Page 9 - John Hundley 2018

Focus on Legal Ethics

Sharp Thinking

No. 150 Perspectives on Developments in the Law from Sharp-Hundley, P.C. April 2018

7th Circuit Speaks On Concurrent Conflict Waivers

By John T. Hundley, john@sharp-hundley.com, 618-242-0200

Client waivers of concurrent conflicts of interest are ineffective if a lawyer cannot reasonably believe
that he will be able to provide competent and diligent representation to each affected client, the Seventh
U.S. Circuit Court of Appeals has held.

Ruling in Doe v. Nielsen, 883 F.3d 716 (7th Cir. 2018), the court said
representation is prohibited notwithstanding informed consent if a court cannot
reasonably conclude that the lawyer will be able to provide competent and
diligent representation.

In Nielsen, Doe was seeking permanent resident status under the visa
program that considers a foreigner’s investment of capital in a new commercial
enterprise in the United States. Doe had invested $500,000 in an unfinished
memory care facility, through the law firm that was representing him in his visa
case. In the midst of that case, the Securities & Exchange Commission sued
the firm’s principal, accusing him of defrauding at least 226 immigrant investors
who participated in the visa program. It alleged he had misappropriated funds
received for the facility at issue. Hundley

Although the firm submitted an affidavit from Doe waiving any conflict of
interest, the Seventh Circuit proceeded to disqualify it from the visa case. It
identified two conflicts which it said were non-waivable.

First it said the firm had an incentive to reject lines of inquiry or argument
that may have helped Doe’s case, such as by alleging fraud by the firm. In
this respect, the court seemed to treat the firm as if it were an adverse client
under Illinois Rule of Professional Conduct 1.7(b)(1).

Second, the court said the firm’s duties to other investors created a
conflict, because its duties to the 226 investors exceeded available moneys,
pitting one against another for available funds. “No lawyer could reasonably
continue the representation under these circumstances,” the court said.

In its result and reasoning, Nielsen implicitly emphasizes the word “reasonable” which appears in
Rule 1.7(b)(1). Often lawyers think that if both they and the clients say the concurrent representation
is okay, that closes the matter. Nielsen rejects that logic by making the test what a court, not the self-
interested lawyer, would believe.

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
Sharp Thinking is an occasional newsletter of Sharp-Hundley, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp Thinking shall
be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein constitute educational
material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal advice on your particular
situation, contact a Sharp-Hundley lawyer at the phone number or one of the addresses provided on page 2 of the newsletter.