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ETHICS UPDATE PART AND PART First Run Broadcast

VIEWS: 3 PAGES: 124

									2012 ETHICS UPDATE, PART 1 AND PART 2
First Run Broadcast: February 2 & 3, 2012
1:00 p.m. E.T./12:00 p.m. C.T./11:00 a.m. M.T./10:00 a.m. P.T. (60 minutes each day)

This annual ethics update will cover major ethics developments and issues of increasing
importance to your law practice. This two-part program will cover practical developments in
conflicts of interest, confidentiality and the attorney-client privilege. The program will also
focus on a series of interrelated ethics issues when using technology in law practice, including
“cloud” storage for law files and data security in using your mobile and wireless devices. The
program will also discuss loss prevention and billing issues, supervisory issues when outsourcing
work, and how to handle “hot documents” that you should not have.

Day 1: February 2, 2012:

      Attorney-client privilege and confidentiality update
      “Hot docs” – what to do with hot documents you shouldn’t have
      Loss prevention, including billing and collecting fees and costs

Day 2: February 3, 2012:

      Developments in conflicts of interest
      Supervisory ethics, including in outsourcing work
      Ethics and technology in practice – “cloud” computing to store law files, data security
       when using and mobile and wireless devices

Speakers:

Lucian T. Pera is a partner in the Memphis office of Adams & Reese, LLP. His practice
includes professional malpractice litigation as well as counseling lawyers and law firms in the
area of ethics and professional responsibility. He was a member of the ABA’s Ethics 2000
Commission and is co-author of "Ethics and Lawyering Today," a national e-mail newsletter on
lawyer ethics, which is accessible at: www.ethicsandlawyering.com. Before entering private
practice, he served as a judicial clerk to Judge Harry W. Wellford of the U.S. Court of Appeals
for the Sixth Circuit. Mr. Pera received his A.B. with honors from Princeton University and his
J.D. from Vanderbilt University School of Law.

William Freivogel is the principal of Freivogel Ethics Consulting and is an independent
consultant to law firms on ethics and risk management. He was a trial lawyer for 22 years and
has practiced in the areas of legal ethics and lawyer malpractice for 20 years. He is chair of the
Editorial Board of the ABA/BNA Lawyers’ Manual on Professional Conduct and recent past
chair of the ABA Business Law Section Committee on Professional Responsibility. He
maintains the Web site “Freivogel on Conflicts” at www.freivogelonconflicts.com. Mr.
Freivogel is a graduate of the University of Illinois (Champaign), where he received his B.S. and
LL.B.
Michael E. Lackey is a partner in the Washington, D.C. office of Mayer Brown, LLP, where he
has an extensive litigation practice representing companies and individuals in federal court and
has developed a specialty in advising clients on a wide range of e-discovery issues. He is an
advisory board member of the Georgetown University Law Center Advanced E-Discovery
Institute and serves as an Adjunct Professor of Law at George Washington University Law
School. Before entering private practice, he served as a judicial clerk to Judge Jacques L.
Wiener, Jr. of the U.S. Court of Appeals for the Fifth Circuit. Mr. Lackey received his B.S. from
the Massachusetts Institute of Technology and his J.D. from the George Washington University
Law School.
                   VT Bar Association Continuing Legal Education Registration Form

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                                       2012 Ethics Update, Part 1
                                              Teleseminar
                                           February 2, 2012

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                   VT Bar Association Continuing Legal Education Registration Form

Please complete all of the requested information, print this application, and fax with credit info or mail it with
payment to: Vermont Bar Association, PO Box 100, Montpelier, VT 05601-0100. Fax: (802) 223-1573
PLEASE USE ONE REGISTRATION FORM PER PERSON.

First Name: _____________________ Middle Initial: _____Last Name: __________________________
Firm/Organization:____________________________________________________________________
Address:___________________________________________________________________________
City:__________________________________                  State: _________        ZIP Code: ______________
Phone #:________________________ Fax #:________________________
E-Mail Address: ____________________________________________________________________


I will be attending:


                                       2012 Ethics Update, Part 2
                                              Teleseminar
                                           February 3, 2012

              Early Registration Discount By 1/27/12           Registrations Received After 1/27/12


              VBA Members: $70.00                         VBA Members: $80.00
              Non VBA Members/Atty: $80.00                Non-VBA Members/Atty: $90.00




                             NO REFUNDS AFTER January 27, 2012

               PLEASE NOTE: Due to New Hampshire Bar regulations, teleseminars cannot be used for
                                         New Hampshire CLE credit




       PAYMENT METHOD:

         Check enclosed (made payable to Vermont Bar Association): $________________
         Credit Card (American Express, Discover, MasterCard or VISA)

       Credit Card # ________________________________________Exp. Date_______

       Cardholder: ________________________________________________________
                                          Vermont Bar Association

                              ATTORNEY CERTIFICATE OF ATTENDANCE


Please note: This form is for your records in the event you are audited

Sponsor:            Vermont Bar Association

Date:               February 2, 2012

Seminar Title:      2012 Ethics Update, Part 1

Location:           Teleseminar

Credits:             1.0 Ethics


Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This
form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your
responsibility to adjust CLE hours accordingly.
                                          Vermont Bar Association

                              ATTORNEY CERTIFICATE OF ATTENDANCE


Please note: This form is for your records in the event you are audited

Sponsor:            Vermont Bar Association

Date:               February 3, 2012

Seminar Title:      2012 Ethics Update, Part 2

Location:           Teleseminar

Credits:             1.0 Ethics


Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This
form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your
responsibility to adjust CLE hours accordingly.
           PROFESSIONAL EDUCATION BROADCAST NETWORK

                             Speaker Contact Information

                         2012 Ethics Update, Part 1 & Part 2




Lucian Pera
Adams and Reese, LLP - Memphis, Tennessee
(o) (901) 524-5278
Lucian.Pera@arlaw.com


Michael E. Lackey
Mayer Brown, LLP - Washington, D.C.
(o) (202) 263-3224
mlackey@mayerbrownrowe.com


William Freivogel
Freivogel on Conflicts
(o) (312) 642-4567
billfreivogel@me.com
www.freivogel.com
      2012 Ethics Update
Conflicts of Interest Material




             William Freivogel
           Freivogel on Conflicts
             (o) (312) 642-4567
           billfreivogel@me.com
 “Freivogel on Conflicts”: www.freivogel.com
                    Current Client Current - Part I
Note: due to the length of this page we have divided it into two parts, Part I (this page) and Part
II (next page; click here). Part I discusses the basics of the current client rule with subcategories.
Part II consists of cases that do not particularly illuminate the categories at Part I.

A law firm based in Chicago represents a corporate client (Client A) in one matter, a property tax
appeal in San Diego, being handled by a partner in the firm's San Diego office. While that matter
is pending, another client (Client B) asks a partner in the firm's Chicago office to bring a billion-
dollar breach of contract suit against Client A. The alleged breach of contract has nothing
whatsoever to do with the property tax matter in San Diego, and the corporate personnel
involved are in different divisions and different cities. Can the law firm take on the breach of
contract matter?

In all states, except Texas, the firm would need Client A's consent. Otherwise, the law firm is
being asked to take on a matter directly adverse to a current client, which violates Model Rule
1.7(a)(1). This is also the rule in Canada, R. v. Neil, [2002] 3 S.C.R. 631 (Can.); Wallace v.
Canadian Pac. Ry., 2011 SKCA 108 (Ct. App. Sask. Sept. 28, 2011) (discusses “professional
litigant” exception contained in Neil); Lotech Med. Systems Ltd. v. Kinetic Concepts Inc., 2008
FC 1195 (Fed. Ct. Oct. 24, 2008); and Toyota Credit Canada Inc. v. Phantom Ind. Inc., 2007
CanLII 23030 (Ont. Super. Ct. June 19, 2007) (following Neil). See also Restatement § 128(2).
Comment [6] to ABA Model Rule 1.7 makes it explicit.

The Texas exception. Texas is the only state having a version of Model Rule 1.7 that permits a
lawyer to be directly adverse to a current client on a matter unrelated to the representation. See
Texas Rule 1.06(b)(1). The Fifth Circuit has specifically rejected the Texas rule, In Re Dresser
Industries, Inc., 972 F.2d 540 (5th Cir. 1992). In In re Southwestern Bell Yellow Pages, Inc., 141
S.W.3d 229 (Tex. App. 2004), the court applied the Texas rule and said no disqualification;
however, the court also found that the lawyer in question had not gained information in the other
matter to assist the lawyer in this matter.

Ohio. Carnegie Cos., Inc. v. Summit Props., Inc., 2009 Ohio App. LEXIS 3973 (Ohio App. Sept.
9, 2009). This is a comprehensive discussion of current clients under the new Ohio Rules of
Professional Conduct. It takes issue with several federal court decisions decided under Ohio’s
former unique version of Model Code DR5-105, which were somewhat more lenient than the
ruling in this case.

