1. The undisclosed relationship
Mary owes Peg loyalty, independent judgment, diligence, and enough information to make informed decisions about the representation. Friendship with opposing counsel does not itself prohibit representation. The question is whether this particular relationship creates a significant risk that Mary will pull her punches for Peg.
Under ABA Rule 1.7, a lawyer's personal interests or responsibilities to another person can materially limit representation. Here the risk has become concrete: Mary believes the affair information would increase Peg's recovery but is especially reluctant to use it because Len is her good friend. That is more than normal professional courtesy. She must explain the relationship, the resulting risk, and reasonably available alternatives, including independent counsel. Continuing requires informed consent confirmed in writing, together with a reasonable belief that competent and diligent representation remains possible. Consent cannot excuse an inability to exercise independent judgment.
California Rule 1.7(b) likewise requires informed written consent for a significant material-limitation risk. Mary's acknowledged reluctance supplies strong evidence of that risk. Concealing the friendship while allowing it to influence advice therefore implicates both loyalty and communication, even if no automatic relationship-based disclosure provision applies.
California separately requires written disclosure of specified relationships with another party's lawyer even without a significant limitation risk. The listed categories include an intimate personal relationship. Mary and Len were intimate decades ago, but the facts expressly say the romance ended. A former romance is not automatically a present intimate relationship. Their continuing friendship could be sufficiently close to fit that description, but ordinary good friendship alone is not expressly a separate listed category. The better answer identifies the uncertainty rather than treating every former dating relationship as a categorical violation. In either event, the demonstrated material-limitation risk independently requires disclosure and the appropriate consent. Len is opposing counsel, not a party or witness; the broader California provision concerning relationships with parties and witnesses should not be substituted for the narrower opposing-lawyer provision.
Mary's failure to tell Peg is thus particularly serious once she recognizes that friendship may reduce Peg's recovery. She should address the conflict before deciding how to negotiate. She cannot silently resolve the issue in Len's favor.
2. Using the affair information
Peg controls the objectives of representation and the decision whether to settle. Mary ordinarily handles professional means after reasonable consultation, so Peg's instruction is not an unlimited command to use any tactic. Mary should explain how the information bears on the suit, its permissible uses, and the consequences of attempting to exploit it.
The information may have a legitimate litigation purpose. Doug denied infidelity under oath, and Peg claims solid contrary proof. Depending on relevance and evidentiary limitations, that contradiction may affect credibility, discovery, or an assessment of trial risk. Mary should investigate the proof and applicable limits before asserting that it establishes perjury or guarantees admissibility. An affair does not itself establish sexual harassment or determine the amount of compensatory damages.
There is a meaningful difference between telling Len that supported evidence will be pursued through lawful litigation and demanding money solely to prevent disclosure to Doug's wife. The latter threatens collateral personal harm and may constitute unlawful extortion or a prohibited use of means lacking a substantial purpose beyond embarrassment or burden. ABA Rule 4.4 is particularly relevant to that distinction. A lawyer may not assist unlawful conduct simply because a client expects a larger settlement.
California's rule against threatening criminal, administrative, or disciplinary charges for civil advantage also requires attention. Merely mentioning an affair is not necessarily a threat of one of those charges. Nor does every negotiation involving embarrassing evidence violate that specific rule. Threatening a perjury prosecution to obtain a larger civil settlement would present a different and serious problem. The facts should not be rewritten to assume that Mary has already made such a threat.
Mary should therefore use supported, relevant information in legitimate negotiations if her independent professional assessment favors that course, but should refuse an unlawful or purely abusive threat. Her own concern for Len cannot supply the reason for withholding a useful lawful argument. She should explain the distinction to Peg and document the advice. Confidential information supplied by Peg must also be handled consistently with the representation and authorized negotiating purpose; a general public disclosure is not automatically authorized.
3. Withdrawal if Peg persists
If Peg insists on criminal or fraudulent conduct, Mary must refuse assistance. Withdrawal may be required if continued representation itself would violate the rules or law. A conflict that cannot be competently managed or properly consented to can independently require withdrawal. The client cannot authorize Mary to continue with materially impaired loyalty.
If the proposed tactic is lawful but fundamentally repugnant to Mary, permissive withdrawal may be available under the ABA rule addressing repugnant action or fundamental disagreement and California's corresponding provisions concerning conduct the lawyer finds repugnant or disagrees with. A tactical disagreement is not automatically a mandatory withdrawal ground. Mary should first consult with Peg and consider whether she can continue competently without subordinating Peg's interests.
Because trial is set in Superior Court, Mary must comply with the tribunal's requirements for withdrawal and continue if ordered. She must give adequate notice, allow a reasonable opportunity to obtain replacement counsel, release client papers and property as required, and refund unearned fees. She should protect Peg's confidential information when explaining withdrawal. The $50,000–$150,000 stakes and approaching trial make a prejudicial last-minute exit especially problematic. Mary may seek a permitted withdrawal; she may not simply abandon Peg to preserve a friendship.