Joint representation in personal injury actions can be a plaintiff attorney’s most satisfying and rewarding experience. The attorney, beyond navigating the legal landscape, naturally bonds with the clients as they cope with their loss, be it a personal injury or wrongful death. However, when preparing to represent more than one individual in the same action, an attorney is well advised to keep in mind and prepare for the pitfalls and conflicts of joint representation.
The typical scenarios that present conflict problems to practitioners are basically categorized into three situations (1) married couple where one spouse is injured and other spouse has a loss of consortium claim; (2) separation or divorce of married couples; (3) wrongful death claim brought by parents and/or children of deceased. Each of these situations presents unique potential or actual conflict situations, and they are addressed as follows.
Rules of Professional Conduct
All issues of conflict flow from the basic Rules of Professional Responsibility. In particular, the conflict rules that guide this area are found in Rule 3-310, “Avoiding the Representation of Adverse Interests.” California Rules of Professional Responsibility Rule 3-310(C) addresses the question of how an attorney must handle situations when representing clients whose interests potentially and actually conflict. This section reads in pertinent part as follows:
A member shall not, without the informed written consent of each client:
(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or
(3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.
Thus, the attorney must receive “informed written consent” – from both clients – in potential or actual conflict situations. Additionally, under 3-310(D):
A member who represents two or more clients shall not enter into an aggregate settlement of the claims of or against the clients without the informed written consent of each client.
Thus, upon the settlement of a case, additional written consent is required when more than one client is represented. In the Discussion Section of 3-310, the Rules explain this section as follows:
[F]or the sake of convenience or economy, … parties may well prefer to employ a single counsel, but a member must disclose the potential adverse aspects of such multiple representation (e.g., Evid. Code, §962) and must obtain the informed written consent of the clients thereto pursuant to subparagraph (C)(1). Moreover, if the potential adversity should become actual, the member must obtain the further informed written consent of the clients pursuant to subparagraph (C)(2).
In other words, an attorney is obliged to vigilantly keep clients informed and updated as to actual and potential conflicts as they arise throughout the representation. With these rules in place, they can be applied to the three typical scenarios below.
Married Couple Where One Spouse Is Injured and the Other Has Loss of Consortium Claim
This situation presents the easiest of the three to deal with. Pursuant to California law, the spouse of the injured party has a claim for loss of consortium. Each party is entitled to a separate award by the jury if the case is tried. With this separate award, there clearly could be a potential or actual conflict in terms of settling this case. However, this conflict is substantially eliminated by statute because any award to a married couple is community property. Therefore, regardless of the amount either party receives, both are entitled to a half interest in the other’s recovery.
Under Family Code §780:
Except as provided in Section 781 and subject to the rules of allocation set forth in Section 2603, money and other property received or to be received by a married person in satisfaction of a judgment for damages for personal injuries, or pursuant to an agreement for the settlement or compromise of a claim for such damages, is community property if the cause of action for the damages arose during the marriage. [Added 1992 ch. 162 (operative Jan. 1, 1994).] (emphasis supplied).
Generally, therefore, under Family Code § 780, an award of damages or a judgment in favor of a married couple will be treated as community property.
Since one-half of either award is considered to belong to the other spouse, there is no actual conflict in this joint representation.
Nonetheless, an attorney has a duty to address the good, the bad and the ugly of litigation and conflicts of interest fit at least two of those categories. While there is no conflict so long as the couple stays married, if there is any indication that the marriage may not last, there could be an issue of a potential conflict that may require some disclosures. Such disclosures could be incorporated into the original letter of representation. Namely, the letter could set forth the applicable Family Code provisions addressing how an award for damages is treated under the law. Such a letter could include the caveat that in the event of a future dissolution, the disposition of any damage award is presumed to be the separate property of the injured individual but that a judge, weighing certain factors, is empowered to redistribute the award. The law affecting such a disposition is discussed below.
Separation or Divorce of Married Couples
1. Divorce or Legal Separation Before the Accrual of the Cause of Action
As a starting point, the first issue is whether the divorce or separation occurred before or after the accrual of the cause of action. If either legal separation or divorce occurred before the accrual of the cause of action, there is no claim for loss of consortium, and only the injured party has a right to a claim. (Eldon v. Sheldon (1988) 46 Cal.3d 267, 277 [holding only married couples can bring an action for loss of consortium].) Therefore, only one claimant exists and there is no conflict. Under Family Code § 781, the funds received in settlement or by verdict of the claim are the separate property of the injured individual. Thus, any award for damages given to the divorced or legally separated injured party is separate property.
2. Divorce or Legal Separation After the Accrual of the Cause of Action
Unfortunately, as all plaintiffs’ attorneys know, the stresses and strains of a serious injury and resulting lawsuit can break up even the most solid marriage. The emotional difficulty of coping with the permanent disability of a spouse, as well as the economic and social strains inevitably experienced during the litigation are often too much for a married couple to handle. What is an attorney’s duty if a married couple that is jointly represented separates during the litigation?