Daniel J. Bussel, No Conflict, 25 Geo. J. Legal Ethics (2012) (at SSRN, to be published).
Professor Bussel contends that the American current client rule should be changed in favor of a
"substantial relationship" test as applied in the former client rule. Whatever one thinks of that
conclusion, the article is a thorough and entertaining history of the current rule.

"No Harm, No Foul." On occasion a court will allow a law firm to remain in a case where it was
technically being adverse to a current client. Such a case is Elonex I.P. Holdings, Ltd. v. Apple
Computer, Inc., 142 F. Supp. 2d 579 (D. Del. 2001) (although, also showing of a consent). More
usually, this is where one representation had ended, was nearly "dead," was severely winding
down, or was recently dead. See, for example, Bayshore Ford Truck Sales, Inc. v. Ford Motor
Co., 380 F.3d 1331 (11th Cir. 2004) (had conflict for brief time, then dropped one of the clients);
Boston Scientific Corp. v. Johnson & Johnson Inc., 2009 U.S. Dist. LEXIS 75527 (D. Del. Aug.
25, 2009) (firm had continuing current client conflict involving European matter but screen, etc.;
same result, same parties, Wyeth v. Abbot Labs., 2010 U.S. Dist. LEXIS 11032 (D.N.J. Feb. 8,
2010)); Cliff Sales Co. v. Amer. Steamship Co., 2007 U.S. Dist. LEXIS 74342 (N.D. Ohio Oct. 4,
2007) (overlapping conflict lasted only two months with no harm to client); LifeNet, Inc. v.
Musculoskeletal Transplant Foundation, 2007 U.S. Dist. LEXIS 29058 (E.D. Va. April 19,
2007) (one of the lawyers left the firm); Pfizer, Inc. v. Stryker Corp., 256 F. Supp. 2d 224
(S.D.N.Y. 2003) (firm briefly represented the other side in two product liability cases, but then
withdrew); End of Road Trust v. Terex Corp., 2002 U.S. Dist. LEXIS 2586 (D. Del. 2002);
Research Corp. Tech., Inc. v. Hewlett-Packard Co., 936 F. Supp. 697 (D. Ariz. 1996); SWS
Financial Fund A v. Salomon Bros., Inc., 790 F. Supp. 1392 (N.D. Ill. 1992); Kaminski Bros.,
Inc. v. Detroit Diesel Allison, Div. of Gen. Motors Corp., 638 F. Supp. 414 (M.D. Pa. 1985) (also
a "hot potato" situation); Air Products & Chemicals, Inc. v. Airgas, Inc., 2010 Del. Ch. LEXIS
35 (Ct. Ch. Del. March 5, 2010) (lawyers screened; matters not related; Cravath was the firm);
Airgas, Inc. v. Cravath, Swaine & Moore LLP, 2010 U.S. Dist. LEXIS 78162 (E.D. Pa. Aug. 3,
2010) (motion to dismiss damages case against Cravath denied); Goodman v. Goodman, 2008
Mo. App. LEXIS 1375 (Mo. App. Oct. 7, 2008) (no showing the “fair or efficient administration
of justice” was threatened); Develop Don’t Destroy Brooklyn v. Empire State Development
Corp., 816 N.Y.S.2d 424 (N.Y. App. 2006); In Prudential Ins. Co. of America v. Anodyne, Inc.,
365 F. Supp. 2d 1232 (S.D. Fla. 2005), the court denied a motion to withdraw even though the
moving law firm discovered that it was representing the other side on unrelated matters. The
court relied heavily on SWS, above as well as what is now § 11.21 of Hazard, Hodes & Jarvis. In
Gen-Cor, LLC v. Buckeye Corrugated, Inc., 111 F. Supp. 2d 1049 (S.D. Ind. 2000), the court
found a current client conflict by virtue of a parent-subsidiary relationship, but rejected
disqualification because the client would not be prejudiced by the conflict. In Atofina Chemicals,
Inc. v. Jci Jones Chemicals, Inc., 2002 U.S. Dist. LEXIS 13970 (E.D. Pa. July 10, 2002), the
court held that because one of the representations was surely going to end, in any event, and to
avoid prejudice to the client of the firm with the conflict, the court denied the motion. A
variation on "no harm, no foul" is Stanton v. Northside Marina at Sesuit Harbor, Inc., 2005 U.S.
Dist. LEXIS 17942 (D. Mass. Aug. 18, 2005). It was not a disqualification case. An aggrieved
litigant attempted to have a summary judgment hearing stayed because of a conflict. The court
denied the stay because the litigant was not prejudiced by the conflict. In Hempstead Video, Inc.
v. Village of Valley Stream, 409 F.3d 127 (2d Cir. 2005), the court held that a law firm could be
adverse to the current client of an of counsel where the firm could show that the of counsel has
been screened from the firm's matter. In Board of Regents of the Univ. of Neb. v. BASF Corp.,
2006 U.S. Dist. LEXIS 58255 (D. Neb. Aug. 17, 2006), the court allowed a law firm to oppose a
party, even though the law firm was representing that party in another case, not related to this
case. There is too much to the case to repeat here, but if you want to be adverse to a current
client, you should read it. In Doctor John's, Inc. v. City of Sioux City, 2007 U.S. Dist. LEXIS 90
(N.D. Ia. Jan. 2, 2007), the court gave a law firm a pass even though for a short period of time it
had a current-client conflict. In Abubakar v. County of Solano, 2008 U.S. Dist. LEXIS 12173
(E.D. Cal. Feb. 4, 2008), lawyer interviewed opponents in one case while defending employer in
another case; no disqualification. In Great American Ins. Co. v. General Contractors &
Construction Mgm’t, Inc., 2008 U.S. Dist. LEXIS 37015 (S.D. Fla. May 6, 2008), the court
allowed a law firm to be adverse to a current client.

Watch out, though. In the following cases the law firm was suing a client in one case and
representing it in another, but the conflict lasted for just a few months. Nevertheless, the court
held the law firm should be disqualified in the surviving matter even though the other matter had
ended: Rembrandt Technologies, LP v. Comcast Corp., 2007 U.S. Dist. LEXIS 9027 (E.D. Tex.
Feb. 8, 2007); Florida Ins. Guar. Ass’n., Inc. v. Carey Canada, 749 F. Supp. 255 (S.D. Fla.
1990); State Farm Mut. Auto. Ins. Co. v. Federal Ins. Co., 86 Cal. Rptr. 2d 20 (Cal. App. 1999);
and Kelly, Remmel & Zimmerman v. Walsh, 2007 Me. Super. LEXIS 71 (Me. Super. Ct. April
13, 2007). Similar cases where the court could have said "no harm no foul" but didn't are
Snapping Shoals Electric Membership Corp. v. RLI Ins. Corp., 2006 U.S. Dist. LEXIS 45226
(N.D. Ga. July 5, 2006); Anderson v. Nassau County Dept. of Corrections, 376 F. Supp. 2d 294
(E.D.N.Y. 2005); and Atlantic Pacific Home Loans, Inc. v. Superior Court, 2006 Cal. App.
Unpub. LEXIS 11228 (Cal. App. Dec. 13, 2006).

Odd Sequence. In Friskit, Inc. v. RealNetworks, Inc., 2007 U.S. Dist. LEXIS 51774 (N.D. Cal.
July 5, 2007), the court denied a motion to disqualify where the movant was the second of the
two clients to have retained law firm.

In Starwood Hotels & Resorts Worldwide, Inc. v. Aoki Corp., 768 N.Y.S.2d 9 (N.Y. App. 2003),
a law firm, because of a merger, wound up on both sides of a case for several months. A lawyer
for one side left the firm, and the court allowed her and her new firm to keep the client. While
she was with the former firm, the lawyers for each side were in different cities and had little
contact. In a similar scenario the court in Laucella v. Ireland San Filippo, LLP, 2006 Cal. App.
Unpub. LEXIS 359 (Cal. App. Jan. 13, 2006) disqualified the law firm.

Combustion Engineering Caribe, Inc. v. George P. Reintjes Co., Inc., 298 F. Supp. 2d 215
(D.P.R. 2003). This is a suit involving a troubled construction project. The relevant entities in
question are three subcontractors, Sub1, Sub2, and Sub3. Sub1 hired Sub2, and Sub2 hired Sub3.
When things went badly, Sub1 sued Sub2 (this case). Sub3 is not a party in this case. When it
came time for Sub1 to depose two employees of Sub3 (the non-party), one of Sub2’s lawyers,
Duane Fox, announced that he would be representing not only Sub2 at the depositions, he would
also be representing Sub3 and the two deponents, for purposes of the depositions. After the
depositions Sub1 moved to disqualify Fox from representing Sub2, because it was a conflict to
represent both Sub2 and Sub3. Sub2 first raised Sub1’s standing to make the motion. The court
admitted that standing was an issue and noted authorities going both ways. Then, without
expressly ruling on standing, the court went on to rule on the merits and denied the motion. The
court acknowledged that there were disputes between Sub2 and Sub3, although, again, Sub3 had
not been brought into the case. But, the court felt that as to the issues in this case, and as to
discovery in this case, Sub2 and Sub3 had common interests. It was also important that Fox’s
limited role in temporarily representing Sub3 in certain discovery activities diminished any
chance that Sub3 would be prejudiced with respect to its dispute with Sub2.

