CONFLICT of INTEREST – lawyer chided for secretly continuing affair with husband of firm’s divorce client
What is the proper sanction for a lawyer who concealed from her boss that she had renewed a romantic relationship with the estranged husband of the firm’s divorce client? A private reprimand is what a closely divided Vermont Supreme Court decided (In re Strouse, Vt., No. 2010-053, 7/15/11). The court determined that the lawyer had a duty to reveal that she had resumed the affair because she knew it created a conflict of interest for her firm. The misconduct also damaged her boss’s relationship with the client and put stress on the client and her children, the court found.
The unnamed client hired a Burlington, Vt., law firm to represent her in a divorce. When firm attorney Margaret Strouse realized that she was dating the client’s husband, she immediately notified the firm’s senior attorney and recommended that the firm set up a ‘conflict wall.’ Instead, the firm restricted her choices to either (1) ending the affair, or (2) facing termination from the firm. The following day Strouse told the senior attorney that she had broken off the relationship. This was revealed to the firm’s client, who chose to continue having the firm represent her in her divorce. Later Strouse was confronted by the senior partner who had received a report that Strouse was still involved with the client’s husband. Strouse admitted that she had resumed the relationship and was summarily dismissed from the firm. The court ruled that Strouse had violated Rule 8.4 (c) (dishonesty, fraud, deceit, misrepresentation) but instead of the six-month suspension proposed by the professional responsibility board, it concluded that a public reprimand was sufficient.
Strouse’s decision to continue seeing the husband put the law firm at risk of being in violation of Rule 1.7(a)(2) (current-client conflicts of interest), the court said. It also turned to Rule 1.10(a) (imputation of conflicts), noting that if one lawyer in a firm is prohibited from representing a client because of a conflict, all members of the firm are forbidden to do so. Further, the situation raised “serious concerns about loyalty to the client and misuse of confidential information,” the court said. It noted that although some conflicts are consentable, the senior attorney had not sought the client’s consent. The court rejected Strouse’s claim that she had not engaged in any fraud or deceit, for she had to have been aware that her relationship presented a conflict of interest, and her failure to inform the senior attorney that she had renewed the relationship could be characterized as deceitful. Turning to the common law concept of ‘negative deceit,’ which states that a failure to disclose material facts may be as fraudulent as an affirmative misrepresentation, the court concluded there was a duty to disclose so the firm could take curative action.
The court also rebuffed the lawyer’s argument that there was no justifiable reliance on her nondisclosure. “The senior attorney relied upon [Strouse’s] promise to terminate the relationship with the husband by continuing to represent the client, oblivious to the conflict of interest and by continuing to employ [Strouse].” These actions not only damaged the firm by exposing it to an ethics violation, but also damaged the senior attorney’s relationship with the client, causing the client to suffer stress.
Disciplinary counsel had argued that the misconduct warranted disbarment pursuant to Standard 4.6 of the ABA Standards for Imposing Lawyer Sanctions, which calls for disbarment when the lawyer “knowingly deceives a client with intent to benefit the lawyer” and “causes serious injury or potential serious injury to a client.” However, the majority disagreed, noting that the fraud was aimed at the senior partner, not the client.
Looking to its own decisions and commentary in the ABA Standards, the majority found that disbarment and suspension are normally reserved for serious misconduct. Disbarment is usually invoked where there is “significant criminal activity, misuse of client information or funds, or deceit in the handling of client information,” it said.
As for suspension, the majority said that sanction is typically warranted for egregious misconduct such as serious misrepresentation directly to the client of matters being handled by the attorney or intentional interference with the administration of justice, misrepresentation, and fraud. Although Strouse’s actions were self-serving and caused harm, it said, they were not egregious and were mitigated by her inexperience, remorse, and lack of malice.
“[S]he acted not for greed or glory, nor for malice or lucre,” the majority said, “but apparently for romantic reasons.”