Ahoy! Conflict of Interest Ahead: Does Your Condominium or HOA Attorney Represent Your Management Company?

Ahoy! Conflict of Interest Ahead: Does Your Condominium or HOA Attorney Represent Your Management Company?

| Dec 9, 2020 | Firm News |

If an attorney represents your condominium association or homeowners association (HOA), it would be wise to find out if that attorney represents or has ever represented your management company. Why? Because that is a conflict of interest.

The Michigan Rules of Professional Conduct (MRPC) provide:

Rule: 1.7 Conflict of Interest: General Rule

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests, unless:

(1) the lawyer reasonably believes the representation will not be adversely affected; and

(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.[1]

Rule: 1.9 Conflict of Interest: Former Client

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client consents after consultation.

(b) Unless the former client consents after consultation, a lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated has previously represented a client

(1) whose interests are materially adverse to that person, and

(2) about whom the lawyer had acquired information protected by Rules 1.6[2] and 1.9(c) that is material to the matter.

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the former client except as Rule 1.6[3] or Rule 3.3 would permit or require with respect to a client, or when the information has become generally known; or

(2) reveal information relating to the representation except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client.[4]

Condominium associations and HOAs are on opposite sides of a contract with the management company. That means if a dispute arises about the contract or the contract needs to be renegotiated, and your attorney represents both the association and the management company, then that leaves all the parties and the attorney in quite the pickle. Whose interests will that attorney be looking out for, the association’s or the management company’s?

Under the MRPC, if your condominium association or HOA attorney also currently represents your management company he/she must disclose this to you. In addition, for the representation of both parties by that attorney to continue, you and your management company must agree in writing. If you believe your attorney is not being forthcoming about the risks involved in representing both of you at the same time, you should each contact independent attorneys prior to agreeing to the continuance of that attorney’s representation.

Under the MRPC, if your condominium association or HOA attorney represented your management company in the past, they must inform the management company of that if they believe that the representation of your condominium association or HOA would be “materially adverse” to the interests of management company. The management company would then have to consent. The converse of this would be true if the management company sought representation from the condominium or HOA’s former attorney. The attorney would have to notify the condominium or HOA and the condominium or HOA would need to give consent to the management company’s representation by that attorney.

These situations are sticky. Even if you and your management company consent to representation by an attorney that represents both of you or has represented one of you in the past, you could have ongoing ethical issues to deal with such as when to invoke the attorney-client privilege or other issues with confidentiality. Let’s face it, condominium associations and HOAs generally have interests that are opposed to those of a management company and if a significant issue arises between the two, you might both have to seek new counsel to resolve the issue because the attorney will not be able to ethically pick a side.

At Tilchin & Hall, P.C., we have a policy that we do not represent management companies or their employees. While we work closely with management companies, we know who are clients are. Can you say the same about the attorney representing your condominium association or HOA? If you cannot or you do not know whether you can or cannot, it’s worth a call to your association’s attorney to find out.

If you discover that your association’s attorney represents your management company or has in the past and failed to disclose that to you, you should seriously consider finding a new attorney to represent your association. If you or your association have questions about how to these issues or any others, or are seeking new representation, please feel free to contact Tilchin & Hall, P.C. at (248) 349-6203 or by emailing us below.

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[1] MRPC 1.7. You can read the complete MRPC here: https://courts.michigan.gov/Courts/MichiganSupremeCourt/rules/Documents/Michigan%20Rules%20of%20Professional%20Conduct.pdf

[2] MRPC 1.6 addresses Confidentiality of Information.

[3] MRPC 1.6 addresses Confidentiality of Information and MRPC 3.3 addresses Candor Toward the Tribunal.

[4] MRPC 1.9