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The parties dispute the legal effect of a contested transaction. A lawyer learned confidential information from one client and then considered a related representation adverse to that client. The disputed action was partly authorized but exceeded an important limitation. The parties disagree about the legal effect of those facts. Which option gives the best analysis?

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Reject the claim or defense solely because the opposing party disputes a required fact. Treat the formal label attached to the claim or defense as conclusive and disregard facts bearing on the rule's elements. Resolve the dispute on equitable fairness alone without identifying the governing doctrine or its limits. The court should resolve the dispute by applying the operative rule to the material facts: The answer should identify the governing rule for Fees and apply it to the operative facts.

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