The Prospective Client Who Shopped
Attorney Ruth Kessler represents Homeowners Association A in a construction defect suit against Builder B. In February, board member Tomas Reyes of a different association, HOA C, consulted Kessler about HOA C's similar defect claims against the same Builder B. At the consultation, Reyes gave Kessler a binder of HOA C's repair estimates and internal board emails, including a candid email in which the board discussed settling cheaply because it lacked funds. Kessler declined the representation and sent a declination letter. In June, Builder B's counsel contacted Kessler about representing Builder B in the HOA A case, and Kessler agreed, believing her HOA A representation was unrelated to HOA C. In July, HOA C retained new counsel and sued Builder B. Builder B now wants Kessler to use what she learned from Reyes to press a global settlement and has asked her to depose Reyes about HOA C's finances.
1. Analyze Kessler's duties to HOA C as a prospective client and whether she may represent Builder B.
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A person who consults a lawyer about a possible representation is a prospective client, and the lawyer owes duties of confidentiality even if no representation results. Under Arizona's rules, a lawyer who received information from a prospective client may not represent a client with materially adverse interests in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person. Here the matter is substantially related: same builder, same defect type, and Kessler holds HOA C's repair estimates and its settlement-vulnerability email. That information is significantly harmful. Kessler's belief that the matters are unrelated is not the test; the test is substantial relationship plus significantly harmful information. Her representation of Builder B is therefore likely prohibited unless HOA C gives informed consent confirmed in writing, which is implausible given the adversity, or unless screening and other conditions are satisfied.
2. Can Kessler's firm, if any, or Kessler herself rely on screening, and what must she do about the Reyes deposition?
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Screening is available only in limited circumstances and generally requires that the lawyer took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to take the case. Kessler received a full binder of internal board emails, far more than needed for a conflicts check; that undercuts any screening argument for her personally. For a firm, imputation may be avoided if the affected lawyer is screened and the former prospective client is given written notice, but the personally-disqualified lawyer cannot simply be screened out. As to the deposition, Kessler may not use or reveal the prospective client's confidences to Builder B's advantage, and she may not examine Reyes using the settlement-vulnerability email. Her duty of confidentiality to HOA C continues. The safe course is to withdraw from the Builder B engagement before any further exposure, notify Builder B, and preserve HOA C's confidences.
3. What should Kessler have done differently at the consultation and after the declination?
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At the outset she should have limited the intake: tell the prospective client that she would screen for conflicts and would not receive sensitive case details until conflicts cleared, and warn that information shared would not disqualify her from representing others only if that warning is accurate and the client consents. She should have documented what was received and, on declining, returned or destroyed the binder rather than retaining it. After declining, she should have run a formal conflicts check before accepting Builder B, flagged HOA C as a former prospective client, and declined the Builder B engagement when the substantial relationship appeared. If she wanted Builder B, she could have sought HOA C's informed written consent, which the facts make unlikely. The lesson is that intake hygiene determines whether screening is available later.