are competing for one opportunity (Rule 3.4-4 (b)). Law firms are still allowed to concurrently represent clients competing for the same opportunity when different lawyers within the firm act for the various clients and the firm has implemented a screen to protect confidential information.