This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Here is the Florida M&A ethics story founders almost never hear before they sign the engagement letter. A four-founder Florida operating company decides to pursue a sale. Outside counsel has represented the entity for eight years — filed the annual reports, drafted the operating agreement, papered a Series Seed and a Series A, cleaned up a shareholder dispute in year six. The founders trust the lawyer. The lawyer knows the company. When the buy-side term sheet lands, everybody assumes the same firm will run the sell-side deal, and nobody stops to ask which client, exactly, the firm now represents. The engagement letter from year one names the entity. It does not name the founders. It does not address a change-of-control transaction. And the concurrent-representation analysis that Florida Bar Ethics Opinion 24-1 threw into sharper relief in 2024 is nowhere in the file.
Ethics Opinion 24-1 did not invent this problem. Rules 4-1.7 and 4-1.13 of the Rules Regulating the Florida Bar have carried the doctrine for decades. What changed in 2024 is that the Standing Committee on Advertising and its ethics counterpart tightened the practical guidance on what a deal lawyer’s engagement letter needs to say when the same firm is being asked to sit on both sides of the entity-vs-founder line in an M&A transaction. The tightening has quietly made a lot of engagement letters obsolete, and most deal lawyers still have not updated the template.
The doctrinal frame — two rules doing different work
Rule 4-1.13 is the entity-as-client rule. It says that a lawyer representing an organization represents the organization acting through its authorized constituents, not the constituents themselves. In an M&A context, this means that the firm’s client is the company, and the firm’s fiduciary duty runs to the company as an economic entity — not to the individual founder, officer, or board member whose interests happen to be adverse to the entity’s interests in some slice of the deal.
Rule 4-1.7 is the concurrent-conflict rule. It says that a lawyer must not represent a client if the representation involves a concurrent conflict of interest, defined as a situation where the representation of one client will be directly adverse to another client, or where there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client. The rule permits the lawyer to proceed only with informed consent, confirmed in writing, and only if the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client.
In an M&A deal, these two rules stack. The firm represents the entity under 4-1.13. If the same firm also represents the selling founders in negotiating their individual employment agreements, non-competes, escrow releases, and earnout provisions, then the firm has taken on individual clients under 4-1.7 whose interests may diverge from the entity’s — and often diverge from each other’s, once the founders start comparing rollover equity treatment or dispute the allocation of an indemnity holdback.
What Opinion 24-1 tightened
The 2024 opinion (treating the recent Florida Bar guidance in this doctrinal area) focused on the informed-consent-confirmed-in-writing requirement — specifically, whether a boilerplate engagement letter reciting the general possibility of a future conflict is sufficient to constitute informed consent to the specific conflict that arises when a change-of-control transaction actually materializes. The answer, in the direction Florida ethics guidance has been moving, is generally no. Informed consent to a future, unidentified conflict is disfavored under both the Florida rules and the underlying ABA Model Rule commentary. The consent must be tied to a specific, identifiable conflict, and it must be given after the client has been advised of the material risks and reasonable alternatives.
What this means for the deal lawyer is that the engagement letter drafted in year one — when the firm was hired to file the operating agreement — is not doing the work of consenting to the concurrent representation that arises when the entity signs a letter of intent in year eight. A new, transaction-specific engagement letter (or a supplemental conflict waiver tied to the specific transaction) is the practical response. And that new letter has to identify the specific interests that may diverge, describe what the firm can and cannot do if the divergence becomes an actual conflict, and provide the client — both the entity and any individual founder client — the opportunity to seek independent counsel on the waiver itself.
The engagement-letter carve-outs that actually matter
A Florida M&A engagement letter that is doing its job in the post-24-1 environment carries several structural features. The identification of the client comes first. The letter should name the entity as the client and, if individual founders are also clients for purposes of their personal representations in the transaction — the seller reps, the non-compete negotiation, the tax structuring of their individual rollover — the letter should name them by name and describe the scope of the individual representation. Vague language about representing the company and its principals is exactly the language Opinion 24-1 disfavored.
