A lawyer’s duty of loyalty is one of the foundations of the attorney-client relationship. Clients trust lawyers to protect their interests, give independent advice, and avoid divided loyalties. When a lawyer represents clients with conflicting interests, that trust can break down.

Conflicts of interest often arise in business matters. A lawyer may represent a company and its owners, two business partners, a buyer and seller, a borrower and guarantor, or multiple family members in a transaction. The clients may begin aligned, but their interests can diverge quickly.

Joint representation can be risky because the lawyer may receive confidential information from one client that matters to another. If a dispute later develops, the lawyer may be unable to advocate fully for either side. In some situations, the lawyer should never have handled the matter without informed consent. In others, the lawyer may need to withdraw when the conflict becomes unmanageable.

Undisclosed conflicts can cause real harm. A lawyer may fail to advise one client about claims against another client, push a settlement that protects the lawyer’s other client, avoid difficult advice, or structure a transaction in a way that favors one side.

Conflicts can also appear in litigation. A lawyer may represent multiple defendants who blame each other, a business and an individual officer, or a client while also having a relationship with an opposing party, witness, or financial interest in the outcome. These issues can affect strategy, settlement, and trial decisions.

Not every conflict creates a legal malpractice claim. The client must still show that the conflict caused damage. But when a lawyer’s divided loyalty leads to lost claims, bad settlements, impaired defenses, or financial loss, malpractice may be an issue.

Warning signs include a lawyer refusing to discuss claims against another client, discouraging independent counsel, failing to disclose relationships, giving vague explanations about who the lawyer represents, or asking clients to sign conflict waivers without meaningful explanation.

Clients who suspect a conflict should gather engagement letters, conflict waivers, emails, settlement communications, transaction documents, and billing records. The first question is often simple: who exactly was the lawyer representing, and whose interests were being protected?

A lawyer should not place a client in a position where loyalty is uncertain. When divided loyalty causes harm, the consequences can become a legal malpractice claim.

Brenden Kelley Law represents clients harmed by conflicted representation, undisclosed conflicts, and other breaches of attorney duties.

Additional legal and practical context

Conflicts of interest can be especially damaging because they attack the foundation of the attorney-client relationship: loyalty. A client hires a lawyer expecting that lawyer to exercise independent judgment for that client. When the lawyer has divided loyalties, the client may receive compromised advice even if the lawyer never intended harm.

The Ohio Rules of Professional Conduct address concurrent conflicts of interest in Rule 1.7 and duties to former clients in Rule 1.9. See the Ohio Rules of Professional Conduct. A conflict may exist when representing one client will be directly adverse to another client, or when there is a substantial risk that the lawyer’s responsibilities to another person, a former client, a third person, or the lawyer’s own interests will materially limit the representation.

Common examples include a lawyer representing two business partners in a formation and later advising one against the other; representing both a company and an owner in an internal dispute; representing multiple family members in a probate conflict; representing a buyer and seller in a transaction; or advising a client in a matter where the lawyer has a personal financial interest. In some situations, informed written consent may allow the representation. In others, the conflict may be nonconsentable.

In a malpractice case, the existence of a conflict is not always enough. The client still usually must prove damages caused by the conflicted representation. That may require showing that independent counsel would have given different advice, negotiated different terms, disclosed different risks, or avoided a course of action that harmed the client.

Practical takeaway

Clients should be cautious when a lawyer says, “I can represent everyone,” especially in business, probate, and closely held company disputes. Joint representation may appear efficient at the beginning, but it can create serious problems when interests diverge. If you later believe your lawyer’s loyalty was divided, preserve the engagement agreement, conflict waivers, emails, settlement documents, transaction documents, and billing records.

Sources and further reading

•            Ohio Rules of Professional Conduct

•            ABA Model Rule 1.7 - Conflict of Interest: Current Clients