Defining Joint Representation Agreements
A joint representation agreement ("JRA") is a contract between two or more individuals to retain an attorney for a specific purpose. It is an agreement in which multiple clients agree to be represented by the same attorney in a legal matter. In this context, multiple subjects are represented by the same counsel.
Simply put, joint representation is useful when several persons would benefit from representation by the same counsel in a single issue headed in a single direction. We spoke of these joint efforts in "The Heirs of an Estate Can Be United" and "Florida Real Estate Investors Should Use Joint Representation Agreement." In most instances, the purpose behind joint representation agreements are beneficial, it expedites the process and reduces the retainer required of each party. When tensions arise or the parties’ position changes, the joint representation will halt.
In Gosper v. Commissioner, 139 T.C. No. 12 (12/5/12), the Court gave an excellent explanation of joint representation: As a general matter, two or more persons with interests that are sufficiently common may join together in a single proceeding. But the interests to be represented must be common to the extent that the advancement of one would not by itself immediately impugn the integrity of the other’s position. Those with interests that are only potentially aligned should not try to achieve their respective goals through joint representation. The Rule is designed to maintain public confidence in the integrity of our system of justice . And we will not entertain joint representation, even if authorized by statute, that may endanger that interest regardless of the parties’ consent to the joint representation. We will grant a motion to quash even where discovery is undertaken in conformance with statutory law. The information sought cannot be so indiscriminately permissible so as to jeopardize the integrity of the judicial system.
A JRA is entered into by separate people once they have decided to be represented jointly. A traditional example of a JRA is in real estate transactions, where there is a husband and a wife as purchasers or sellers, and their attorneys sign a JRA disclosing the joint representation. It is understood that information of the full financial picture of both the husband and the wife is disclosed to the lender or seller in such transaction.
Many people co-own properties together, such as family members, friends, investors, shareholders, and so on. A JRA is utilized in circumstances where two people or more wish to be represented by the same attorney and agree to having their confidences disclosed. The JRA is a contract. It describes the relationship between the lawyer and the existing and future clients. For example, a father and son may wish a family attorney to represent them in a business deal. Once this relationship is described in the joint representation agreement, the individual clients are bound by the agreement. This means the attorney has no obligation or duty to any single client not to disclose relevant facts. All clients are bound by the interactions that occur.
Benefits and Dangers of Joint Representation
Clients and attorneys considering a joint representation agreement will appreciate the potential advantages and risks involved. Advantages include such things as cost savings, and improved collaboration, while risks can include potential conflicts of interest and other issues. The common sense approach, quite simply, is to recognize that: such agreements must be voluntary and agreed to; and they need to be executed prior to the related legal work being undertaken.
For example, if an attorney does work for a business under a traditional fee agreement (with each issue or project requiring its own specific justification) then both sides will have the opportunity to determine if joint representation is desirable. However, if one party retains an attorney, asks that attorney to represent both, and the attorney agrees, that is a different matter. The question then becomes one of how to deal with any potential conflicts, which also may complicate or interfere with payment.
For example, many clients appreciate being able to pay a flat or fraction of a flat fee (e.g., $350 an hour instead of $485 per hour). But, if the attorneys agree to represent both, then they need to make certain that their bills will be prepared accordingly (e.g., $350 per hour from A, $485 per hour from B) and that each pays their share.
Joint representation issues will be complicated further by such considerations as whether an issue will be settled, what responsibilities each side wishes to assume, and whether any issues arise that dictate separate (as opposed to collaborative) representation. For example, what if there is a dispute about fees, scope of services or what to do next (assuming the work has not been completed yet)? And, what if one side wants to end the representation?
If there are separate agreements in place to deal with all of the ongoing issues then it should be relatively simple to address any resulting questions. Otherwise, it could prove time-consuming, costly, and potentially required an attorney other than the one originally used. In addition, any dispute can result in awards of fees or penalties (such as amounts that were not agreed to, or differences with regard to ongoing work).
Another potential issue involves contractual obligations to third parties. For example, if a departing owner wants to take the business he created to a competitor, but the joint representation agreement specifically prevents doing so, then the client who seeks to do so may be liable for breach of contract.