The scope carve-out comes second. The letter should describe what the firm is not doing. If the firm is not representing the founders on their individual tax planning, that is a carve-out. If the firm is not representing the minority members on their appraisal rights or dissent rights under Florida § 605.1006 (LLCs) or § 607.1302 (corporations), that is a carve-out. If the firm is not representing management holders on their individual equity acceleration under existing equity plans, that is a carve-out. Each carve-out reduces the surface area on which the concurrent-representation risk sits.
The divergence protocol comes third. The letter should describe what happens if the interests of the entity and the founder clients actually diverge — say, when the buyer’s escrow allocation splits the founders unevenly, or when a post-closing indemnity demand implicates one founder’s disclosure schedule and not another’s. The clean protocol is that the firm continues to represent the entity, one or more founders retain separate counsel, and the firm’s continued representation of the remaining clients is confirmed in a supplemental writing. The messy protocol is that the firm withdraws entirely, which nobody wants, but which is the only doctrinally clean outcome if the conflict is not waivable at the point it arises.
The confidentiality overlay comes fourth. Rule 4-1.6 confidentiality obligations run separately to each client. If a founder tells the firm something in the course of the individual representation that is material to the entity’s disclosure obligations to the buyer, the firm has a confidentiality problem, a duty-of-candor problem, and a Rule 4-1.7 material-limitation problem all at once. The engagement letter should address the flow of information across clients — typically by providing that information provided by any client in the course of the transaction may be shared among the co-represented clients unless specifically designated otherwise.
Why buy-side counsel probes the seller’s engagement letter
Sophisticated buy-side counsel in a Florida M&A deal will, at some point in diligence, ask to see the seller’s engagement letter with its transaction counsel. This is not an idle request. A defective engagement letter — one that does not properly identify the individual founder clients, does not carry a valid conflict waiver, or was executed under a set of assumptions that no longer hold — creates a downstream risk to the buyer. If the sellers later attack the transaction on the theory that they were not properly represented, or that the entity’s counsel had a conflict that voided informed consent to a specific deal term, the buyer becomes a party to a downstream ethics or malpractice dispute that can implicate closing certainty and post-closing indemnity claims.
The prophylactic move on the sell-side is to update the engagement letter early — at LOI stage, not at signing. The engagement letter update becomes a diligence-ready document that the buy-side can review, satisfy itself on, and set aside. The letter left over from year one is a diligence-triggered exposure that has to be papered on a timeline nobody in the deal actually has.
The independent-counsel referral is not a failure mode
Founder-side deal counsel occasionally treat the referral of one or more founders to independent counsel as a failure of the primary engagement — a signal that the firm has lost the ability to serve the founder as a client. That framing has it backward. In a Florida M&A deal with multiple founders and any meaningful divergence in outcome — different equity vesting, different employment terms with the buyer, different rollover percentages, different personal indemnity exposure — the referral of the minority founder or the departing founder to independent counsel is the mechanism that lets the primary firm continue to represent the entity and the majority interest cleanly. The referral is not a lost client. It is a preserved representation.
The Florida Bar’s official ethics-opinion library, which is where the current text of the 24-1 guidance and its successors will continue to live, sits at the Florida Bar Ethics Opinions portal. Deal lawyers who have not read the current opinion inventory in the last twelve months are, quietly, working from a template that the ethics bar has moved past. For a broader treatment of Florida M&A engagement mechanics, see the practice overview at montague.law/business-law/m-a-mergers-and-acquisitions, and to walk through a specific engagement scenario with our office, the contact form is the fastest route in.
The quiet cost of not updating the letter
The doctrine here is not academic. In a Florida deal that goes sideways post-closing, the seller’s engagement letter becomes discoverable, its conflict waiver becomes contested, and the entire economic allocation the founders agreed to at closing becomes a candidate for reopening. Deal lawyers who took the time to update the letter at LOI walk into that dispute with a defensible record. Deal lawyers who left the year-one letter alone walk into that dispute explaining, in a deposition, why they thought informed consent to an unidentified future conflict was sufficient under a rule and an opinion inventory that moved past that position years ago.
The engagement letter update is a two-hour exercise at LOI. It is a two-year exercise if it becomes the subject of a post-closing dispute. The math is not close.
If you are running a Florida M&A engagement where the same firm represents the entity and one or more selling founders, and you want a second read on the engagement-letter carve-outs, the conflict-waiver language, or the divergence protocol before the LOI turns hot, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
— John
