Legal malpractice expert witness discusses case involving a law firm accused of conflicts in representing family partnership

A legal malpractice expert witness advises on a case involving two sisters and a brother, who contracted with a law firm for more than 20 years regarding representation related to their family business, a limited partnership and their family partnership agreements. The firm also represented the sisters on other matters. In the beginning, each sibling owned equal parts of the family business. Later, new arrangements were made, creating three limited partnerships in which an organization controlled by the brother constituted the general partner and the sisters were limited partners. Other terms favorable to the brother included long-term duration, limits on withdrawals by the sisters, his right to compete with the new organization, amendments permitted only with the brother’s approval, and partnership meetings permitted only with his approval. The sisters assert that the law firm did not identify these arrangements and explain their significance to them, nor did it advise them to obtain independent representation.

Further, the firm shared information from discussions involving the sisters with the brother and drafted messages for him to send to his sisters.

Question(s) For Expert Witness

1. Was there a conflict of interest?

2. What should the law firm have done to avoid the conflict?

Expert Witness Response

The firm’s representation of the sisters, while simultaneously representing their brother and entities associated with him regarding the family business, involved serious conflicts of interest. The firm did not provide adequate disclosure of these conflicts to the sisters nor recommend that they obtain independent counsel. The sisters reasonably understood that the law firm continued to represent them, and they relied on the firm to act in their best interests. The conflicts of interest were so serious that the firm could not properly represent the sisters and their brother.

The conflicted representation resulted in allocation of ownership and control of the family business strongly in the brother’s favor and to the severe disadvantage of the sisters. The brother received complete and long-term control of the family business. Independent counsel for the sisters would reasonably have obtained more favorable terms for them. Protracted and expensive disputes and litigation resulted from the conflict and should have been foreseen by the firm and the attorney.

The expert is a law professor who maintains an active consulting practice in the field of professional ethics and conduct. The expert is an advisor on legal ethics to the American Bar Association and was a reporter for the ABA Model Rules of Professional Conduct.