Separate counsel: Overview, definition, and example
What is separate counsel?
Separate counsel refers to the practice of appointing different lawyers or legal teams to represent the interests of distinct parties or individuals in a legal matter. This situation often arises in cases where there is a potential or actual conflict of interest, and each party requires independent legal representation to ensure that their rights and interests are fully protected. Separate counsel is typically used when two or more parties involved in the same case or legal proceedings have divergent goals or positions.
For example, in a corporate transaction, a company may hire separate counsel to represent the interests of the corporation and the interests of its executives or directors. This ensures that each party’s specific legal rights and obligations are addressed without any conflict of interest.
Why is separate counsel important?
Separate counsel is important because it helps prevent conflicts of interest and ensures that each party's interests are independently and adequately represented. In situations where the interests of multiple parties may not align, separate counsel allows for the unbiased and focused legal representation of each party. It helps safeguard confidentiality, maintains trust, and prevents the possibility of a situation where one lawyer might have divided loyalties.
In complex cases such as mergers, acquisitions, or class action lawsuits, separate counsel is often necessary to ensure that the legal interests of different stakeholders are managed and defended appropriately. Without separate counsel, a lawyer may be unable to effectively represent all parties involved due to conflicting interests, leading to a compromised or unfair outcome.
Understanding separate counsel through an example
Imagine two business partners who are involved in a legal dispute over the terms of their partnership agreement. If both partners were to hire the same lawyer, the lawyer might find it difficult to represent both sides impartially, given that the partners have different views on how the partnership should be structured. In this case, each partner would hire separate counsel to ensure that their individual interests are fully represented and protected.
In another example, during a corporate acquisition, the buyer and the target company may each have different legal interests. The target company’s management might hire separate counsel to negotiate their personal contractual terms (e.g., severance or retention bonuses), while the company itself might retain a different set of lawyers to negotiate the sale of its assets. This ensures that the separate legal needs of the company and its executives are fully addressed.
An example of a separate counsel clause
Here’s how a separate counsel clause might appear in a contract or agreement:
“In the event that a conflict of interest arises between the parties, each party shall have the right to retain separate counsel to represent their interests. Each party shall be responsible for the fees and costs of their respective counsel. The parties acknowledge that this arrangement is necessary to ensure the independent representation of their legal interests and to avoid any potential conflicts of interest.”
Conclusion
Separate counsel is a critical practice in ensuring that each party involved in a legal matter receives independent, unbiased representation, particularly in situations where conflicts of interest may arise. Whether in corporate transactions, disputes between business partners, or complex litigation, separate counsel ensures that each party’s legal rights and obligations are fully addressed. By allowing for independent legal representation, separate counsel helps protect the interests of all parties and promotes fairness and integrity in the legal process.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.