with Sample Answers and Tips
(2025 Edition)
1. Conglomerate Corporation owns a little more than half the stock of Giant
Company. Conglomerate's stock, in turn, is public, available on the public stock
exchange, as is the remainder of the stock in Giant Company. The president of
Conglomerate Corporation has asked Attorney Stevenson to represent Giant
Company in a deal by which Giant would make a proposed transfer of certain real
property to Conglomerate Corporation. The property in question is unusual because
it contains an underground particle collider used for scientific research, but also
valuable farmland on the surface, as well as some valuable mineral rights in another
part of the parcel. These factors make the property value difficult to assess by
reference to the general real-estate market, which means it is difficult for anyone to
determine the fairness of the transfer price in the proposed deal. Would it be proper
for Attorney Stevenson to facilitate -Answer:d) No, not unless the attorney first
obtains effective informed consent of the management of Giant Company, as well as
that of Conglomerate, because the ownership of Conglomerate and Giant is not
identical, and their interests materially differ in the proposed transaction.
RESTATEMENT § 131
2. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces
criminal charges of discussing prices with the president of a competing firm. If found
guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and
criminal penalties under state and federal antitrust laws. An attorney has been
,representing Conglomerate Corporation. She has conducted a thorough
investigation of the matter, and she has personally concluded that no such pricing
discussions occurred. Both Conglomerate Corporation and Mr. Burns plan to defend
on that ground. Mr. Burns has asked the attorney to represent him, as well as
Conglomerate Corporation, in the proceedings. The legal and factual defenses of
Conglomerate Corporation and Mr. Burns seem completely consistent at the outset
of the matter. Would the attorney need to obtain informed consent to a conflict of
interest from both Mr. Burns and a separate corp -Answer:a) Yes, the likelihood of
conflicting positions
in such matters as plea bargaining requires the attorney to obtain the informed
consent of both clients before proceeding with the representation.
RESTATEMENT § 131
3. An attorney decides to purchase "litigation cost protection" insurance for matters
she handles on a contingency fee basis. Plaintiffs' lawyers can buy this type of
insurance on a case-by-case basis, for a one-time premium payment. The insurance
is available for purchase up to three months after the filing of the initial complaint.
Note that this policy is separate and distinct from malpractice liability insurance. The
purpose of this type of insurance is to reimburse the attorney for litigation costs
advanced by the attorney - only in the event of a trial loss. Do the Model Rules of
Professional Conduct prohibit the attorney from purchasing litigation cost protection
insurance for her contingency fee cases?
a) Yes, because the client and the attorney may have different cost-benefit
calculations.
b) Yes, for an attorney may prefer that his
client accept a low settlement offer to ensure that the attorney receives -Answer:d)
No, the attorney may purchase litigation cost protection insurance so long as she
does not allow the terms of the coverage to adversely affect her independent
professional judgment, the client-lawyer relationship, or the client's continuing best
interests.
N.C Formal Ethics Op. 2018-6
4. An attorney purchased "litigation cost protection" insurance at the outset of
representing a plaintiff in a personal injury case. When the attorney recovered funds
for the client through a settlement or favorable trial verdict, the attorney proposed to
receive reimbursement for the insurance premium from the judgment or settlement
funds. The attorney disclosed the cost of the insurance to the client as part of the
representation agreement. Was it proper for the attorney to include in a client's fee
agreement a provision allowing the attorney's purchase of litigation cost protection
,insurance and requiring reimbursement of the insurance premium from the client's
funds in the event of a settlement or favorable trial verdict?
a) Yes, because the Model Rules do not purport to regulate insurance for lawyers,
which is a matter of state statute.
b) Yes, if the amount charged to the client is fair and reasonable, and t -Answer:b)
Yes, if the amount charged to the client is fair and reasonable, and the lawyer fully
explains to the client what litigation cost protection insurance is, why the lawyer
believes a litigation cost protection policy will serve the client's best interests, that
the client should get the advice of independent legal counsel regarding the
arrangement, that other lawyers may advance the client's costs without charging the
client the cost of a litigation cost protection policy; and the client gives informed
consent in writing, while the lawyer maintains independent professional judgment.