As such, although there are advantages to joint representation agreements, they also can be potentially confusing and risky. Clients and attorneys will need to remember that, like every other aspect of the law, these agreements need to be entered into wisely, with full knowledge of all rights and risks involved.
Legal Implications and Guidelines
In addition to obtaining the informed consent from all parties, joint representation must not result in an unwaivable conflict of interest. For this reason, in jurisdictions where conflicts are imputed to a law firm based on the conflicts of its partners and associates, joint representation may be barred if a conflict exists for a single attorney within the firm. It is important to review applicable model rules to determine whether a conflict that arises requires the client’s consent, and whether joint representation is possible in that case.
Rigorous disclosure is required. The lawyer must fully disclose to all clients the risks involved in the proposed joint representation, the possible decisions that may have to be made adverse to one or more of the clients, and the procedural aspects of joint representation such as having to sever the relationship early or reallocating decisions between clients. Depending on the applicable rules in the jurisdiction, there may be a duty to obtain a blanket waiver from all clients to future conflicts, although express consent to each conflict, or several waivers, may be required.
Creating a Joint Representation Agreement
The essential elements of a joint representation agreement fall into three general categories: adequate scope of the contemplated joint representation and all of its ramifications, confidentiality, and termination. If any of these three are not addressed or do not meet both the clients’ expectations, the consent of all clients to the proposed representation generally cannot be obtained. The process begins with drafting the joint representation agreement (or, in certain cases, an engagement letter with two or more clients). As the ethical obligation of the attorney representing two or more clients may not extend as far as the average layperson may expect, the discussion of conflicts of interest with each party must necessarily include sufficient explanation to dispel the naive view that the attorney will always act in the best interests of all clients, even in situations where clients’ interests are diametrically opposed to one another and/or if litigation subsequently occurs. For instance, if a corporation and its wholly-owned subsidiary are involved in the representation, the joint counsel must clearly and emphatically communicate that in the case of an actual disagreement, he can represent only one entity, i.e., by affirmatively stating which party would be his client and the other would be limited to that entity’s consent to his ability to act as a limited special counsel in connection with matters involving the former and such former’s wholly-owned subsidiary in order to protect the interests of the former. This assumption of limited representation by one party must then be confirmed by way of adequate drafting of the terms in the joint representation agreement.
In addition to the basic information contained in any engagement letter, that is, full name, address, and contact information for each party, the joint representation agreement should contain a description of the scope of the joint representation and how costs and expenses are to be allocated; an express statement of the parties’ intention to share confidential information, to the extent allowed; an explanation of the circumstances allowing disclosure of such information such as by way of mutual waiver of privilege; the right to terminate the relationship; settlement authority; and a statement of who shall make tactical decisions. Depending on the situation, some of these elements may be more critical than others, but each client may reasonably expect that the expectations as to scope of representation, the sharing of confidential information, the ability to terminate the relationship, and acting in good faith as to settlement authority, will all be memorialized in the terms of the joint representation.
Controlling Conflicts in Joint Representation
Once conflicts have been identified the attorney must then exercise careful and ongoing judgment about whether or the attorney should continue with the representation. The attorney’s decision must be informed by the attorney’s knowledge of the applicable law; the facts and circumstances of the matter at hand; the attorney’s experience, skill and standard of care; and further information gathered over time. The attorney should also continually communicate with the client about any significant conflicts or potential conflicts that the attorney has identified.
When discussing the attorney’s duty to exercise reasonable care in the context of joint clients, the Texas Supreme Court has held that the duty to explain "includes the need for the lawyer to point out any conflict attending the joint representation." McCamish, Martin, Brown & Lloy, P.L.L.C. v. F.E. Appling Interests, Inc., 998 S.W.2d 626, 632 (Tex. 1999) (citing Southland Royalty Co. v. Gaston, 416 S.W.2d 397, 403 (Tex. Civ. App.—San Antonio 1967, writ ref’d n.r.e.)). The Court further expounded that the attorney’s disclosure duty is part of the attorney’s general duty to provide competent representation, and that if the attorney falls short of this disclosure duty, "the attorney has breached his fiduciary duty of full and fair disclosure." Id. at 635. Thus , a failure to disclose or warn clients about conflicts can amount to malpractice. See also Kahn v. Shearman & Sterling, No. 03-cv-4332, 2010 WL 3069524, at *7 (S.D.N.Y. Aug. 6, 2010) (finding that failure to warn of potential conflicts was actionable).
