Due Diligence and Dual Representation in EB-5 Cases
by Brandon Meyer and Elizabeth Peng
The following article is an outgrowth of a March 8 , 2014 presentation before the Las Vegas EB-5 Conference entitled “ Representing Parties in the EB-5 Process .” Moderated by Jeff Campion , co-authors Brandon Meyer and Elizabeth Peng , along with panelist Carlos Colombo , provided a brisk and thought-provoking overview of the issues facing immigration attorneys who choose to represent both EB-5 Regional Centers ( or third-party project developers “ renting ” a regional center ) and EB-5 investors in the same regional center ( or project ).
This article provides greater context regarding the risks to immigration practitioners when representing both a regional center ( and its project developers ) and the regional center ’ s individual EB-5 investors . While professional conduct rules permit dual representation , we will highlight why these risks , unless significantly mitigated , generally outweigh the benefits of dual representation .
The desire for dual representation
Existing professional conduct rules do not prohibit dual representation of a securities issuer and its investor in the same transaction . 1 However , it is precisely because the rules permit it that immigration practitioners should tread very carefully . Referencing the practice of securities counselors will likely provide valuable insight to the dangers of the dual representation approach .
The desire to please an existing client and maintain a professional relationship is the hallmark of a good practitioner .
The EB-5 practitioner who represents both investors and regional centers ( or project developers ) confronts this issue on a daily basis . If you represent a regional center , chances are you already have a good working relationship with its principals . Therefore , the regional center or project may strongly prefer that you also process its investors ’ I-526 petitions as a way of maintaining control . The desire to please an existing client and maintain a professional relationship is the hallmark of a good practitioner . Thus , declining the I-526 work could potentially affect your overall relationship with the regional center or project developers and place your existing legal relationship at the risk of replacement by another practitioner willing to commit to dual representation .
“ Aside from maintaining professional relationships with existing clients , the lure of dual representation can result in a steady and lucrative income stream .”
1
According to the ABA ’ s Model Rules of Professional Conduct ( M . R .) 1.7 , there are exceptions to prohibition against dual representation when : the practitioner has “ reasonable belief ” in competent and diligent representation to all parties ; not prohibited by law ; representing adverse parties in litigation ; each client gives “ informed consent ,” in writing .
28 EB5 Investors Magazine