In Sperr v. Gordon L. Seaman, Inc., 727 N.Y.S.2d 456 (N.Y. App. June 18, 2001), a law firm
defended Hicksville Cinemas in two personal injury actions, which have been settled. While
those cases were pending, the law firm, in a third personal injury case involving the same
property, filed a third-party action against Hicksville Cinemas on behalf of the defendant. The
court affirmed the trial court's order disqualifying the law firm in the pending, third case. The
court said in part:

This case involves a law firm which, even if for a relatively brief time, represented a client in one
personal injury case while simultaneously opposing relief sought by that same client in a separate
personal injury case involving the same premises. Thus, there is a more serious risk of an
appearance of impropriety than in the case of a lawyer who later adopts a position which is
adverse to that of a former client in a substantially related matter (see, Code of Professional
Responsibility DR 5-108 [22 NYCRR 1200.27] . . . .

Possessing Confidences of Non-Clients. Law Firm represents the underwriter in an IPO. Law
Firm must conduct due diligence of the issuer, although Law Firm does not represent the issuer.
Can Law Firm be directly adverse to the issuer if the new matter is somehow related to the
information gathered in the earlier due diligence? Yes, according to HF Mgm’t. Services LLC v.
Pistone, 818 N.Y.S.2d 40 (N.Y. App. 2006). However, other New York cases hold that
possessing confidences, validly obtained, of a non-client can prevent a law firm from being
adverse to the non-client. Blue Planet Software, Inc. v. Games Int’l., 331 F. Supp. 2d 273
(S.D.N.Y. 2004); Felix v. Balkin, 49 F. Supp. 2d 260 (S.D.N.Y. 1999); Marshall v. State of N.Y.
Div. of State Police, 952 F. Supp. 103 (N.D.N.Y. 1997); and Greene v. Greene, 418 N.Y.S.2d
379 (N.Y. 1979). This appears to be the rule nationally, as evidenced by the following cases:
Glueck v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir. 1981); Trone v. Smith, 621 F.2d 994 (9th
Cir. 1980); Westinghouse Electric Co. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir.), cert.
denied, 439 U.S. 955 (1978); Coburn v. DaimlerChrysler Services N.A. L.L.C., 289 F. Supp. 2d
960 (N.D. Ill. 2003); Berry v. Saline Mem. Hosp., 907 S.W.2d 736 (Ark. 1995); The Oaks Mgm’t
Corp. v. Superior Court, 145 Cal. App. 4th 453 (Cal. App. 2006) (no disqualification;
distinguished Raley, cited just below; court seemed influenced by fact that the non-client had
produced more current information in this case); Englert v. Sierra Foothills Pub. Util. Dist.,
2006 Cal. App. Unpub. LEXIS 2961 (Cal. App. April 11, 2006) (recognized that such
information is protected but held that the lawyer did not have the information; distinguished
Raley, which follows); William H. Raley Co. v. Sup. Ct., 197 Cal. Rptr. 232 (1983) (partner
served on board; lawyer could not be adverse because of the information available to board
members); Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft, 81 Cal. Rptr. 2d 425 (Cal.
App. 1999) (court also found that the non-client subsidiary and the parent were one for conflicts
purposes); Arkansas Valley State Bank v. Phillips, 2007 Okla. LEXIS 109 (Okla. Oct. 16, 2007)
(implied that lawyer would have been disqualified if he had actually received confidences); Nat.
Med. Enterprises v. Godbey, 924 S.W.2d 123 (Tex. 1996); In re Dalco, 186 S.W.3d 660 (Tex.
App. 2006); and RWR Management, Inc. v. Citizens Realty Co., 135 P.3d 955 (Wash. App.
2006). Canada: see Miele v. Humber River Reg. Hosp., 2007 CanLII 27757 (Ont. Super. Ct. July
13, 2007), leave to appeal to Divisional Court granted, 2007 CanLII 44820 (Super. Ct. of Ont.
Oct. 25, 2007); Pilgrim v. Pilgrim, 2008 NLTD 162 (CanLII) (S. Ct. Newfoundland & Labrador
Oct. 21, 2008); and Stanley v. Advertising Directory Solutions Inc., 2007 BCSC 1125 (CanLII)
(S. Ct. of Brit. Col. July 26, 2007). See Restatement § 121, illus. 10. The “joint defense” cases
are in this mold. To see how, go to “Co-Counsel/Joint Defense Agreements” in this site. A law
firm in this position should consider setting up a screen around the confidential information and
the lawyers and staff who were privy to it. A helpful authority suggesting that entire law firms
need not be disqualified is Restatement §132 cmt. g(ii). It says that where there is not an
attorney-client relationship, the law of agency applies, and that law does not impute the
knowledge of agents to others. Other helpful authorities are Restatement § 15 and Model Rule
1.18. Those provisions relate to information gathered from “prospective clients.” They provide
that the lawyer is to keep the information confidential and not use it to the prospective client’s
disadvantage. It is important to note that both provisions provide that a screen will prevent other
lawyers in the firm from being disqualified. Thus, one could argue that a law firm obtaining non-
client information while doing due diligence could also use a screen. There appears to be no
logical difference between the two situations. To see other “prospective client” cases, go to
“Initial Interview/Hearing too Much,” in this site.

Similar Facts and Same Result as in HF Mgm't, Above. Strasbourger Person Tulcin Wolff Inc. v.
Wiz Tech., Inc., 82 Cal. Rptr. 2d 326 (Cal. App. 1999) (another underwriter-issuer case where the
court ruled found no conflict) .

Case Involving Confidences of Non-Client, but Court Unclear Whose Interests Were Important.
Shire Laboratories Inc. v. Nostrum Pharmaceuticals, Inc., 2006 U.S. Dist. LEXIS 51043 (D.N.J.
July 25, 2006).

Secondment of Firm Lawyer Need not Create Conflict. N.Y. City Op. 2007-2 (undated).


What Is a "Current" Client?

When is a client a "current" client, as opposed to a "former" client? That is discussed at the
section entitled "Former Client - the Substantial Relationship Test." To go there, click here.

What Is Direct Adversity?

Suing a current client is direct adversity. What about negotiating a major contract for one client
when the opposite party to the contract is a current client of the firm on unrelated matters? That
is probably direct adversity, but there are few cases or opinions on the subject. See the section of
this publication entitled, "Commercial Negotiations."

What about suing a non-client where the outcome will have an adverse economic impact on
another client who is not a party to the law suit. For example, can a law firm sue a person who is
a guarantor on a note held by a current client where the maker of the note is in financial
difficulty? There are few cases that address that issue. ABA Op. 95-390 (1995) contains an
excellent discussion of direct adversity in the corporate family context. Also, see the section of
this publication, entitled, "Corporate Families." ABA Op. 95-390 cites a case that is very similar
to the guarantor situation, North Star Hotels Corp. v. Mid-City Hotel Associates, 118 F.R.D. 109
(D. Minn. 1987).

The Standing Committee on Ethics and Professional Responsibility of the American Bar
Association has provided valuable insight into what is “direct adversity” in two opinions. Formal
Opinion 05-434, dated December 8, 2004, deals with a testator who asks a lawyer to draft a new
will, the effect of which is to disinherit the testator’s son. The problem is the son is a client of the
lawyer on matters unrelated to the testator’s estate. The court held that drafting the will is not
direct adversity to the son, and the lawyer does not need the son’s consent to do the will. The
Committee does point out scenarios under which the lawyer may not be able to do the will,
which we will not elaborate on here. Anyone who has this situation should read Opinion 05-434.
Formal Opinion 05-435, also dated December 8, 2004, deals with a lawyer who represents an
insurance company as a named party in litigation. Now, in an unrelated matter, another client
("Client A") asks the lawyer to file a lawsuit against Defendant B. The problem is that Defendant
B is insured by a policy issued by the lawyer’s insurance company client. The Committee opined
that without more, pursuing the lawsuit against Defendant B is not direct adversity to the
insurance company. As was the case in Opinion 05-434, the Committee discusses scenarios
under which filing the suit may not be permissible.

GATX/Airlog Co. v. Evergreen Int'l. Airlines, Inc., 8 F. Supp. 2d 1182 (N.D. Cal. 1998) furnishes
another twist on direct adversity. The owner of several 747 passenger airplanes sued a company
that allegedly did faulty work in converting them to freight airplanes. The defendant's law firm
also represented a major bank on a variety of matters. Well into the 747 litigation, the parties
realized that the bank was an owner of one of the airplanes that had been converted, although the
bank had not yet filed its own suit. The bank moved to intervene in the original suit to have the
law firm disqualified. The court granted the motion, saying it should have been clear early on
that the law firm's actions were adverse to its bank client - even though the bank had not yet filed
an action. The law firm's status later became moot, and the Ninth Circuit ordered the
disqualification order vacated, at 192 F.3d 1304 (9th Cir. 1999).