If the couple separates or is otherwise estranged after the accrual of the action but prior to settlement or judgment, money damages or other award are still treated as community property. (See Family Code §§ 780 and 781.) However, if the couple divorces after the settlement or judgment, the question is how is the money treated in the dissolution proceeding and what duties does the attorney owe to the clients under Rule 3-310? Again, California Family Law addresses the issue. Under Family Code § 2603:
(b) Community estate personal injury damages shall be assigned to the party who suffered the injuries unless the court, after taking into account the economic condition and needs of each party, the time that has elapsed since the recovery of the damages or the accrual of the cause of action, and all other facts of the case, determines that the interests of justice require another disposition. In such a case, the community estate personal injury damages shall be assigned to the respective parties in such proportions as the court determines to be just, except that at least one-half of the damages shall be assigned to the party who suffered the injuries.
Thus, if the couple separates after the accrual of the action, the award or settlement is still taken as community property. However, if a divorce is initiated, the judge will treat the funds as the separate property of the injured party unless justice requires otherwise. Therefore, what obligations does a careful practitioner have if his clients separate during the pendancy of the claim? Obviously, when clients separate there is an actual conflict in representing the two parties and informed written consent to continue representation must be obtained.
In any such situation, the clients should be informed of the relevant provisions of the Family Code. They should be told that any award or settlement would be considered community property prior to divorce. However, upon divorce, it may be treated as separate property, unless a judge weighing the above factors decides otherwise. If the personal injury action is resolved by a trial, the jury will apportion the percentage recovery for each injured party.
If a matter is resolved by settlement, the conflict issue is also complicated. In anticipation of the conflict over apportionment of a settlement, an attorney may consider setting forth a dispute resolution mechanism within the conflict letter (i.e., binding arbitration of the distribution of settlement, or suggesting an agreement authorizing the attorney to negotiate and settle the claims independently during the settlement proceedings).
Wrongful Death of Spouse, Child or Parent
This presents one of the most difficult situations to resolve. Under California law, in a wrongful death action, there is a “single award” given for the wrongful death of any person. This award may be subject to the claims of multiple individuals such as a spouse and the children of the deceased. It can also involve children born out of wedlock, and children from prior marriages. All have potential claims, and all have a conflict in relationship to one another. If the case is tried to verdict, it is up to the judge to divide the proceeds, unless the parties have agreed to a division ahead of time. (C.C.P. § 377.61.)
To prepare for the first meeting with the spouse and children bringing the wrongful death action, should the attorney have a conflict letter at the ready? For obvious reasons, in the first meeting with clients coping with every person’s worst nightmare, bringing up the “potential adverse aspects” of potential and actual conflicts is not easy. The subtext of any such discussion, by implication, is the suggestion that two injured and emotionally fragile plaintiffs may be at loggerheads over money damages awarded by virtue of their respective injuries. In such a case, the potential conflict is the foreseeable dispute in resolving the case through a settlement that is more favorable for one plaintiff or another.
The conflict is best resolved if the parties are able to easily determine among themselves ahead of time the proper division of funds. Obviously, the attorney cannot and should not get involved with the discussions as to what a fair division should be absent written consent to provide such advice in an actual conflict situation. This route is often only possible with a close family relationship without complicating factors such as children of prior marriages or those born out of wedlock, competing with children of the current marriage. If this is done with written agreement and informed consent by all parties at the start of the representation, the conflict rules may be satisfied.
However, sometimes the conflict may be such that joint representation should be avoided altogether, as discussed below.
Conflict Too Substantial to Continue
Although the rules allow for continued representation in actual conflict situations, there are clearly times where the representation of adverse interests is not appropriate and the attorney should consider having each client obtain separate counsel. Such a situation is most apparent during the trial of a case where there are actual conflicts between the clients. How can an attorney adequately represent adverse interests in front of a jury, which requires placing one person’s interest above the other? The risk is that following the determination of the jury, the party who received the lower amount will be unhappy with the result and could easily claim that “inadequate” informed consent was received.
Therefore, while every case presents its own unique factual situation, the careful practitioner must keep in mind that not all conflicts can be overcome by disclosure and written consent. Some cases clearly require separate counsel to adequately, and fairly, represent all sides of the litigation.
In cases where an attorney jointly represents family members or others, the dictates of Rule 3-310 are the only guide. As such, an attorney must, at the outset of the case, be prepared to fully advise the clients of the potential and actual conflict that exist and receive written informed consent from the clients to proceed. Oftentimes that can be accomplished with a “sign-on” letter that fully explains the conflict scenario and provides for a signature line for acknowledgment.
In any event, the attorney must be vigilant in spotting the potential and actual conflicts and deal with them as they arise. Further, if a potential conflict becomes an actual conflict, the attorney must revisit the issue with the clients and receive additional “written informed consent” to proceed with the representation or if the conflict is too significant, joint representation should end.