2007 Issue 1 - New York City Bar Association

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P R O F E S S I O N A L A N D J U D I C I A L E T H I C S DISCUSSION Originally a British military term meaning “[t]o remove (an officer) temporarily from his regiment or corps, for employment on the staff, or in some other extra-regimental appointment,” 1 in legal circles, secondment has come to describe the practice under which a lawyer from a law firm temporarily acts as inside counsel for a host organization, such as a client, a governmental agency, or a charity. 2 Secondments provide mutual benefit: the law firm benefits because the secondment strengthens the firm’s relationship with the host organization, the host organization benefits because the seconded lawyer provides needed assistance, and the seconded lawyer benefits because he or she gains an insider’s perspective into the business of the host and similar organizations. A secondment may take many forms, depending, for example, on whether (a) the seconded lawyer has access to the confidences and secrets of the firm’s clients or of the host organization; (b) the host organization or the firm compensates the seconded lawyer; (c) the firm is compensated for making the secondment; and (d) the secondment is a partial one, in which the seconded lawyer devotes only a portion of the lawyer’s time to the host organization. The many forms that a secondment may take naturally have different ethical implications, to which we now turn. I. Ethical <strong>Issue</strong>s Arising from a Seconded Lawyer’s Continuing <strong>Association</strong> with the Law Firm Under DR 5-105(D), lawyers associated in a law firm cannot knowingly accept or continue employment when any one of them would be prohibited from doing so because of a conflict of interest: While lawyers are associated in a law firm, none of them shall knowingly accept or continue employment when any one of them practicing alone would be prohibited from doing so under DR 5-101(A), DR 5-105(A) or (B), DR 5-108(A) or (B) or DR 9-101(B) except as otherwise provided therein. 3 1. Oxford English Dictionary Online (2006). 2. The term “host organization” refers to the entity to which the secondment is made. 3. Model Rule 1.10(a) of the Model Rules of Professional Conduct is substantially the same: While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm. T H E R E C O R D 156
F O R M A L O P I N I O N 2 0 0 7 - 2 We discuss below the meaning of being “associated” with a law firm. As a threshold matter, under DR 5-105, when the seconded lawyer remains associated with the firm, conflicts may abound. For example, DR 5-105(A)- (B) prohibit the seconded lawyer who remains associated with the law firm from representing the host organization in litigated and transactional matters against the interests of a current client of the law firm, and DR 5-108 prohibits that seconded lawyer from acting adversely to the interests of a former client of the law firm in substantially related matters. Another significant source of potential conflicts in this context arises from the possibility that the seconded lawyer may learn confidential information from the host organization that is imputed to the law firm under DR 5-105(D) and that is material to one of the firm’s other clients. For example, the seconded lawyer may learn that the host organization has been approached on a confidential basis to extend critical workingcapital financing to Corporation Y. At the same time, the firm may represent Client Z that intends to launch a hostile bid for Corporation Y. Through its continuing association with the seconded attorney, the law firm would be considered to possess information that “is so material to the second representation,” i.e., of Client Z, that the law firm would be representing “differing interests,” so as to create a conflict under DR 5- 105, “in the sense that the representation of one client cannot be accomplished without violating the rights of another.” See ABCNY Formal Op. 2005-2. Similarly, “continued employment [could] mean violating . . . the requirement of DR 4-101(B)(3) that a lawyer may not use a confidence or secret for the advantage of another client.” Id. Accordingly, because obtaining the informed consent of both Client Z and the host organization would require each to make disclosures to the other that neither is likely to agree to make, the law firm and the seconded attorney would be precluded from continuing to represent either one. Moreover, when the seconded lawyer is associated with both the law firm and the host organization, the conflicts of the law firm become the conflicts of the host organization, and vice versa. 4 See N.Y. State 793 (2006) (when a lawyer is “of counsel” to two law firms, the lawyer is ordinarily associated with both, and thus the conflicts of the one firm are imputed to the other). Thus, DR 5-105 would prohibit, for example, all the attorneys in the host organization’s law department from acting adversely to any client of the firm. 4. Under the Code, a law firm is defined to include the legal department of a corporation. Code, Definitions. 2 0 0 7 V O L. 6 2 , N O. 1 157
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2007 Issue 1 - New York City Bar Association

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