to handle all of the work – it is cleaner and more efficient
that way. However, as time wears on, and more interests (e.g.,
more clients) are added to the proverbial pot, conflict becomes
inevitable: unanticipated, adverse circumstances invariably arise
during the course of the build-out of a project – circumstances
which diligent legal counsel will become aware of in due course,
but which the regional center/developer will avoid disclosing
to either existing or potential investors, for fear that investors
will back out of the investment. While legal counsel has a
duty of confidentiality to safeguard the potentially-actionable
information that it discovers in the course of its representation
of its regional center clients, counsel has an equally weighty
fiduciary duty to disclose adverse circumstances that might
negatively impact the investment and/or immigration prospects
of existing and potential investor-clients. In these circumstances,
attorneys are damned if they disclose, and damned if they do
not. Moreover, to the extent that legal counsel has its own vested
interest in the outcome of the project – and in increasing the fee
potential of working with as many parties as possible – there is
a significant risk that the representation of either the regional
center/developer and/or the investors will be materially limited
by the personal concerns of the attorneys themselves. This is
why attorneys are usually deterred from “doing business” with
their clients under the ABA Model Rules (1.8) and most states’
rules of professional responsibility: attorneys who have their
own self-interest foremost in mind will not, presumptively, be
acting in the best interests of their clients.
In the end, where the same law firm is representing all of the
parties involved in a project, it is really the individual investors
who stand to lose the most in this calculus: after all, if the goals
of both the regional center/developer and the law firm– i.e.,
to maximize the number of investors/payers of legal fees –
then it does not take much guess work to figure out whose
interests will be the least protected under these conditions.
Given the high risk of conflict(s) of int