Practice Quiz

Paralegal

Category - Ethics

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A paralegal owned shares in Microsoft that she inherited from her grandfather. The stock shares regularly paid dividends, and the paralegal appreciated the extra income from the dividends. Some time later, the paralegal accepted a job with another law firm that often worked on litigation involving technology companies. One month later, the paralegal learned that her new employer had been hired to file suit against Microsoft in an anti-trust action. Must the paralegal disclose to her employer that she owns shares in Microsoft?
  1. Yes, because her ownership of the shares creates a conflict of interest based on a personal interest.
  2. Yes, because her ownership of the shares creates a conflict of interest based on representation of a former client.
  3. No, because she inherited the shares from her grandfather and did not buy them directly in the stock market.
  4. No, because an exception to the conflict rules exists for ownership of shares in an opposing party.
Explanation
Answer: A - Yes, because her ownership of the shares creates a conflict of interest based on a personal interest. A lawyer has a concurrent conflict of interest if a significant risk exists “that the representation of one or more clients will be materially limited by . . . a personal interest of the lawyer.” Model Rule 1.8(a)(2). “A paralegal must disclose to his or her employer . . . any pre-existing client or personal relationship that may conflict with the interests of the employer or prospective employer and/or their clients.” NALA Code of Ethics and Professional Responsibility, Canon 8. Answer A is the best choice because the paralegal’s ownership of the shares could influence her work and judgment on the case against Microsoft (since it could reduce her future dividends). The conflict can be eliminated by selling the shares, but the share ownership must be disclosed. Answer B is not the best choice because the situation does not involve a former client. Answer C is not the best choice because how the shares were acquired does not make any difference. Answer D is not the best choice because no exception is provided under the Model Rules.
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