What responsibilities do lawyers have to people they talk to about legal matters without getting hired? Until January 1, 2005, it wasn’t very clear. That’s when new Indiana Rule of Professional Conduct 1.18 went into effect. Before then, some cases (none from Indiana) developed the law in this area. But Rule 1.18 was the first effort to codify a lawyer’s duties.
Lawyers have long puzzled over their responsibilities to prospective clients who consult them in anticipation of forming attorney-client relationships, but do not actually become full-fledged clients. I will refer to the lawyer who engages in the direct communication with the prospective client as the “consulting lawyer.” I assume that the prospective client does not then hire the consulting lawyer. If a full attorney-client relationship arises, the duties are less nuanced than when no attorney-client relationship grows out of the consultation.
WHAT IS A PROSPECTIVE CLIENT?
For starters, Rule 1.18 defines a prospective client as a person “who discusses with a lawyer the possibility of forming a client-lawyer relationship….” This says nothing about the formality of the circumstances surrounding the discussion. It need not take place in the lawyer’s office. It could be over the telephone, by e-mail or even at a cocktail party.
Lawyers always run the risk of creating a true attorney-client relationship through these informal interactions. That can happen when the lawyer allows the prospective client to reasonably believe that an attorney-client relationship exists—always a dangerous situation if the lawyer doesn’t share that same belief. But we’re talking about something else here—the risk of such a person having the status of prospective client. It is much easier for someone who talks to a lawyer to be considered a prospective client than a true client, and as we shall see, important consequences flow from this.
Even though Rule 1.18 uses “person” to describe prospective clients, it seems apparent the rule applies equally to entities that have discussions through their authorized agents with lawyers in advance of a hiring decision.
“YOU’RE A LAWYER, LET ME TELL YOU ABOUT …”
According to Comment  to Rule 1.18, a prospective client is not someone who unilaterally foists information upon a lawyer with no reasonable expectation that the lawyer is willing to consider the creation of an attorney-client relationship. So in the cocktail party example, the guest who spontaneously blurts out his legal travails of the moment to a lawyer-guest does not become a prospective client. But that could change by action on the part of the lawyer to draw out further information or convey interest in undertaking representation. As interesting as the story might be, the lawyer is better off changing subjects or offering to schedule the person into the office where the matter can be pursued in a more controlled environment.
Rule 1.18 takes on two topics: confidentiality obligations to and conflict of interest ramifications of consultations with prospective clients.
Confidentiality is the easy part. Lawyers who consult with prospective clients are obliged to treat information that is revealed as confidential to the same extent as if the person had been a full-blown client. Rule 1.18(b). Lawyers owe a duty to former clients to continue to protect all information relating to the representation. Rule 1.9(c). Client information cannot be revealed except to the extent there is an exception in the primary client confidentiality rule. See Rule 1.6(b). Also, the lawyer cannot use information conveyed by a prospective client to that person’s disadvantage unless the information has become generally known. Rule 1.9(c)(1). For example, if a prospective client conveys information that could reveal a lucrative business opportunity for the lawyer that, if seized, would be to the prospective client’s financial disadvantage, the lawyer may not take advantage of it.
CONFLICTS OF INTEREST
When a prospective client does not ripen into a true client, to what extent does that person enjoy the rights that former clients have under Rule 1.9(a) and (b)? The general rule for former clients is that a lawyer is not permitted to take on a new client whose interests are materially adverse to the old client in a matter that is the same or substantially related to the previous representation. Moreover, imputation of the conflict precludes other lawyers in the same firm from taking on the new client.
Conflict of interest analysis is not quite as rigid when it comes to former prospective clients. If, during the course of the consultation with the prospective client, the consulting lawyer receives information that “could be significantly harmful to that person in the matter,” the consulting lawyer is presumptively just as burdened with a conflict as if the prospective client had been a true client. In that event, not only is the consulting lawyer personally disqualified from handling the adverse matter in the future, so is the consulting lawyer’s firm. This is a looser standard than if the prospective client had been a true client. In a former client situation, a conflict exists whenever a lawyer receives any material information related to the representation, not just information that could be significantly harmful.
