RFF Family Partnership, LP v. Burns & Levinson, LLP

In RFF Family Partnership, LP v. Burns & Levinson, LLP, 465 Mass. 702, 991 N.E.2d 1066, 1071 (Mass. 2013), the Massachusetts Supreme Judicial Court articulated a four-part test by which a court can ascertain whether confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim are privileged from disclosure to the client. Such communications are generally privileged, provided that: (1) the law firm has designated an attorney or attorneys within the firm to represent the firm as in-house counsel; (2) the in-house counsel has not performed any work on the client matter at issue or a substantially related matter; (3) the time spent by the attorneys in these communications with in-house counsel is not billed to a client; (4) the communications are made in confidence and kept confidential. Id. at 1068. The Massachusetts Supreme Judicial Court noted, "the rationales used by courts in reaching this conclusion are varied" but the underlying theme seems to be that, where a current outside client threatens legal action against a law firm and the attorneys in the firm seek legal advice from the law firm's in-house counsel, "the law firm is both the attorney for the outside client and itself a client, and these two 'clients' have conflicting interests." Id. at 1077. The Massachusetts Supreme Court also noted in 2013 in RFF Family Partnership LP, that "the majority of courts that have been confronted with the issue . . . have invoked some variation of the current client exception and ruled that, where a law firm seeks legal advice from its in-house counsel in response to an adverse claim brought by a current outside client, the communications are not protected from disclosure to the outside client." 991 N.E.2d at 1076-77. The Court noted: "If this were the law, an attorney threatened with a malpractice claim would have four practical alternatives: first, he could withdraw from the representation without first consulting with better informed and more dispassionate in house ethics counsel; second, he could advise the client of the conflict without first consulting with in-house counsel, and seek the client's consent to confer with in-house counsel; third, he could confer with in-house counsel without first having withdrawn from the representation or obtaining the client's informed consent, recognizing that the communications would not be protected from disclosure to the client; or fourth, he could retain an attorney in another law firm to discuss how best to proceed." 991 N.E.2d at 1073-74. The court reasoned that such a regime would not serve the interest of justice, or clients: "The first alternative poses the risk that a law firm, without the benefit of expert advice, may unnecessarily withdraw from a representation where the apparent conflict was illusory or reparable, or withdraw without adequately protecting the client's interests. The second alternative poses the risk that the law firm may advise the client about the conflict before itself obtaining the advice that would enable it better to understand the conflict. The third alternative poses the risk that the information provided to in-house counsel will be withheld or "sugar-coated" because of the risk of disclosure to the client, and the advice received will suffer from the lack of candor. The fourth alternative, apart from the additional cost to the law firm, may delay the receipt of the ethical advice because new counsel will need to be retained and the new counsel's law firm will need to complete its own conflicts check. None of these alternatives best serve the interests of the client." Id. at 1074 . In RFF Family Partnership, LP, (supra) the Massachusetts Supreme Judicial Court rejected the claim that a conflict exists at all when an attorney seeks advice on his own behalf: "The rule of imputation safeguards the duty of loyalty by prohibiting a law firm from representing two clients who are adverse to each other, where loyalty to one client may risk disloyalty to the other client. A law firm can avoid conflicting loyalties by refusing to represent an adverse outside client. But where a law firm is already representing a client and that client threatens to bring a claim against the law firm, the potential conflict between the law firm's loyalty to the client and its loyalty to itself cannot be avoided and must instead be addressed, either by resolving the conflict satisfactorily to the client or withdrawing from the representation. However, a law firm is not disloyal to a client by seeking legal advice to determine how best to address the potential conflict, regardless of whether the legal advice is given by in-house counsel or outside counsel. Applying the rule of imputation in such circumstances therefore would not avoid conflicting loyalties or prevent disloyalty; it would simply prevent or delay a law firm from seeking the expertise and advice of in-house counsel in deciding what to do when there is a potential conflict." RFF Family Partnership, LP, 991 N.E.2d at 1078-79 .