500 MPRE Questions (Correct Answers)
1. Conglomerate Corporation owns a little more than half the stock of Giant Company. Conglomerate's stock, in turn, is public, available on the public stock exchange, as is the remainder of the stock in Giant Company. The president of Conglomerate Corporation...
500 MPRE Questions (Correct Answers)
1. Conglomerate Corporation owns a little more than half the stock of Giant Company.
Conglomerate's stock, in turn, is public, available on the public stock exchange, as is
the remainder of the stock in Giant Company. The president of Conglomerate
Corporation has asked Attorney Stevenson to represent Giant Company in a deal by
which Giant would make a proposed transfer of certain real property to Conglomerate
Corporation. The property in question is unusual because it contains an underground
particle collider used for scientific research, but also valuable farmland on the surface,
as well as some valuable mineral rights in another part of the parcel. These factors
make the property value difficult to assess by reference to the general real-estate
market, which means it is difficult for anyone to determine the fairness of the transfer
price in the proposed deal. Would it be proper for Attorney Stevenson to
facilitateCorrect Answersd) No, not unless the attorney first obtains effective informed
consent of the management of Giant Company, as well as that of Conglomerate,
because the ownership of Conglomerate and Giant is not identical, and their interests
materially differ in the proposed transaction.
RESTATEMENT § 131
2. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces
criminal charges of discussing prices with the president of a competing firm. If found
guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and criminal
penalties under state and federal antitrust laws. An attorney has been representing
Conglomerate Corporation. She has conducted a thorough investigation of the matter,
and she has personally concluded that no such pricing discussions occurred. Both
Conglomerate Corporation and Mr. Burns plan to defend on that ground. Mr. Burns has
asked the attorney to represent him, as well as Conglomerate Corporation, in the
proceedings. The legal and factual defenses of Conglomerate Corporation and Mr.
Burns seem completely consistent at the outset of the matter. Would the attorney need
to obtain informed consent to a conflict of interest from both Mr. Burns and a separate
corpCorrect Answersa) Yes, the likelihood of conflicting positions
in such matters as plea bargaining requires the attorney to obtain the informed consent
of both clients before proceeding with the representation.
RESTATEMENT § 131
3. An attorney decides to purchase "litigation cost protection" insurance for matters she
handles on a contingency fee basis. Plaintiffs' lawyers can buy this type of insurance on
a case-by-case basis, for a one-time premium payment. The insurance is available for
purchase up to three months after the filing of the initial complaint. Note that this policy
is separate and distinct from malpractice liability insurance. The purpose of this type of
insurance is to reimburse the attorney for litigation costs advanced by the attorney - only
in the event of a trial loss. Do the Model Rules of Professional Conduct prohibit the
attorney from purchasing litigation cost protection insurance for her contingency fee
cases?
,a) Yes, because the client and the attorney may have different cost-benefit calculations.
b) Yes, for an attorney may prefer that his
client accept a low settlement offer to ensure that the attorney receivesCorrect
Answersd) No, the attorney may purchase litigation cost protection insurance so long as
she does not allow the terms of the coverage to adversely affect her independent
professional judgment, the client-lawyer relationship, or the client's continuing best
interests.
N.C Formal Ethics Op. 2018-6
4. An attorney purchased "litigation cost protection" insurance at the outset of
representing a plaintiff in a personal injury case. When the attorney recovered funds for
the client through a settlement or favorable trial verdict, the attorney proposed to receive
reimbursement for the insurance premium from the judgment or settlement funds. The
attorney disclosed the cost of the insurance to the client as part of the representation
agreement. Was it proper for the attorney to include in a client's fee agreement a
provision allowing the attorney's purchase of litigation cost protection insurance and
requiring reimbursement of the insurance premium from the client's funds in the event of
a settlement or favorable trial verdict?
a) Yes, because the Model Rules do not purport to regulate insurance for lawyers,
which is a matter of state statute.
b) Yes, if the amount charged to the client is fair and reasonable, and tCorrect
Answersb) Yes, if the amount charged to the client is fair and reasonable, and the
lawyer fully explains to the client what litigation cost protection insurance is, why the
lawyer believes a litigation cost protection policy will serve the client's best interests,
that the client should get the advice of independent legal counsel regarding the
arrangement, that other lawyers may advance the client's costs without charging the
client the cost of a litigation cost protection policy; and the client gives informed consent
in writing, while the lawyer maintains independent professional judgment.
N.C Formal Ethics Op. 2018-6
5. Mr. Burns, the chief executive officer of Conglomerate Corporation, now faces
criminal charges of discussing prices with the president of a competing firm. If found
guilty, both Mr. Burns and Conglomerate Corporation will be subject to civil and criminal
penalties under state and federal antitrust laws. An attorney has been representing
Conglomerate Corporation. She has conducted a thorough investigation of the matter,
and she has personally concluded that such pricing discussions did in fact occur. Both
Mr. Burns and Conglomerate Corporation have stopped their denials, and they now
concede that the pricing discussions took place. One of Mr. Burns' defenses will be that
the former general counsel of Conglomerate Corporation had advised Mr. Burns that a
discussion of general pricing practices with a competitor would not be illegal. In
contrast, Conglomerate Corporation denies that this was the legal advice given,
aCorrect Answersd) No, the conflicting positions between Conglomerate and Mr. Burns
,are so great that the same lawyer cannot provide adequate legal representation to both,
so consent to the conflict is ineffective.