Conflict waivers can serve to protect against claims as to joint clients. Ethics opinions from both the ABA and Texas Board of Disciplinary Appeals Cond. R. VP-9(a)(2) have approved the use of conflict waivers to resolve potential conflicts of interest. Such waivers must be obtained from each client, and must be "informed" consent, meaning that the attorney must inform the client of the identities of his/her joint client and the goals of that client, and must obtain the client’s consent both to represent both clients and to undertake the specific representation that could result in a conflict. Id. However, as noted above, these waivers do not receive universal approval. See, e.g., Kahn, 2010 WL 3069524, at *11 (rejecting waiver as invalid based on the circumstances of the case).
Attorneys can also mitigate their risk by keeping clear and comprehensive documentation of the conflict and the client’s determination that the joint representation can still continue, and by promptly notifying the client of any additional, more detailed, or updated information that the attorney becomes aware of later. Failure to notify the client of later-acquired information could result in legal liability.
Case Studies and Examples
Here are some real-life examples and case studies involving joint representation agreements. For instance, in Family Court of the State of Delaware v. Concannon, a lawyer was retained to represent both the husband and the wife in their divorce proceeding. The lawyer failed to obtain both the wife’s and the husband’s informed consent to joint representation. A dispute later arose between the parties, and the wife disqualified the lawyer for previously representing both husband and wife in the divorce proceeding. The court held that the lawyer’s failure to properly advise spouse violated the ethical rules and resulted in a breach of fiduciary duty. As a result, the court held that all legal fees and costs were paid by the lawyer.
In another case, In the Matter of the Petition for Suspension of the Law License of Melvyn S. Williams, Jr., the declarant sued the lawyer for misappropriating the funds which were to be distributed to the declarant. A limited joint representation agreement between the lawyer and the declarant’s now deceased son, the lawyer and the declarant’s now deceased husband was found to be unethical and inadmissible in the declarant’s action to recover moneys due her. The court noted that under these circumstances, the lawyer could not seek compensation from the declarant husband.
In Wilson, et. al. v. Insight Comms., LLP, et. al., the Delaware Supreme Court affirmed the lower court’s denial of plaintiffs’ request to disapprove a settlement agreement in a class action, relying upon the accuracy of the district court’s written findings in which the court cited the hitting three prongs of the Rales test, which are as follows: (1) the directors are purchased from the corporation itself so that the directors are in a functional sense beholden to the corporate board (the "badge of divisional control"); (2) the directors lacked independence because the director might be influenced by an impact from the proposed litigation; and (3) the directors served on other boards with one or more defendants.
In Estate of Casey v. Key Bank of Maine, the court found no basis for the executor’s challenge to the joint representation agreement, since he did not allege that his mother lacked capacity to execute the joint representation agreement or that the agreement failed to meet the statutory requirements.
Helpful Hints for Clients in Joint Representation
Even if you have spoken with an attorney about the possibility of joint representation, you still need to do your homework:
Ask the lawyer about his or her experience with issues of common interest and his or her past joint representations.
Look at the overall case to make a judgment whether it makes sense to consider joint representation based on the information known about the case so far. The real question is whether the people are on the same page as to the facts and the approaches to the problem before them. If so, then they should talk about the possible benefits and pitfalls of joint representation.
Ask the lawyer whether other clients may have the ability to get the same benefits that this person can get from a joint representation .
If cost is a concern, ask the lawyer whether he or she feels the time spent on the conflict issues would be helpful to get savings on the other work, if any is needed when the problems are set aside.
If each client has a different view of what happened to them, joint representation may likely result in extra costs for everyone, no matter how you slice it up.
Make sure each client understands the risk that joint representation may result in one or more of the group having to get separate counsel later if the relationship dissolves, whether because of differences between them or the other clients’ circumstances, such as death.