The disqualification presumption can be overcome under two circumstances. The easy one is when the former prospective client and the new client both give informed consent that is confirmed in writing.
DEATH FROM OVEREXPOSURE
Secondly, the presumption is overcome as to the law firm, but not the consulting lawyer, if the consulting lawyer “took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client” and the consulting lawyer is timely screened from any participation in the new matter.
This is tricky stuff. What information is reasonably necessary to decide whether to represent the prospective client? Clearly, basic information required to determine if there is a conflict of interest qualifies. See Comment . Information about the client’s wherewithal to pay for the lawyer’s services seems reasonable. But what about information concerning the merits? It seems reasonable for a lawyer to know something about the merits of a case before undertaking representation. Yet, a lawyer could go too far in probing the merits to benefit from this exception, thereby disqualifying the entire firm from future adverse representation.
In cases where a lawyer consults with a prospective client, suspects that the client might just be “window shopping,” and believes being hired later by the other side is a possibility, the consulting lawyer should use as much restraint as possible in eliciting potentially harmful facts from the prospective client. This is no solace for the sole practitioner, of course, because there are no additional lawyers to handle the new matter once the consulting lawyer is disqualified and screened.
When screening of the consulting lawyer is an available method to avoid imputation of the conflict to the entire law firm, the screen must be timely imposed, the screened lawyer may not be apportioned any part of the fee from the new matter, and the former prospective client must be informed that the consulting lawyer has been screened from the new matter. For more about screening, see Rule 1.0(k) and Comments  through  of that rule.
Comment  to Rule 1.18 suggests that the consulting lawyer may condition the consultation on receiving informed consent from the prospective client that “no information disclosed during the consultation will prohibit the lawyer from representing a different client in the matter.” This is, in effect, a waiver of future conflicts of interest. This is risky business. Consents to unknown, future conflicts can and should be difficult to justify. Comment  to Rule 1.7 discusses consents to future conflicts at length. The lawyer who chooses this route should be very familiar with this comment and some of the case law surrounding consents to future conflicts. The less sophisticated the client and the more uncertain the nature of the future conflict, the less likely waiver of a future conflict will hold up.
One situation where waiver of a future conflict is more likely to hold up is when the client manipulates his role as a prospective client for the sole purpose of conflicting out a lawyer or her firm. This happens in some communities, particularly in domestic relations cases, when a cunning party consults with most of the relevant lawyers in town, but only hires one of them. When the other party tries to hire a lawyer, he or she learns that the firm has a conflict, or alternatively, if the firm accepts the case, the former prospective client wages a disqualification campaign. Even under this circumstance, the consulting lawyer will want to avoid exposure to more information than necessary for the case acceptance decision.
I DIDN’T KNOW THE GUN WAS LOADED
It is usually too late when a lawyer finds out about a conflict because someone else has pointed it out, typically in a motion for disqualification. Our conflict rules presume that lawyers will have conflict checking systems in order to identify potential conflicts so they can be avoided. See Comment  to Rule 1.7.
Because a prospective client consultation may create a disqualifying conflict for an entire law firm, it is not enough that a conflicts checking system merely identify current and former clients (as well as current and former adverse parties). It must also be able to identify former prospective clients. When a new client contacts the firm, the firm is going to want to know whether the adverse party in the proposed representation has ever been a former client or a former prospective client. If so, that former “window shopping” relationship might be disqualifying for the consulting lawyer and potentially disqualifying for the entire firm. Lack of advance knowledge of the conflict might preclude screening the consulting lawyer in a timely fashion.
Rule 1.18 gives us a set of standards that we didn’t have before 2005. Even so, these standards aren’t cut-and-dried and still require the close attention of lawyers who wish to avoid falling into an ethics trap or becoming enmeshed in wasteful disqualification litigation.