In Harvey E. Morse, P.A. v. Clark, 890 So. 2d 496 (Fla. App. 2004), the court held that the law
firm representing a trust, which was trying to deplete a decedent’s estate in favor of the trust, was
directly adverse to the heirs of the estate. Because one of the heirs (actually, an assignee of
several heirs) was a current client of the firm on unrelated matters, the court held the firm had a
direct adversity conflict.

What About Referring other Party to Lawyer. D.C. Op. 326 (Dec. 2004). The D.C. Bar Ethics
Committee opined that a lawyer with a conflict may refer the non-client to another lawyer. The
Committee relied principally upon D.C.’s version of Model Rule 4.3. Compare Flatt v. Superior
Court, 885 P.2d 950 (Cal. 1994), in which the court held that a lawyer did not have a duty to
advise a declined client about the statute of limitations if doing so would disadvantage an
existing client.

"Potential" vs. "Actual" Conflicts. In most contexts and in most jurisdictions lawyers are
disqualified for having "actual" rather than "potential" conflicts. See, for example Shaffer v.
Farm Fresh, Inc., 966 F.2d 142 (4th Cir. 1992); Guillen v. City of Chicago, 956 F. Supp. 1416
(N.D. Ill. 1997); Chapman Engineers, Inc. v. Natural Gas Sales Co., 766 F. Supp. 949 (D. Kan.
1991); In re Possession & Control of Commissioner of Banks, 764 N.E.2d 66 (Ill. App. 2001);
and Bottoms v. Stapleton, 706 N.W.2d 411 (Ia. 2005). However, California Rule 3-310(C)(1)
says a lawyer may not represent interests that "potentially" conflict, without consents. In Glahn
& Hirschfield v. Taylor, 2004 Cal. App. Unpub. LEXIS 3249 (Cal. App. April 7, 2004), the court
described how California courts define "potential" (a situation that is "reasonably likely" to lead
to an actual conflict). Another case discussing these distinctions is Maali v. Abtahi, 2008 Cal.
App. Unpub. LEXIS 454 (Cal. App. Jan. 16, 2008). "Potential conflict" is also used in
bankruptcy cases. To read about those go to "Bankruptcy" at this site. The distinction is also
made in the criminal cases. To read about them, go to "Criminal Practice."

E.D.N.Y. Attempt to Distinguish "Actual" vs. "Potential" Conflict. Norton v. Town of Islip, 2006
U.S. Dist. LEXIS 60459 (E.D.N.Y. Aug. 23, 2006)

Oregon's "Actual" Conflict vs. "Likely" Conflict Rule. In re Lawrence, 98 P.3d 366 (Ore. 2004).

Patent Opinions. Va. Op. No. 1774 (Feb. 13, 2003). This may be a first. A law firm is asked by
client A to render a validity opinion on a patent owned by B. B is a patent client of the firm, but
on other types of products. The Virginia committee opined that to render the opinion is direct
adversity under Va. Rule 1.7(a), and that the firm can only do so with the consent of A and B.
More recently, a court made a similar holding regarding a non-infringement opinion, Andrew
Corp. v. Beverly Mfg. Co., 415 F. Supp. 2d 919 (N.D. Ill. 2006). That is the first court opinion so
holding, of which we are aware. Also, see Samuel C. Miller, Ethical Considerations in Rendering
Patent Opinions and the Impact of Knorr, Echostar and Andrew, 88 J. Pat. & Trademark Off.
Soc’y 1091 (Dec. 2006).

Bond Lawyer Conflicts. Iowa Op. 06-03 (November 6, 2006). This opinion softens Iowa’s
position on conflicts for municipal bond lawyers. It provides that a law firm may represent an
issuer when it is already representing the underwriter in other, unrelated, transactions, provided
waivers are obtained, and the parties signing the waivers are sophisticated. Earlier Iowa Op. 95-
20 (February 22, 1996), would have prevented such a waiver and would have barred a law firm
from representing an issuer where the firm represents the underwriter currently, or had
represented the underwriter in the past.

Banks/Trust Departments. May a lawyer doing lending work for a bank oppose the bank it its
capacity as a fiduciary? There is little judicial guidance. For a full discussion of this, go to
"Banks/Trust Departments" by clicking here.

Zero Sum Games. May a law firm assist one client in seeking a broadcast license in competition
with another client? May a law firm assist one client in collecting a debt, where another client is
also a creditor of the same debtor, and the amount of money available is not enough to satisfy
both. We discuss these issues and provides cases and opinions on them at a section entitled "Zero
Sum Games." To go there, click here.

"Nominal" Clients. In the following cases the court held that the lawyer's representation of one of
the clients was only nominal, so the lawyer could be adverse to that "client:" Commercial Union
Ins. Co v. Marco Int'l. Corp., 75 F. Supp. 2d 108 (S.D.N.Y. 1999); Guzewicz v. Eberle, 953 F.
Supp. 108 (E.D.Pa. 1997); and In re Dooley, 599 N.W.2d 619 (N.D. 1999). In American Special
Risk Ins. Co. v. Delta America Re Ins. Co., 634 F. Supp. 112 (S.D.N.Y. 1986), the court allowed
a law firm to stay in a matter using the “nominal client” rubric; however, the law firm was doing
real work for the client, and the client was “nominal” in the matter where the law firm was
adverse to it.

"Vicarious Clients." Atrotos Shipping Co., S.A. v. The Swedish Club, 2002 U.S. Dist. LEXIS
9018 (S.D.N.Y. May 20, 2002). A ship owner is suing its "Freight, Demurrage, and Defense"
insurance carrier, The Swedish Club ("TSC"). TSC usually appoints law firms to represent ship
owners, all correspondence is between the law firm and TSC, and TSC pays the law firm's fees.
The law firm for the plaintiff is also representing TSC in other shipping losses. TSC moved to
disqualify the law firm in this case, because of these other matters. The law firm responded that
it was really representing the insured in the other cases and that TSC was merely a "vicarious"
client. The court disagreed and disqualified the law firm.

Third-Party Actions. Richmond American Homes of Northern California, Inc. v. Air Design, Inc.,
2002 Cal. App. Unpub. LEXIS 6948 (Cal. App. July 25, 2002). A sued B. B filed a third-party
action against C. C moved to disqualify A’s lawyer because that lawyer had previously
represented C on substantially related matters. A claimed that A was not suing C, so there was no
adversity. The Appellate Court disagreed noting that third-party defendants can defend against a
third-party complaint by attempting to prove the defendant had no liability to the plaintiff. The
court held that is being directly adverse to the former client. (While this is not a current client
conflict, the same analysis regarding third-party complaints should apply to current clients.)
Another third-party action in which the court held that a lawyer could not represent both the
plaintiff and the third-party defendants is Pressman-Gutman Co., Inc. v. First Union National
Bank, 459 F.3d 383 (E.D. Pa. 2004). The court disqualified the law firm from representing the
third-party defendants. And, upon reconsideration, the court ordered the law firm out of the case
entirely, Pressman-Gutman Co., Inc. v. First Union National Bank, 2004 U.S. Dist. LEXIS
23991 (E.D. Pa. Nov. 30, 2004). The Third Circuit denied mandamus at Pressman-Gutman Co.,
Inc. v. First Nat. Bank, 459 F.3d 383 (3d Cir. 2006) . In In re Methyl Tertiary Butyl Ether
Products Liab. Lit., 438 F. Supp. 2d 305 (S.D.N.Y. 2006), a law firm started out representing
plaintiffs and a third-party defendant. When challenged, it withdrew from representing the latter.
In Liberty Mut. Fire Ins. Co. v. Ravannack, 2006 U.S. Dist. LEXIS 50252 (E.D. La. July 21,
2006), the court allowed a lawyer to represent both a plaintiff and a third-party defendant (with a
waiver) without discussing the conflict and the ability of the parties to understand it. Same, in
Hall Dickler Kent Goldstein & Wood, LLP v. McCormick, 930 N.Y.S.2d 195 (N.Y. App. 2007).
In Decker v. Nagel Rice LLC, 2010 U.S. Dist. LEXIS 26530 (S.D.N.Y. March 22, 2010), the
court ruled that a lawyer could not represent the plaintiff and be a third-party defendant.

