The current client conflict of interest rules are (unsurprisingly) more restrictive than the former client conflicts of interest rules. This difference can be seen clearly in two primary ways: (1) lawyers may generally represent current clients against former clients on all matters not substantially related to the former clients’ matters, whereas lawyers generally may not represent one current client against another current client, even if the two matters are wholly unrelated and even if one client has separate counsel; and (2) former clients may consent to virtually all conflicts, whereas many concurrent client conflicts are non-consentable. Thus, as an ethical matter, lawyers are often better off by placing current clients in the former-client box, which in turn frees lawyers to take a much wider array of matters on behalf of current and future clients.
The problem is that many lawyers fired their current clients to represent new (and often more lucrative) clients. The courts, therefore, have since developed the “hot potato” doctrine: courts now generally preclude lawyers from dropping (i.e., firing) a current client like a “hot potato” in order to sue that client. See, e.g., Restatement (Third) of the Law Governing Lawyers § 132 cmt. c & Reporter’s Note to cmt. c. (2000); Unified Sewerage Agency v. Jelco, Inc., 646 F.2d 1339, 1345 n.4 (9th Cir. 1981); Picker Int’l, Inc. v. Varian Assocs., Inc., 670 F. Supp. 1363, 1365 (N.D. Ohio 1987), aff’d, 869 F.2d 578 (Fed. Cir. 1989).
By way of illustration, a recent Florida case, Young v. Achenbauch, 136 So. 2d 575 (2014), applies the hot potato doctrine. There, two lawyers brought suit against a non-profit organization, claiming that the non-profit’s board members were (among other misconduct) misusing funds. The problem, however, was that two of the board members were also the lawyers’ current clients. The lawyers attempted to solve the problem by firing the clients and thereafter continuing to sue the board on which they sat. The Florida Supreme Court agreed with the trial court that the lawyers’ had unethically dropped their clients like a hot potato, and the court affirmed their disqualification (and referred them to the state bar for a disciplinary investigation to boot).
[Update: For an excellent discussion of the hot potato doctrine, see this page on Freivogel on Conflicts. The page also lists many of the various exceptions to the doctrine, including the somewhat-common “thrust upon” exception, i.e., when the client in effect causes the conflict by merging with another corporation that the lawyer happens to be suing; because the conflict was involuntarily “thrust upon” the lawyer, courts in such situations may permit the lawyer to withdraw from representing the client and continue the preexisting, but now adverse, representation.]