N.C Formal Ethics Op. 2018-6
6. Big Firm represents hundreds of corporate clients out of a dozen offices in different
states. The firm has no formal procedures in place to check for conflicts at the outset of
representation for new clients, but the managing partner of the firm has an incredible
memory and has never failed to spot a potential conflict of interest in the past. An
attorney agrees to represent a new corporate client that owns many subsidiaries, and
checks with the managing partner, who assured Attorney there are no potential
conflicts. After the new corporate client had disclosed a substantial amount of
confidential information, it emerged that some of its subsidiaries were directly adverse
to other clients of Big Firm. The attorney was completely unaware of the potential
conflicts at the time he agreed to the representation, despite asking the corporate client
a few questions about the opposing parties in pending litigation it mighCorrect
Answersa) Yes, because ignorance caused by a failure to institute reasonable
procedures, appropriate for the size and type of firm and practice, will not excuse a
lawyer's violation of the Rules regarding conflicts of interest.
7. An attorney sued Giant Company on behalf of a client in a personal injury matter.
During the protracted litigation that ensued, Conglomerate bought Giant Company. The
attorney was already representing Conglomerate in a regulatory compliance matter
before a federal administrative agency. Assuming this development was unforeseeable
at the outset of representing the client against Giant Company, will the attorney have
the option to withdraw from one of the representations to avoid the conflict?
a) Yes, because one matter is in state court and the other matter is a completely
unrelated federal administrative proceeding.
b) Yes, but the attorney must seek court approval where necessary and take steps to
minimize harm to the clients, and he must continue to protect the confidences of the
client from whose representation the lawyer has withdrawn.
c) No, if a conflict arises after representation is underway, the lawyeCorrect Answersb)
Yes, but the attorney must seek court approval where necessary and take steps to
minimize harm to the clients, and he must continue to protect the confidences of the
client from whose representation the lawyer has withdrawn.
8. A husband and wife decide to divorce and reach an agreement to share the same
lawyer in hopes of saving money. They hire an attorney to represent each of them in
Family Court for the dissolution of marriage. The attorney explains that there is an
obvious conflict of interest here, but the husband and wife insist, and sign informed
consent forms waiving the conflict and their rights to assert any future claims related to
the conflict. The husband and wife have no children, and they have always kept
separate bank accounts. Each purchased their own car from the money in their own
bank account and each car's title is in only one name. They live in an apartment whose
, lease is expiring soon, so there is no real property to divide. Would it be proper for the
attorney to represent both in the divorce?
a) Yes, because it appears on these facts that
there will be no assets in dispute at all, so the theoretical conflict ofCorrect Answersd)
No, because the representation involves the assertion of a claim by one client against
another client represented by the lawyer in the same litigation or other proceeding
before a tribunal.
9. Three individuals plan to form a joint venture and ask an attorney to represent them
in drafting the necessary documents and making the necessary filings with government
agencies. They have already agreed that everyone will contribute exactly one-third of
the startup funds for the venture, each will own a one-third share, each will have equal
control over the Board, and each agrees to indemnify the others for a one- third share of
any personal liability related to the joint venture. They have also agreed that they will
have no non-compete agreements. The joint venture will hire managers, marketers, and
other employees to operate the business. The three individuals are co-owners of a
patent that could potentially be very lucrative when they bring it to market, and they
have known each other and worked together for a long time. The attorney cannot find
any current areas of conflict between them, though he knows thatCorrect Answersb)
Yes, because the mere possibility of
subsequent harm does not itself require
disclosure and consent.
10. A client owns a partnership share of a closely-held business, and the other partners
vote to impose an involuntary buy-out of the client to remove him from the firm. The
client is clearly upset about this, but the partnership agreement clearly permits
involuntary buyouts by a majority vote of the other shareholders. Then the client hires
an attorney to represent him in the buyout transaction, to review the necessary
documents and provide legal counsel about it. No litigation is under consideration yet.
The attorney's sister is also a lawyer in that city, at another firm, and the sister
represents the other shareholders in the partnership. Nevertheless, the attorney did not
disclose that her sister represented the other partners, as she and her sister are not
close and rarely speak, and the matter is unlikely to turn into litigation. Is the attorney, or
the other lawyers in her firm, subject to disqualification inCorrect Answersd) The
attorney would be subject to disqualification, but ordinarily the other lawyers in her firm
would not be subject to disqualification.
11. An attorney has applied to make a lateral move from her firm to Big Firm, and she
has already gone through the first two of three rounds of interviews for the position.
Then the attorney agrees to represent a client in filing a breach of contract claim against
Construction Company over a commercial development project. Big Firm is
representing Construction Company, and the firm's lawyers drafted the contract that
forms the basis of the client's complaint. The client claims that Construction Company
breached a certain provision of the contract that is ambiguous; Construction Company
is confident that its conduct falls within the contractual language in that provision. Is it
proper for the attorney to undertake representation of the client in this case?
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