Inherent Attorney Conflicts of Interest under ERISA: Using the Model Rules of Professional Conduct to Discourage Joint Representation of Dual Role Fiduciaries

Abstract:     
Although ERISA expressly permits employers to act as both an employer/plan sponsor and fiduciary of an ERISA employee benefit plan, the statute does not address itself to whether corporate counsel should represent an employer in both of these capacities. Conflicts of interest frequently arise in this context because corporate officers have a fiduciary duty to act in the best interests of their shareholders, while ERISA plan fiduciaries have a duty to act in the best interests of the plan participants and beneficiaries.

Although the Model Rules speak generically of how to identify the client in corporate situations, and also of how to resolve concurrent conflicts of interests between two clients, the Model Rules do not adequately address themselves to the common ERISA circumstance in which counsel represents simultaneosuly the company in its employer and plan fiduciary capacities. This article for the first time therefore proposes a modification to the current version of the Model Rules to address these recurring and inherent attorney conflict of interest situations under ERISA.

Although the new provision, denominated Rule 1.13(h), would not ban outright joint representation of dual role fiduciaries under ERISA, it would establish a strong presumption against such joint representations because of the inevitable conflicts of interest that develop between the interests of the employer in its corporate capacity and the fiduciary interests of the employer as ERISA plan fiduciary. The only way such joint representation of ERISA dual role fiduciaries should be considered ethically appropriate is if counsel can assure herself under the conflict of interest principles for current and former clients under Model Rules 1.7 and 1.9 that such recurring conflicts will not jeopardize the effectiveness of the legal representation for either the company or the plan.

Keywords: ERISA, fiduciaries, fiduciary, dual role fiduciary, Model Rules of Professional Conduct, employee benefits, settlor, settlor-function doctrine, concurrent conflicts of interest, joint representation

JEL Classifications: J26

Accepted Paper Series