The Ethical Challenges in Dual Representation of Corporations and Executives
By Nathara Moise
In corporate law, dual representation occurs when attorneys or law firms represent a corporation and its executives in the same case. Lawyers do not represent executives individually unless there has been an agreement set to do so. Although dual representation can be beneficial in some instances, it can also create ethical challenges when there is a conflict of interest between the corporation and the executives.
Conflict of interest occurs when there are issues of loyalty and confidentiality during dual representation, and it is up to the attorneys to remain professional within their judgments. Confidentiality issues are prone to arise when an attorney is dealing with executives from a corporation who may have opposing ideas or interests from the corporation. The attorney needs to be fair while protecting valuable information.
Many ethical challenges can occur with dual representation. Clients’ interests may change or divide during the case, making the case more challenging for the attorney. The clients may disagree on the terms they want to settle the case. There may be instances where attorneys may have known the client before the case, which may cause them to show favoritism to this client. The attorney may collect different instructions from each client, which may cause conflict.
Ontiveros v. Constable (2016) was a case between a plaintiff shareholder and a majority shareholder, Kent Constable. This was a dual representation case where the court ruled that the attorney on the case could not represent both defendants simultaneously while a conflict existed between them. This case is an example of the ethical challenges that affected the results of a case.
For attorneys to attempt to avoid these ethical challenges, they must detect any preexisting conflicts that may take place between connected clients. Ensure that all clients are being represented fairly to avoid any favoritism from being shown. Communicate and be transparent with clients about the difficulties that come with dual representation.
Dual representation has its advantages but also comes with difficulties when handling cases like these. Attorneys need to understand the risks involved, take the proper steps to potentially avoid these issues, and communicate effectively with their clients to make the process smoother.
Citations
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