ETHICAL ISSUES IN REPRESENTING MULTIPLE PARTIES IN CONSTRUCTION CASES

1. Introduction
2. Applicable Rules
1. Texas Disciplinary Rule of Professional Conduct
2. ABA Model Rules of Professional Conduct
3. Texas Rules of Civil Evidence
4. Restatement - The Law Governing Lawyers
3. Evaluating Whether Multiple Representation is Proper
4. Is there a conflict?
5. Disclosure/Consent Issues
6. Withdrawal/Disqualification Issues
7. Settlement
8. Joint Defense Privilege
9. Application to Construction Cases
1. Indemnity/Additional Insured Cases
2. Reservation of Rights
3. Multiple Representation in Construction and Surety Bond Cases
4. Owner Controlled Insurance Plan
5. Fee Claims
6. Representing Multiple Parties to a Real Estate Transaction
10. Conclusion

Abstract

Lawyers are being called upon to represent multiple parties in litigation with increasing frequency. This is especially true in the construction litigation setting, where one party (or its insurer) owes a duty to defend multiple participants in the construction process who frequently may end up as co-defendants. These arrangements typically arise pursuant to a contractual indemnity provision or an owner controlled insurance plan.

There are many advantages to dual representation, such as decreased litigation costs and the potential reduced case value which comes through the existence of unity among defendants. However, lawyers must be aware of the applicable rules governing representation of multiple parties. If there is a conflict or potential for conflict, the lawyer should obtain the client=s informed consent before proceeding with the representation. In some cases, multiple representation is prohibited even if the client consents.

When deciding whether joint representation is appropriate, the attorney must consider the effect on the clients if a conflict does arise and the attorney is forced to withdraw. Additionally, the attorney will want to consider whether he or she will be precluded from representing any of the parties should a conflict arise. If an attorney continues to represent one or more clients after a conflict arises, the attorney may face a disqualification hearing, or worse, a malpractice lawsuit.

The benefits of multiple representation often far outweigh the disadvantages in construction disputes and litigation. However, any attorney undertaking the representation of multiple clients must be aware of the applicable ethics rules. Prior to embarking on multiple representation, the attorney should analyze whether a conflict, or the potential for conflict, exists. The attorney should explain the risk that a conflict may arise, and the potential that the attorney may be required to withdraw, to all clients in writing. The attorney may want to include a provision in his or her disclosure letter allowing for the continued representation post-conflict of one or more clients. The extent to which information will be shared among the clients should also be discussed at the outset. The attorney should monitor the potential for conflicts, as a permissible conflict may later develop into an impermissible one.

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