N.C Formal Ethics Op. 2018-6
5. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces
criminal charges of discussing prices with the president of a competing firm. If found
guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and
criminal penalties under state and federal antitrust laws. An attorney has been
representing Conglomerate Corporation. She has conducted a thorough
investigation of the matter, and she has personally concluded that such pricing
discussions did in fact occur. Both Mr. Burns and Conglomerate Corporation have
stopped their denials, and they now concede that the pricing discussions took place.
One of Mr. Burns' defenses will be that the former general counsel of Conglomerate
Corporation had advised Mr. Burns that a discussion of general pricing practices
with a competitor would not be illegal. In contrast, Conglomerate Corporation
denies that this was the legal advice given, a -Answer:d) No, the conflicting positions
between Conglomerate and Mr. Burns are so great that the same lawyer cannot
provide adequate legal representation to both, so consent to the conflict is
ineffective.
N.C Formal Ethics Op. 2018-6
6. Big Firm represents hundreds of corporate clients out of a dozen offices in
different states. The firm has no formal procedures in place to check for conflicts at
the outset of representation for new clients, but the managing partner of the firm has
an incredible memory and has never failed to spot a potential conflict of interest in
the past. An attorney agrees to represent a new corporate client that owns many
subsidiaries, and checks with the managing partner, who assured Attorney there are
no potential conflicts. After the new corporate client had disclosed a substantial
amount of confidential information, it emerged that some of its subsidiaries were
directly adverse to other clients of Big Firm. The attorney was completely unaware of
, the potential conflicts at the time he agreed to the representation, despite asking the
corporate client a few questions about the opposing parties in pending litigation it
migh -Answer:a) Yes, because ignorance caused by a failure to institute reasonable
procedures, appropriate for the size and type of firm and practice, will not excuse a
lawyer's violation of the Rules regarding conflicts of interest.
7. An attorney sued Giant Company on behalf of a client in a personal injury matter.
During the protracted litigation that ensued, Conglomerate bought Giant Company.
The attorney was already representing Conglomerate in a regulatory compliance
matter before a federal administrative agency. Assuming this development was
unforeseeable at the outset of representing the client against Giant Company, will
the attorney have the option to withdraw from one of the representations to avoid the
conflict?
a) Yes, because one matter is in state court and the other matter is a completely
unrelated federal administrative proceeding.
b) Yes, but the attorney must seek court approval where necessary and take steps to
minimize harm to the clients, and he must continue to protect the confidences of the
client from whose representation the lawyer has withdrawn.
c) No, if a conflict arises after representation is underway, the lawye -Answer:b) Yes,
but the attorney must seek court approval where necessary and take steps to
minimize harm to the clients, and he must continue to protect the confidences of the
client from whose representation the lawyer has withdrawn.
8. A husband and wife decide to divorce and reach an agreement to share the same
lawyer in hopes of saving money. They hire an attorney to represent each of them in
Family Court for the dissolution of marriage. The attorney explains that there is an
obvious conflict of interest here, but the husband and wife insist, and sign informed
consent forms waiving the conflict and their rights to assert any future claims related
to the conflict. The husband and wife have no children, and they have always kept
separate bank accounts. Each purchased their own car from the money in their own
bank account and each car's title is in only one name. They live in an apartment
whose lease is expiring soon, so there is no real property to divide. Would it be
proper for the attorney to represent both in the divorce?
a) Yes, because it appears on these facts that
there will be no assets in dispute at all, so the theoretical conflict of -Answer:d) No,
because the representation involves the assertion of a claim by one client against
another client represented by the lawyer in the same litigation or other proceeding
before a tribunal.