Conflicts of Interest of Lawyers Serving on Boards of Directors

A lawyer serving on the board of directors of a corporation is burdened with potential conflicts of interest. However, his or her service is not barred by the Ohio Rules of Professional Conduct. Some lawyers take on a dual role as corporate counsel and corporate director. This arrangement is routinely cautioned against because of its ethical challenges. Such challenges confronting the dual role of corporate director and counsel include: whether the lawyer may remain independent in their judgment; whether the lawyer’s views are legal advice or business ideas; and concerns about client confidentiality, especially the client-lawyer privilege1.

Even when a lawyer serves as a corporate director and not as corporate counsel, ethical concerns remain. For instance, conflicts of interest may arise between the lawyer’s duties as corporate director and the lawyer’s duties in representation of clients. Thus, the question arises as to whether a lawyer sitting on the board of directors of a corporation, but not serving as corporate counsel, may represent a client in a lawsuit against the corporation. In Opinion 2008-2, the Ohio Board of Commissioners on Grievances and Discipline opined that:

• A lawyer sitting on the board of directors of a corporation but not as corporate counsel possesses a material limitation conflict of interest that prohibits the lawyer from representing a client in a lawsuit against the corporation2.

• That conflict of interest of a lawyer director, in the representation of a litigation client against the corporation, cannot be waived because the client and the corporation are direct adversaries in the same proceeding3. Though the corporation is not a client of a lawyer director, the lawyer director cannot segregate fiduciary duties owed to the corporation from his or her professional duties as a lawyer.

• The conflict of interest is imputed to the lawyer director’s law firm4. Therefore, it would be improper for a law firm member, partner, or associate of the lawyer director to represent a client in a lawsuit against the corporation for which the lawyer director serves.

Footnotes

1. See ABA Formal Opinion 98-410 (1998).

2. Ohio Sup. Ct. Bd. Comm’rs on Grievances & Discipline, 2008-2 (2008); Prof. Cond. R. 1.7(a) (2).

3. Prof. Cond. R. 1.7(c) and (b).

4. Prof. Cond. R. 1.10 (a).

For more information on Opinion 2008-2 of the Ohio Board of Commissioners on Grievances and Discipline, contact Alvin Mathews at 614.227.2312. or visit our Legal Ethics and Professional Responsibility Resource Center.

This document has been prepared as a general reference for careful lawyers and their staff for informational purposes. The information contained herein is not intended to be and should not be construed as legal advice. Each circumstance should be considered and evaluated separately, and possibly with involvement of legal counsel.

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