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Prohibition against conflict-of-interest representation; current clients, C3S14 CPRA

Section 14, Canon III

SECTION 14. Prohibition against conflict-of-interest representation; current clients. – In relation to current clients, the following rules shall be observed:
(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client unless:
(1) it is shown that the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking, and is given a reasonable opportunity to seek, the advice of another independent lawyer on the transaction; and
(3) the client gives written informed consent to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.
(b) A lawyer shall not use confidential information relating to representation of a client without the client’s written informed consent, except as permitted or required by law or the CPRA.
(c) A lawyer shall not, by undue influence, acquire any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer such gift, directly or indirectly.
(d) Unless with the written informed consent of the client and subject to the application of the sub Judice rule, a lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.
(e) A lawyer shall not accept compensation for representing a client from any person other than the client, unless:
(1) the client gives written informed consent;
(2) there is no interference with the lawyer’s independence or professional judgment or with the lawyer-client relationship; or
(3) the information relating to representation of a client is protected as required by the rule on privileged communication.
(f) A lawyer, who represents two or more clients in the same case, in case there is a settlement or plea-bargaining, shall disclose to all the clients the existence and nature of all the claims or pleas involved and the participation of each client in the settlement or plea-bargaining.
(g) A lawyer shall avoid testifying in behalf of the client, except:
(1) on formal matters, such as the mailing, authentication or custody of an instrument, and the like; or
(2) on substantial matters, in cases where the testimony is essential to the ends of justice, in which event the lawyer must, during the testimony, entrust the trial of the case to another counsel. (2023 Code of Professional Responsibility and Accountability or CPRA)

1. Prohibition against conflict-of-interest representation; current clients

a. Rules on conflict-of-interest representation for current clients

Under this section, and in relation to current clients, lawyers are required to observe the following rules:

1) No entering into business transaction; exceptions

Lawyers are prohibited from entering “into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client.”

The prohibition is subject to the following exceptions:

1) It is shown that the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;

2) The client is advised in writing of the desirability of seeking, and is given a reasonable opportunity to seek, the advice of another independent lawyer on the transaction; and

3) The client gives written informed consent to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

2) No using of confidential information; exceptions

Lawyers are prohibited from using “confidential information relating to representation of a client without the client’s written informed consent, except as permitted or required by law or the CPRA.”

3) No substantial gift

By undue influence, lawyers are prohibited from acquiring “any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer such gift, directly or indirectly.”

4) No making or negotiating agreement giving lawyer literary or media right to a portrayal or account

Lawyers are prohibited from making or negotiating “an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.”

The prohibition is subject to the following exception:

1) With the written informed consent of the client; and

2) Subject to the application of the sub Judice rule.

5) No accepting compensation from third parties; exceptions

Lawyers are prohibited from accepting “compensation for representing a client from any person other than the client.”

The prohibition is subject to the following exceptions:

1) The client gives written informed consent;

2) There is no interference with the lawyer’s independence or professional judgment or with the lawyer-client relationship; or

3) The information relating to representation of a client is protected as required by the rule on privileged communication.

6) Active disclosure when representing a client two or more clients


If representing two more clients at the same time, and if there is a settlement or plea-bargaining, lawyers are required to “disclose to all the clients the existence and nature of all the claims or pleas involved and the participation of each client in the settlement or plea-bargaining.”

7) Avoid testifying in behalf of clients; exceptions

Lawyers should “avoid testifying in behalf of the client.”

The prohibition is subject to the following exceptions:

1) On formal matters, such as the mailing, authentication or custody of an instrument, and the like; or

2) On substantial matters, in cases where the testimony is essential to the ends of justice, in which event the lawyer must, during the testimony, entrust the trial of the case to another counsel.

References

Canon III, 2023 Code of Professional Responsibility

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