81-F-9 - Former Client

FORMAL ETHICS OPINION 81-F-9

On April 8, 1981, Disciplinary Counsel issued an Advisory Ethics Opinion
and the Board has now been asked to issue a Formal Opinion pursuant to
Section 26 of Rule 9 adopted by the Supreme Court of Tennessee at
Nashville on January 28, 1981.


The following factual situation was presented:


The attorney defended the owner of a commercial building
in a suit brought by the tenant in the building to cancel the
lease and be allowed to remove his equipment where the
building had been damaged by fire allegedly as a result of
the tenant's negligence. The lease provided the tenant could
cancel the lease if the building could not be repaired within
90 days and it was the tenant's contention that such could
not be done. The attorney effected a settlement between the
parties, as a result of which the owner's insurance company
repaired the building within the 90 day period and the
tenant dismissed his suit. Sometime later, a member of the
owner's family retained the attorney to make claim against
the tenant for damages to his personal property, and the
insurance carrier of the owner retained the attorney to file
suit against the tenant on its subrogation claim. The lease
was silent as to waiver of subrogation and as to the tenant's
responsibility for damage to the building. The owner
refused to cooperate and refused to be named as plaintiff in
the subrogation suit and the attorney raised the question as
to whether he could properly represent the insurance
company in an action against the owner, his former client,
to recover the proceeds paid for failure of the owner to
cooperate.


Rule 8 of the Rules of the Supreme Court of Tennessee incorporates the Code of
Professional Responsibility. In the section on Definitions, we find "Differing Interests"
defined to "include every interest that will adversely affect either the judgment or the
loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other
interest." The word "Confidence" is defined in Disciplinary Rule 4-101.

 
The Court of Appeals, in the case of Harris v. Marshall, 8 Tenn. App. 508, quoted with
approval the following language:


The relationship of attorney and client is an extremely
delicate and fiduciary one, so far as the duty of the attorney
toward the client is concerned, and the Courts jealously
hold him to the utmost good faith in the discharge of his
duty ....


The relation he (the attorney) bears to the client implies the
highest trust and confidence. The client lays bare to his
attorney his very nature and heart, leans and relies upon
him for support and protection in the saddest hours of his
life, knowing not which way to go to obtain his rights, he
puts himself under the guidance of his attorney and
confides that he will lead him aright ....


The Court from general principles of policy and equity will
always look into the dealings between attorney and client,
and guard the latter from any undue consequences resulting
from a situation in which he may be supposed to stand
unequal.


The language of the first paragraph of the quote was cited with approval again in the case
of Coleman v. Moody, 52 Tenn. App. 138,372 S.W. (2d) 306,313.


In the case of American National Bank v. Bradford, 188 S.W. (2d) 971, the Middle
Section of the Court of Appeals, at page 981, stated:
It is true the relation of client and attorney is one of great
confidence and even after its termination the law continues
to protect that confidence. An attorney who has once been
made the recipient of the confidence of a client concerning
a particular matter is thereafter disqualified from acting for
any other party adversely interested in the same matter.


The Tennessee Court of Criminal Appeals, in the case of Autry v. State, 430 S.W. (2d)
808 at page 809, held:


It has long been firmly established, both in the canons of
professional ethics and by judicial opinions, that attorneys
cannot represent conflicting interests or undertake to
discharge inconsistent duties. When an attorney has once
been engaged and receives the confidences of his client, he
cannot enter the services of those whose interests are
adverse to that of his client or former client. The rule is a
rigid one, and it is well that it is so.


The duty or loyalty owed by an attorney to his client with respect to matters as to which
the attorney acted as counsel survive the formal conclusion of the attorney-client
relationship to the extent that, having represented a party to a transaction, the attorney
may not thereafter represent any other party in an action against his former client arising
out of or closely related to the transaction. Under the facts given, it would certainly be
impermissible for the attorney to file suit on behalf of the insurance company against his
former client, the building owner.


This 25th day of June , 1981.


ETHICS COMMITTEE:


Joseph G. Cummings
F. Evans Harvill
John R. Rucker

 

APPROVED AND ADOPTED BY THE BOARD