Attempt to Apply "Substantial Relationship" Test to Current Client Situation. And, Much More.
Reed v. Hoosier Health Systems, Inc., 825 N.E.2d 408 (Ind. App. 2005). The lawyers
representing the plaintiff in this corporate dispute are in a law firm that represents the defendants
in medical malpractice suits. The trial court granted the defendants’ motion to disqualify
plaintiff’s lawyers, and in this opinion the appellate court affirmed. The plaintiff bravely
attempted to get the court to apply the “substantially related” test even though the conflict is a
current one under Indiana’s version of Model Rule 1.7(a)(1). The court did not buy that one. The
law firm also offered to withdraw from the malpractice cases. The court did not buy that one
either, citing the “hot potato” cases. Last, the plaintiff tried to argue that defendants weren’t
really clients of the firm in the malpractice cases because of the nature of their relationship to
their malpractice carrier. This argument was based upon the fact that the insurance company
appointed defendants’ law firm and had complete control of the defense, and only the insurance
company had exposure. That argument also failed.

. . . Relying on Hoosier. Folsom v. Menard, Inc., 2011 U.S. Dist. LEXIS 40406 (S.D. Ind. April
13, 2011). The court held that a law firm could not cure a current conflict by dropping just one
party.

Strother v. 3464920 Canada Inc., 2007 SCC 24 (Can). Lawyer did tax shelter work for Client
No. 1 for several years and through 1997. The law changed in 1997, and Lawyer advised Client
No. 1 that it could do no further tax shelter deals of the sort it had been doing. Lawyer’s law firm
(“Law Firm”) continued to do other work for Client No. 1 through 1998 and into 1999. In early
1998 Lawyer began representing Client No. 2, and, through a loophole in Canadian tax law,
Lawyer did a number of tax shelter deals for Client No. 2, similar to those Lawyer had done for
Client No. 1. Further, Lawyer had an agreement that Client No. 2 would share its profits with
Lawyer. When Client No. 1 learned of Lawyer‘s work for Client No. 2, it sued Lawyer and Law
Firm for breach of fiduciary duty for failure to advise Client No. 1 of the loophole opportunities.
The key issue was whether Lawyer had an obligation in 1998 to advise Client No. 1 of the
loophole. As of 1998 Law Firm had no written engagement letter with Client No. 1. The B.C.
trial court held that Lawyer and Law Firm had no duty to advise Client No. 1 of the loophole.
The B.C. Court of Appeal disagreed and reversed. In this opinion the Supreme Court of Canada,
in a 5-4 opinion affirmed the Court of Appeal on the issue of liability of Lawyer. The Supreme
Court ruled that Law Firm had no liability for breach of fiduciary liability but might be
vicariously liable under the Canadian Partnership Act. According to press accounts the Supreme
Court’s ruling on damages reduced Lawyer’s exposure from upwards of $40 million to about $1
million.

S.C. Op. 05-14 (2005). Lawyer may not represent mortgagor in foreclosure proceeding when the
mortgagee is a client in other foreclosure proceedings without a waiver from the mortgagee.

Odd California Case. Cal West Nurseries, Inc. v. Superior Court, 29 Cal. Rptr. 3d 170 (Cal.
App. 2005).

Where Lawyer's Two Current Clients Are Adverse in Proceeding, in which the Lawyer Is not
Involved, Lawyer Does not Have a Current Client Conflict. Fremont Indem. Co. v. Fremont Gen.
Corp., 49 Cal. Rptr. 3d 82 (Cal. App. 2006).

Patent Matter. Enzo Biochem, Inc. v. Applera Corp., 468 F. Supp. 2d 359 (D. Conn. 2007) . In
this case Enzo has sued Applera for patent infringement. In another case Enzo has sued
Amersham for infringement of the same patents. Amersham is a subsidiary of GE. Law Firm
represents Enzo in this case (the Applera case). Another firm represents Enzo in the Amersham
case. Law Firm represents GE in other intellectual property matters. For that reason GE
intervened in this case to move to disqualify Law Firm. In this opinion the court denied the
motion. There was some evidence that Law Firm communicated with the law firm representing
Enzo in the Amersham case in order to present consistent claims construction positions.
However, Law Firm has committed not to participate in any appeals of the claims construction
rulings. The court added:
[W]hile the construction of Enzo's patents applicable to the infringement claims brought against
two separate accused infringers, Amersham and Applera, implicates pretrial Markman overlap,
the trials of how those constructions apply to the respective accused products or conduct are
wholly separate. GE has not claimed that any of its witnesses in Amersham will be cross-
examined by [Law Firm] in Applera, as contemplated as demonstrating direct adversity under
Rule 1.7(a)(1).

Lawyer for Personal Representative Is not Lawyer for the Estate or Beneficiaries. In re Estate of
Buoni, 2006 Cal. App. Unpub. LEXIS 9368 (Cal. App. Oct. 20, 2006) (one lawyer allowed to
represent the person who was administrator and creditor of estate); In re Est. of Deigh, 2006
Wash. App. LEXIS 2160 (Wash. App. Oct. 2, 2006).

Secondment. N.Y. City Op. 2007-2 (undated). Here is the Committee's digest:

A law firm may second a lawyer to a host organization without subjecting the law firm to the
imputation of conflicts under DR 5-105(D) if, during the secondment, the lawyer does not
remain “associated” with the firm. The seconded lawyer will not remain associated with the firm
if any ongoing relationship between them is narrowly limited, and if the lawyer is securely and
effectively screened from the confidences and secrets of the firm’s clients. Both during the
secondment and afterward, the seconded lawyer and his or her employer should be mindful of
the lawyer’s former-client conflicts under DR 5-108.

Representing Client and Having Simultaneous Fee Dispute. L.A. County Op. 521 (2007). This
opinion discusses the extent to which a lawyer may continue to represent a client in the face of a
disagreement over fees.

Threats by Client to Sue for Malpractice Grounds for Withdrawal. Moore v. United States, 2008
U.S. Dist. LEXIS 34741 (E.D. Cal. April 28, 2008). Plaintiffs in this case threatened to sue their
law firm for malpractice. In this opinion the court ruled that the threat created a conflict of
interest and ruled that the law firm’s motion to withdraw should be granted.

Commercial Development Co. v. Abitibi-Consolidated Inc., 2007 U.S. Dist. LEXIS 86147 (W.D.
Wash. Nov. 15, 2007). This is a suit for specific performance of a real estate sales contract,
among other things. A realtor (“Realtor“), affiliated with the real estate agency (“Agency”)
representing the seller, successfully moved to intervene to defend her conduct, which appeared to
be put in issue by the plaintiffs. Realtor then moved to disqualify the plaintiffs’ law firm (“Law
Firm”) because Law Firm represents Realtor and has represented Realtor on matters substantially
related to this matter. In this opinion the court granted the motion. The court plowed no new
ground, here, and the analysis was very fact-intensive. Law Firm’s relationship with Realtor
came about through Law Firm’s representation of Agency, for which Realtor was an independent
contractor. Realtor paid a portion of Law Firm’s fees pursuant to her contract with Agency. A
partner at Law Firm (“Lawyer”) had counseled with Realtor on issues similar to those in this
case.

Ore. Op. 2009-182 (Oct. 2009). In this opinion the Committee held that the filing of a Bar
complaint by a client does not necessarily require the lawyer to withdraw from an ongoing
representation that is the subject of the Bar complaint.
If You "Have to Ask," Rule 1.7(a)(2) Is Almost Certainly Involved -
A Comparison with Rule 1.7(a)(1)

Rule 1.7(a)(2) may be involved where there is no direct adversity against a current client. It
applies if the representation of a client "may be materially limited" by the lawyer's responsibility
to someone else or by the lawyer's own interests. If the answer is "maybe," then the lawyer must
be satisfied that "the representation will not be adversely affected," (1.7[b][1]) and the client
consents (1.7[b][4]).

Take the guarantor situation mentioned above. Notwithstanding the North Star case, which the
drafters of ABA Op. 95-390 believe stretches the meaning of direct adversity under Rule
1.7(a)(1), an analysis of Rule 1.7(a)(2) would still be required. That is, would the lawyer's
loyalty to the payee of the note cause the lawyer to do less than a perfect job in going after, and
possibly bankrupting, the guarantor. Stated another way, if you are concerned about whether
1.7(a)(1) applies, and you decide that it does not, you are almost certainly going to have to go
through the 1.7(a)(2) analysis.

Mother Can Be Son's Lawyer with Son's Waiver. Douglass v. Valteau, 2005 U.S. Dist. 11993
(E.D. La. June 9, 2005).

Daughter Can Represent Mother in Family Leave Medical Act. Mezu v. Morgan State U., 2010
U.S. Dist. LEXIS 113817 (D. Md. Oct. 22, 2010).

Malpractice Plaintiffs' Model Rule 1.7(a)(2) Argument not Successful. Spears v. Overbey, 2006
U.S. App. LEXIS 5426 (6th Cir. March 2, 2006).

