Opinion #37. Representing Both Customers and Retailer Against Manufacturer

Issued by the Professional Ethics Commission

Date Issued: January 17, 1983

Facts

A person making the inquiry has recited the following facts:

In November of 1980, Law Firm A commenced an action in the Superior Court on behalf of a retailer of manufactured homes against the manufacturer, alleging breaches of express and implied warranties and intentional damage to the retailer’s reputation. The retailer has now asked that same law firm to represent unhappy purchasers of the allegedly defective manufactured homes and to join them in the lawsuit as formal parties. To date, the purchasers of the defective homes have made numerous complaints, but have not taken any formal action with respect to the alleged defect. The inquiring party states “to the best of my knowledge the purchasers would not have a cause of action against our client for which the manufacturer would not be ultimately responsible.”

Opinion

There is an inherent conflict of interest in representing the retail purchasers with respect to a claim arising out of the alleged defects in the goods where the law firm represents the retailer in a claim against the manufacturer with respect to such defects. Rule 3.4(b) prohibits a lawyer from accepting employment “if the exercise of his independent professional judgment in behalf of a client will be, or is likely to be, adversely affected by acceptance of such employment, etc.” Rule 3.4(d) authorizes multiple employment if it is obvious that the lawyer can adequately represent the interests of all parties and each party consents to the representation after full disclosure. It is our opinion that it is not at all obvious that the lawyer can represent adequately the interests of each party and, indeed, it appears that the professional judgment on behalf of a client is likely to be adversely affected by the acceptance of such employment. Each of the purchasers from the retailer has a potential action against the retailer. Each of the purchasers may have a direct right of action against a manufacturer. Notwithstanding that the retail purchasers’ claim against the retailers may in whole, or in part, be passed on to the manufacturer, there may be differences in the ease of collection against the manufacturer or the retailer and there may be instances in which the risk of insolvency on the part of the manufacturer may create a direct conflict of interest between the retailers and the retail purchasers.

In addition, there exists the possibility of differing remedies for a consumer, vis‑a‑vis, the retailer as opposed to the manufacturer. If there are remedies against one which are not available against the other, then the interest of one client may not be adequately represented and the judgment of the lawyer may be affected. In addition, the potential problems in advising clients regarding settlements may very easily be affected by the representation of the retailers. Based upon all of this, it is our opinion that an inherent conflict of interest would exist which would prohibit the representation of both classes of Plaintiff in that action.


Enduring Ethics Opinion