When Your Law Firm Represents Your Condo/HOA And Your Management Company

This article first appeared in HOAleader.com. Matt Ober, Esq., CCAL, is a regular contributor to help inform community associations. 

An HOAleader.com reader asks: “I understand it would be a conflict of interest for an attorney to represent both the HOA and the management company. However, is it allowed to have one law firm represent both HOA and management company if they're represented by two different attorneys from that same firm?”

Our experts say this should be rare and only in a limited set of circumstances.

It Could Happen, But it Shouldn't

Florida answers this question by law. “In Florida, we're not allowed to do that statutorily,” says Carolina Sznajderman Sheir, a partner at Eisinger Law in Hollywood, Fla., which represents 600-700 associations throughout the state, who is board certified in condo and planned development law by the Florida Bar. “We don't represent management companies generally, but there's a specific statute in Florida where I can't represent the manager at the same time as I represent the association it works for.”

That may be because any time this situation arose, the question would always be: If your law firm represents both you as a community association and the manager who represents your condo or HOA, who does your law firm truly represent?

“I believe it's a conflict to represent both,” says Matt D. Ober, CCAL, a partner at Richardson Ober LLP, a Pasadena, Calif., law firm with a significant community association practice. “We don't represent management companies; we represent the association only. If you're counseling management and the association, you can have only one client. Is the association or the manager your client? And who's going to negotiate the contract between those parties?”

That's also the take of another one of our experts. “I think that would be a conflict,” reports Scott D. Weiss, CCAL, a partner and the Tennessee office chair at Kaman & Cusimano in Nashville, Tenn., who represents more than 800 condos/HOA communities throughout the state. “That's too close to not be a conflict, but that happens a lot.

“Most of our business comes from management companies—they refer us,” he explains. “But if it's a true representation—meaning if it's the HOA against the management company—ultimately, we represent the association, not the management company. I tell management companies that all the time.”

When it Makes Sense and Does Happen

“It's possible you could represent both the management company and the HOA,” says Janet Oulousian Aronson, a partner at Marcus Errico Emmer & Brooks in Braintree, Mass., who is licensed in that state, in addition to Rhode Island and New Hampshire. “But we, as a general rule, don't represent management companies in their capacity of management, but we do in their capacity as an agent of the client versus the association.

“By that I mean, if both are being sued by one party, we might represent both,” says Aronson. “But we don't independently represent both. And even with not representing both, we still won't get involved in a dispute between the manager and the association.

“Even though the management company may not be an actual client of ours, we have relationships with managers,” she explains. “So there's at least an appearance of a conflict. So rather than have someone question whether we're taking the side of that manager, we stay out of it.”

Ober agrees. “There are situations where the association is sued and management is indemnified, so if you're defending the association, you'll also defend the management company because of the indemnification,” he explains. “You want management and the association to be aligned. But we usually require a conflict consent and waiver so each party is aware and consenting to that representation.”

Weiss also sees this happen in practice and believes it makes sense. “If a homeowner sues the management company and the HOA, that's different,” he explains. “They're both party defendants. But, if it's the HOA against the management company, there's definitely a conflict.”

When it Might Be OK, But it Could Still Look Bad

Aronson says there are a few isolated situations where the same firm could have both a condo or HOA and its management company as clients. “Typically, even if they're represented by two different attorneys in the same firm, there's still a problem,” she says. “But there wouldn't be if it was two different legal issues. Let's say the firm represented the management company in a transaction in which it was buying a piece of property, and it represented an association that uses that management company.

“That's two separate transactions, so that would be OK,” explains Aronson. “There's no information one of our lawyers would get from the property transaction that would affect the representation of the association, so it would be OK. But we try to avoid doing that, too. We just don't do that.”

As Ober noted, legal clients can and do properly waive conflicts and potential conflicts. But Weiss doesn't think that works in this situation. “I do think the board could sign a waiver of conflict,” says Weiss. “But if the association and the management company are adverse parties, there's no way to waive that.”