Sands v. Menard, Inc., 787 N.W.2d 384 (Wis. 2010). According to an arbitration panel, on the
evening of March 14, 2006, Dawn Sands, the general counsel of Menard's, the building materials
chain, was sitting at her desk preparing for a meeting. John Menard, the company founder,
entered her office and said; "Pick your shit up; I want your ass out of here. You've got five
minutes." (Thus, setting a new standard for civility in terminating a general counsel.) Sands
brought an arbitration, and the panel awarded her almost $1.8 million in damages and ordered
her reinstated. The trial court ordered that the award be enforced. The appellate court affirmed.
In a 4-3 decision (this opinion) the Wisconsin Supreme Court reversed the reinstatement and
remanded to the trial court to consider "front pay" damages in lieu of reinstatement. The existing
$1.8 million award was not disturbed. The majority ruled that, given the degree of animosity
between the parties, Sands could not possibly comply with her ethical obligations if she were to
return to the company. The majority cited only Wisconsin Rule 1.7(a)(2), the material limitation
provision. The vigorous dissent, arguing for reinstatement, centered primarily upon the need for
preserving the integrity of arbitration awards. However, it contains one of the lengthier
discussions of the material limitation provision of Rule 1.7 that we have seen.

Suing Current Client for Fees. In re Simon, 2011 N.J. LEXIS 641 (June 9, 2011). In this opinion
the New Jersey Supreme Court upheld a reprimand of a lawyer who had sued a current client for
fees. It was a murder case, from which the lawyer was trying to withdraw. The trial court had
denied the lawyer leave to withdraw. After the suit for fees was filed, the court granted the
lawyer leave to withdraw. The court held that the suit for fees under these circumstances was a
violation of New Jersey Rule 1.7(a)(2), the material limitation rule.

In re Bruzga, 2011 N.H. LEXIS 64 (N.H. May 12, 2011). Lawyer advised Client on whether
Client could remove funds from a "special needs trust" set up under Medicaid laws. After Client
paid the funds to himself and his sister, Medicaid investigators began an investigation of Client,
the sister, and Lawyer as to whether the funds should have been paid to the government. Lawyer
continued to advise Client as to the investigation. Ultimately, the government ordered Client and
his sister to disgorge the funds. A bar prosecution began against Lawyer. In this opinion the court
considered whether Lawyer violated New Hampshire's version of MR 1.7(a)(2) (the material
limitation provision - - designated "1.7(b)" in New Hampshire), because Lawyer represented
Client while they were both being investigated. The court ruled that Lawyer did violate that rule
(among others). The court suspended Lawyer for six months. Lawyer had been disciplined on
three prior occasions, two of them resulting in suspensions of one year and six months,
respectively.

Lawyer argues that his client and not lawyer liable for sanctions, making lawyer subject to
further sanctions. Wade v. Soo Line R.R. Corp., 500 F.3d 559 (7th Cir. 2007).

Coe v. Northern Pipe Products, Inc., 589 F. Supp. 2d 1055 (N.D. Ia. 2008). This is an
employment discrimination case. Disqualification was not an issue. Nevertheless, when
discussing the difference between a "mixed motives" claim and a "but for" claim, the court made
the following interesting observation:

Indeed, this court has often wondered if plaintiffs' lawyers explain these realities to plaintiffs and
let them decide whether to pursue a "but for" or "mixed motive" claim or both. If an attorney
does not make such a full disclosure that allows the plaintiff personally to decide which claim or
claims to pursue, this court suggests that there may be a conflict of interest between the lawyer
and the client. After all, there are some cases in which it is to the plaintiff's lawyer's advantage to
pursue a "mixed motives" claim, which would provide compensation to the lawyer, but it would
not be to the plaintiff's advantage to do so, because the plaintiff might recover nothing, and vice
versa.

Shanley v. Cadle Co., 2010 U.S. Dist. LEXIS 131560 (D. Mass. Dec. 3, 2010). Lawyer appeared
for several plaintiffs in this litigation. The defendant is Cadle Co. Lawyer, in other venues, is
engaged in a bitter personal battle with Cadle Co. Among other things, Cadle Co. obtained a
defamation judgment of $250,000 against Lawyer. In this brief opinion the court expressed
serious concern about Lawyer's ability to adequately represent the plaintiffs in these cases, citing
the material limitation provision in Massachusetts' version of MR 1.7. The court ordered Lawyer
and Lawyer's co-counsel to file affidavits explaining how Lawyer's personal battles with Cadle
Co. will not jeopardize Lawyer's performance in these cases. Stay tuned.

Negotiating Lawyer's Fee with Settlement Amount (posted February 18, 2011) Martin v. Huddle
House, Inc., 2011 U.S. Dist. LEXIS 13670 (N.D. Ga. Feb. 11, 2011). In this opinion the court
refused to approve the settlement of FLSA claims because the plaintiffs' lawyer negotiated the
settlement amounts and his fees "simultaneously." The court scheduled a hearing to deal with
"this potential ethical violation."

Valley/50th Ave. LLC v. Morse and Bratt, P.S.C., 2011 Wash. App. LEXIS 1286 (Wash. App.
June 1, 2011). Without more, the taking of a security interest from a client does not constitute a
“material limitation” under Washington’s version of MR 1.7(a)(2).

O'Malley v. Novoselsky, 2011 U.S. Dist. LEXIS 66406 (N.D. Ill. June 14, 2011). Lawyer is a
defendant in two consolidated lawsuits. One suit is by a former client ("FC"), who is claiming
return of $160,000 in fees. The other suit is by a lawyer formerly employed by Lawyer ("FE").
FE is claiming that he is entitled to 1/3 of FC's $160,000, pursuant to an employment agreement
between FE and Lawyer, because FE had referred FC to Lawyer. FC and FE are represented by
the same lawyer ("Gentleman"). FC is also represented by Johnson. The court held, among other
things, that pursuant to the Northern District's version of Model Rule 1.7(a)(2), any belief by
Gentleman and Johnson that they could adequately represent both FC and FE would be
unreasonable.

In re Rubio, 2011 Colo. App. LEXIS 1400 (Col. App. Aug. 18, 2011). Post dissolution
proceeding. W gave her law firm a retainer. H sought to garnish the unearned portion of the
retainer from W's law firm and moved to disqualify the law firm. The trial court disqualified the
law firm. In this opinion the appellate court reversed. The court said that, as things stood, both W
and the law firm sought the same relief and had no conflict. W had also waived any conflict.

N.Y. Op. 865 (May 10, 2011). Here is the committee's conclusion:

In light of Estate of Schneider v. Finmann, [15 N.Y.3d 306 (2010)], a lawyer who prepared an
estate plan for a client may agree to act as counsel to the executor after the client’s death as long
as the lawyer does not perceive a colorable claim for legal malpractice before or during the
representation of the executor. However, if the lawyer does perceive a colorable claim for legal
malpractice before or during the representation, then the conflict is nonconsentable and the
lawyer (and all other lawyers associated with his firm) must decline or withdraw from the
representation and the lawyer must inform the executor of the facts giving rise to the claim.


Cross-Examining Employee of Client. Lewis v. State, 2011 Ga. App. LEXIS 939 (Ga. App. Oct.
28, 2011). In this criminal case Defendant is charged with defrauding School District, of which
Defendant was Superintendent. Law Firm is defending Defendant. The prosecution listed a
number of witnesses, one of whom is an employee ("Employee") of Company, a construction
firm that did work for School District. Law Firm represents Company on matters unrelated to
this case, or to School District. Law Firm had no prior relationship with Employee. The
prosecution moved to disqualify Law Firm in this case, because Law Firm would have to cross
examine an employee of Law Firm's client, Company. The trial court granted the motion. In this
opinion the appellate court reversed. First, the court held that Company and Employee were not
one for conflicts purposes. Second, the appellate court did not buy the trial court's theory that
Law Firm would be limited in its cross examination of Employee by its fealty to Company. The
court held that the prosecution had not shown the court enough information about Employee or
her importance to Company to establish that Law Firm would, in fact, be so limited. Both
Company and Defendant had waived the conflict.

CSX Transp., Inc. v. Gilkison, 2011 U.S. Dist. LEXIS 130118 (N.D. W. Va. Nov. 9, 2011). Law
Firm represented a number of plaintiffs against Railroad in asbestos cases. In this case Railroad
is suing Law Firm for fraud arising out of the asbestos cases. In this opinion the court ruled that
West Virginia's version of MR Rule 4.2 does not prohibit Railroad's lawyers from contacting
Law Firm's former clients, but does prohibit Railroad from contacting Law Firm's current clients.
The court also ruled that Law Firm could not represent former clients when they are deposed in
this case because of the material-limitation provision of West Virginia's version of MR 1.7(a)(2).

Gatlage v. Winters & Yonkers, P.S.C., 2012 U.S. Dist. LEXIS 149655 (W.D. Ken. Dec. 29,
2011). Lawyer was an associate at Law Firm, which was a plaintiffs' personal injury firm.
Lawyer was encouraged to send all clients to Doctor Co. When he refused to do so, he was
terminated. Lawyer brought this action for wrongful termination. In this opinion the court
granted a motion to dismiss. The court did not specify a rule by number but, evidently, Lawyer is
claiming that the referral arrangement, allegedly a two-way one, violated Kentucky's version of
M.R. 1.7(a)(2). The court said that what Lawyer described was "not a pretty business," but that
the law afforded Lawyer no relief.

