19.4.1Entity as Client, Identity Clarification, and Internal Reporting (Rule 1.13(a)–(b), (f), (g))

Quick review — Entity as client, internal reporting, and joint representation (Rule 1.13(a)–(b), (f), (g)) (taught fully in Chapter 9)

Six points on the entity as client, and the fourth is where the duty to act is triggered.

• The lawyer's client is the organization acting through its duly authorized constituents; no individual director, officer, employee, member, or shareholder is the client.
• When the lawyer knows, or reasonably should know, that the organization's interests run against a constituent's, the lawyer must make plain who the actual client is; Comment [10]'s warnings to that constituent are in Chapter 9.
• Rule 1.6 confidentiality covers what employees share during internal investigations, but that shield doesn't turn employees into clients or let their interests drive the representation.
• The duty to act triggers when the lawyer knows that a constituent's conduct in a matter related to the representation (i) breaches a duty owed to the organization or violates law that reasonably might be imputed to it, and (ii) is likely to cause substantial injury — the lawyer must proceed as is reasonably necessary in the best interest of the organization. Referral to higher authority in the organization is the default: the lawyer shall refer the matter unless the lawyer reasonably believes it is not necessary in the best interest of the organization to do so, including, if warranted by the circumstances, to the highest authority that can act on behalf of the organization as determined by applicable law.
• Concurrent representation of entity and constituent runs through Rule 1.7 (Rule 1.13(g)): all four Rule 1.7(b) conditions must be satisfied (Chapter 8), including informed consent, confirmed in writing, from each affected client, and where Rule 1.7 requires the organization's consent to the dual representation, that consent must be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.
• Representing a corporation or other organization does not, by virtue of that representation, necessarily make its parent, subsidiary or other affiliate a client, so the lawyer is not barred from accepting a matter adverse to an affiliate in an unrelated matter — unless the circumstances are such that the affiliate should also be considered a client, there is an understanding with the organizational client that the lawyer will avoid representation adverse to its affiliates, or the lawyer's obligations to either the organizational client or the new client are likely to limit materially the representation of the other (Rule 1.7, Comment [34]; the entity box in Chapter 9).