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*This outline is adapted from Chapter 27, Ethical Responsibilities,
Norton Bankruptcy Law & Practice 2d (Thomson-West 2005)
the advantages and risks involved.196
4. Model Rule of Professional Conduct 2.2 provides that a lawyer may act as an intermediary between clients if (1) he consults with each about the implications of common representation, including the advantages and risks, and effect on attorneyclient privileges, and obtains each client's consent; (2) the lawyer reasonably believes the matter can be resolved on terms compatible with the clients' best interests, each will be able to make adequately informed decisions, and there is little risk of material prejudice if the contemplated resolution is unsuccessful; and (3) the lawyer reasonably believes the common representation can be undertaken impartially and without improper effect on the responsibilities the lawyer has to the clients. The lawyer is to consult with each client throughout the representation to enable their adequately informed decisions, and is to withdraw if any of the clients requests or if any of the conditions warranting ethical joint representation is no longer satisfied. At that point the lawyer may not continue to represent any of the clients.
1. An "insider" and an "equity security holder" are not "disinterested."197 An "insider" includes a general partner of the debtor, and a director or officer of a debtor corporation.198 Some courts have allowed counsel or other professionals to represent the DIP despite a small number of shares of the publicly traded debtor being held by a firm member.199 But other courts have been much more strict, requiring disqualification despite firm attorneys' ownership of only a small percentage of the outstanding equity shares of the DIP,200 and despite