Restatement. See §§ 121, 125, and 128.

Treatise. Hazard, Hodes, & Jarvis §§ 11.2-11.5.

Law Reviews. David Hricik, How Things Snowball: the Ethical Responsibilities and Liability
Risks Arising from Representing a Single Client in Multiple Patent-Related Representations, 18
Geo. J. Legal Ethics 421 (2005) ; Thomas D. Morgan, Suing a Current Client, 9 Geo. J. Legal
Ethics 1157 (1996).
                             Former Client - Part I

Note: due to the length of Former Client, it has been divided into two pages: Part I and Part II.

Table of Contents of this Page (Part I)

      Introduction
      When Does a “Current Client” Become a “Former Client”?
      What is Substantial Relationship?
      What is “Materially Adverse”?
      “Accommodation Client”
      Playbook


Introduction

Model Rule 1.9(a) states as follows:

A lawyer who has formerly represented a client in a matter shall not thereafter represent another
person in the same or a substantially related matter in which that person's interests are materially
adverse to the interests of the former client unless the former client consents after consultation.

We discuss obligations with respect to current clients at the section entitled, "Current Client and
Direct Adversity." To go there, click here. For purposes of this section, the key provision
regarding current clients is at Model Rule 1.7(a):

A lawyer shall not represent a client if the representation of that client will be directly adverse to
another client, unless . . . .

Thus, it makes a difference, for conflicts purposes, whether the client is "current" or "former." If
the client is current, the lawyer may not be directly adverse without consent. As to former
clients, the lawyer may be directly adverse unless the new matter is "substantially related" to
what the lawyer did for the former client.

This section is built around several issues: (1) When does a current client become a former client
- and thus trigger the substantial relationship test?; and (2) What is "substantially related"?
Included is a discussion of the "accommodation client" concept. Finally, the section deals with
an important subset of the substantial relationship issue - what Professor Wolfram refers to as the
"playbook view." Charles W. Wolfram, Former-Client Conflicts, 10 Geo. J. Legal Ethics 677
(1997). The "playbook view" refers to situations where a lawyer learns from a current client how
the client approaches - or specific employees of the client approach - legal matters, thereby
giving the lawyer a supposed advantage when opposing that person or entity as a former client.
More about Professor Wolfram's article and the "playbook view" later.

Another very helpful source on these issues is Joan C. Rogers, Conflicts of Interest:
Representation Adverse to Former Client, Current Reports, August 14, 2002, p. 490, ABA/BNA
Law. Man. Prof. Conduct, now pages 51:201-243 in the large binder. It is an excellent 30-page
article on former clients. It includes such subjects as client mergers/asset sales, joint defense
arrangements, "accommodation clients," "playbook" information, advance consents, and much,
much more. It is the best writing on these subjects since Professor Wolfram's article, cited above.
Anyone with a former client issue should consult the Wolfram and Rogers articles. This site will
continue to add cases on these subjects.

Warning: More cases deal with former client issues than just about any other issue relating to
conflicts of interest. The cases also tend to be more fact-specific than those in other areas -
particularly as to what is "substantially related." Thus, many of them have relatively little value
as precedent. It is the philosophy of this site to be as comprehensive as possible in including
cases and opinions. However, given the large number of cases on these subjects and their fact-
specific nature, we will cite leading examples without trying to set a record for number of cases
and opinions cited.

Treatise. Hazard, Hodes, & Jarvis §§ 13.2-13.12.

Article. Amanda Kay Morgan, Screening out Conflict-of-Interests Issues Involving Former
Client: Effectuating Client Choice and Lawyer Autonomy while Protecting Client Confidences,
28 J. Legal Prof. 197 (2004).


When Does a "Current Client" Become a "Former Client"?

When confronted with a conflict of interest argument, a lawyer would love to be able to fish out
of her file a letter to the client that says the following:

This matter has concluded. We plan to do no further work for you, and you are no longer our
client.

Lawyers hate to write letters like that. A truly effective letter may offend the client. Moreover,
the lawyer wants to maintain a bond with the client so that it will send more business. Thus,
these letters are rarely written, and the courts must resort to other indicia. Following are
examples of cases where the courts did so:

Law firm's failure to document end of relationship keeps it in case. Jenifer v. Fleming, Ingram &
Floyd, P.C., 2008 U.S. Dist. LEXIS 5492 (S.D. Ga. Jan. 25, 2008).

Fascinating discussion of situation where all the work was done but no “official” termination
had occurred. The court found that the representation was current, but held that no harm would
result to that client by allowing the law firm to continue on the other side of this unrelated case.
Metropolitan Life Ins. Co. v. The Guardian Life Ins. Co. of America, 2009 U.S. Dist. LEXIS
42475 (N.D. Ill. May 18, 2009).

Fenik v. One Water Place, LLC, 2007 U.S. Dist. LEXIS 10096 (N.D. Fla. Feb. 14, 2007). Law
firm had ceased representing plaintiff on other matters several months prior to this case being
filed. That law firm appeared for the defendant in this case. The court denied plaintiff's motion to
disqualify law firm, noting, among other things, that plaintiff hired a different law firm to file
this case.

Jones v. Rabanco, Ltd., 2006 U.S. Dist. LEXIS 53766 (W.D. Wash. Aug. 3, 2006). Work had
ceased three years prior, but: (1) client's officers stated they believed it was still a client; (2) the
law firm in question was listed as one to receive notice of a breach of the settlement agreement,
which was to remain in force until 2011; (3) the law firm had not written a letter saying the
representation had ceased; (4) the law firm's books showed the matter as "open;" and (5) the law
firm was incurring the cost of storing 49 boxes of documents in case they were needed for
further developments in the prior matter. Court held, "current client."

Kabi Pharmacia AB v. Alcon Surgical, Inc., 803 F. Supp. 957 (D. Del. 1992) The law firm had
not given the client advice for "many months," but the court held that it was still a current client.

Research Corp. Tech. v. Hewlett-Packard Co., 936 F. Supp. 697 (D. Ariz. 1996). One brief, but
recent, contact was enough to create a current client relationship.

JTH Tax, Inc. v. H & R Block Eastern Tax Services, Inc., 2002 U.S. App. LEXIS 477 (4th Cir.
2002). A law firm was representing JTH against Block in federal court, while representing Block
in a state court action. The district court held that the law firm did not violate Rule 1.7(a),
because the state court action was "dormant." The court then did a former-client analysis.

Int'l. Bus. Machines Corp. v. Levin, 579 F.2d 271 (3d Cir. 1978). A lawyer handled a series of
labor matters for IBM. Shortly after completion of the most recent one, the lawyer showed up on
the other side of an antitrust case. The court upheld the district court's disqualification of the firm
and said:

Although [the firm] had no specific assignment from IBM on hand on the day the antitrust
complaint was filed and even though [the firm] performed services for IBM on a fee for service
basis rather than pursuant to a retainer arrangement, the pattern of repeated retainers, both before
and after the filing of the complaint, supports the finding of a continuous relationship.

Oxford Systems, Inc. v. CellPro, Inc., 45 F. Supp. 2d 1055 (W.D. Wash. 1999). The law firm had
done all a company's work in the State of Washington for 13 years. At the time it took on a
matter adverse to the company, nothing had been pending for about a year. Nevertheless, the
court held that the company was a current client because of the company's General Counsel's
subjective belief that it was a current client. To the same effect (although individual), Shearing v.
Allergan, Inc., 1994 WL 382450 (D. Nev. 1994).

McCook Metals L.L.C. v. Alcoa, 2001 U.S. Dist. LEXIS 497 (N.D. Ill. 2001). Alcoa had a brief
flirtation with Jenkens & Gilchrist ("J&G"), which included the exchange of general information.
Alcoa assigned a trademark search to J&G, which consumed just several days. A few days after
the trademark search concluded, J&G entered into litigation against Alcoa for McCook. Alcoa
moved to disqualify J&G, and the court denied the motion.

Riggs Nat'l. Bank of Washington, D.C. v. Calumet-gussin, 1992 U.S. Dist. LEXIS 16475 (D.D.C.
1992). A law firm handled several matters for a client. When the client refused to pay a total of
$270,000 in overdue fees, the firm withdrew from one case. The only other pending matter, an
administrative proceeding, concluded at about the same time. Shortly after all this occurred a
bank retained the firm to sue the "former client." The court refused to disqualify the firm. The
court stressed that at the time the firm severed its relationship with the former client, the firm
knew nothing of the bank's claim against the former client.

Artromick Int'l., Inc. v. Drustar, Inc., 134 F.R.D. 226 (S.D. Ohio 1991). About a year had
elapsed since the law firm had done any work for the client. A small invoice remained
outstanding. The firm sent at least one piece of promotional material to the client during that
year. Nevertheless, the court refused to disqualify the firm when it showed up on the other side
of a case. A case that cited Artromick on the promotional material point is Edelstein v. Optimus
Corp., 2010 U.S. Dist. LEXIS 108351 (D. Neb. Sept. 24, 2010).

Manoir-Electroalloys, Inc. v. Lachmann, 711 F. Supp. 188 (D.N.J. 1989). A law firm had done
many things for a client "from the 'seventies" until1983-84. It sent a "dear friend" letter to the
"client" in 1988. It turned up on the other side of a matter shortly thereafter. It was one of those
situations where a "we-don't-represent-you" letter would have been nice. In disqualifying the
firm, the court commented:

[The firm] cannot, of course, isolate any point in time at which [the "client"] became a "former
client" and relies solely on the fact that the last piece of business [the firm] was called upon by
[the "client"] to handle preceded the filing of the . . . action by four years.

Distinguishes Manoir-Electroalloys (just above). Spiniello Companies v. Metra Industries, Inc.,
2006 U.S. Dist. LEXIS 72961 (D.N.J. Oct. 6, 2006). Court did not find client to be current where
lawyer had handled "two discrete and concluded matters several years ago (in 2001 and again in
2003)."

Heathcoat v. Santa Fe Int'l. Corp., 532 F. Supp. 961 (E.D. Ark. 1982). A law firm did a simple
will for a client in 1966. In 1982 she moved to disqualify the firm in a case involving whether
misrepresentations had been made to her in the sale of property. The only event that intervened
was the firm sent her a "dear friends" letter about its services. The court refused to disqualify the
firm.

Gray v. Gray, 2002 Tenn. App. LEXIS 675 (Tenn. App. September 19, 2002). Lawyer did a will
for a client and then nothing further for that person for ten years. The court held that, ten years
later, the lawyer could be adverse to the person, even though the lawyer had not written a
termination letter after completing the will.

Ferguson Electric Co. v. Suffolk Construction Co., 1998 Mass. Super. LEXIS 289 (Mass. Super.
1998). The lawyer was not clear in communications with the client that the work had been
completed and the relationship terminated, so the court found a current relationship.

Abbott Laboratories v. Centaur Chem. Co., Inc., 497 F. Supp. 269 (N.D. Ill. 1980). An outside
lawyer was handling an administrative proceeding for a company. When the matter reached a
stage of relatively little activity, it was turned over to an in-house lawyer. After about 11 months
the outside lawyer showed up on the other side of another matter. The company claimed that it
was a current client because it "might" have to involve the lawyer again in the earlier matter. The
court did not buy that argument and refused to disqualify the lawyer in the later matter.

Mindscape, Inc. v. Media Depot, Inc., 973 F. Supp. 1130 (N.D. Cal. 1997). Although the firm
claimed the representation had ended, the court noted that the firm still had not cleaned up a
patent mistake it had made, the firm still had a power of attorney from the "client," and the firm
had never specifically advised the "client" that the representation had ended. Accordingly, the
court found that the relationship was a current-client one.

“Framework” Retainer Agreements. Banning Ranch Conservancy v. Superior Court, No. 2011
Cal. App. LEXIS 316 (Cal. App. March 22, 2011). The client and law firm had retainer
agreements that provided that the terms would apply for each new matter. In construing the
agreements the court held that the agreements did not mean that the client would remain a client
after the work terminated.

Voicenet Communications, Inc. v. Pappert, 2004 U.S. Dist. LEXIS 6429 (E.D. Pa. April 5,
2004). Fifteen months passed since the last work. The court held that the client became a former
client.

See, too, SWS Financial Fund A v. Salomon Bros., Inc., 790 F. Supp. 1392 (N.D. Ill. 1992), and
G.D. Searle & Co. v. Nutrapharm, Inc., 1999 U.S. Dist. LEXIS 5963 (S.D.N.Y. 1999).

In Schiefler v. Warner, Norcross & Judd, 2006 Mich. App. LEXIS 471 (Mich. App. Feb. 23,
2006), the firm had represented the co-owner of a closely-held entity "for decades," so it could
not claim that he recently became a former client, so that it could be adverse to him in litigation.

Medical Diagnostic Imaging, PLLC v. Carecore Nat., LLC, 2008 U.S. Dist. LEXIS 23596
(S.D.N.Y. March 25, 2008). Two doctors affiliated with a defendant intervened in this case to
move to disqualify a law firm for the plaintiffs. In a highly fact-intensive analysis the magistrate
judge, in this opinion, held that the doctors were former, not current, clients of the law firm, even
though the doctors pointed to circumstances suggesting they were current clients.

Rohm & Haas Co. v. Dow Chem. Co., 4309-CC, (Del. Ch. Feb. 12, 2009). Wachtell represented
Dow in 2007 and 2008 in an employment matter. It later represented Rohm & Haas in this case
against Dow. Dow moved to disqualify Wachtell, on both current client and former client
principles, and in this brief letter opinion the chancellor denied the motion. In mid-2008
Wachtell, without objection from Dow, wound up across the table from Dow, representing Rohm
& Haas in merger negotiations with Dow. That, the court said, should have been notice to Dow
that Wachtell was no longer its law firm, thus dispensing with Dow's current client argument.

Applied Tech. Ltd. v. Watermaster of Amer., Inc., 2009 U.S. Dist. LEXIS 25183 (S.D.N.Y. Mr.
26, 2009). The court did not find that the client was a current client of a law firm even though the
law firm had sent the former client a “client file release form” and a newsletter. The law firm
said it sent those items to all current and former clients.
Leber Associates, LLC v. The Entertainment Group Fund, Inc., 2001 U.S. Dist. LEXIS 20352
(S.D.N.Y. Dec. 7, 2001). Plaintiff filed this action in 2000. Plaintiff moved to disqualify
Defendant's law firm ("Law Firm") because Law Firm had prepared Plaintiff's will and trust in
1997. Although Plaintiff claimed continuing contacts with Law Firm since 1997, the court
discounted those claims because Law Firm's partner testified that he did not remember the
contacts and did not bill time for them. Thus, the court found that Plaintiff was a former, versus
current, client.

Post-Estate Planning Ministerial Work not Current Representation. Yang Enterprises, Inc. v.
Yang, 2008 Fla. App. LEXIS 11865 (Fla. App. Aug. 7, 2008). This is an unremarkable opinion
affirming the trial court’s denial of a motion to disqualify. The movant had waited years to make
the motion. While the decision was based largely on a waiver by passage of time, the court made
this interesting statement as to whether the client was current or former:

Petitioners argued below that they are current clients of Broad and Cassel and relied primarily on
two cover letters sent from a paralegal in Broad and Cassel's Orlando office in 2004 and a
paralegal's bill for minor changes to their estate file in 2007. None of these acts indicated a
continuing legal representation, but rather they were ministerial tasks performed to update the
completed estate planning documents.

Carnegie Cos., Inc. v. Summit Props., Inc., 2009 Ohio App. LEXIS 3973 (Ohio App. Sept. 9,
2009). Law firm was sloppy regarding its engagement letter and lack of a termination letter. As a
result, the trial court’s finding of current client not against the manifest weight of the evidence.

Written Retainer Controlled. California Earthquake Auth. v. Metropolitan West Securities, LLC,
2010 U.S. Dist. LEXIS 44016 (E.D. Cal. May 5, 2010). In 2002 Law Firm and a state agency
("Agency") entered into a written retainer agreement. Among other things, the agreement
provided that Law Firm would have to give Agency thirty days written notice if it intended to
terminate the relationship. Law Firm did three hours work for the Agency during 2002 and did
no work for Agency after that. Law Firm never gave Agency written notice of termination. In
2009 Law Firm appeared for the defendant in this case adverse to Agency. Agency moved to
disqualify Law Firm, and in this opinion the court granted the motion. Basically, the court said
that the absence of written notice of termination meant that Agency was a current client of Law
Firm. The court further said that written contracts between lawyers and clients should be "read
expansively and not parsed to favor the lawyer."

Revise Clothing, Inc. v. Joe's Jeans, Inc., 2010 U.S. Dist. LEXIS 12766 (S.D.N.Y. Feb. 1, 2010).
The court refused to find that Plaintiff was a "current" client of Law Firm, noting: (1) the earlier
retainer was narrow, and the matter had terminated; (2) the fact that the settlement agreement of
the earlier matter designated Law Firm to receive notice for Plaintiff was not determinative; and
(3) the fact that Law Firm continued to send promotional E-mail bulletins ("blasts") to Plaintiff
was also not determinative.

Laclette v. Galindo, 109 Cal. Rptr. 3d 660 (Cal. App. 2010). The issue was whether the
California one-year statute of limitations was tolled by the defendant/lawyer's continuing
representation of the plaintiff/client. In this opinion the appellate court held there was a triable
issue whether the client reasonably believed the representation continued. There had been an
agreement to settle the underlying dispute, which required continuing payments by the parties,
and the defendant/lawyer had remained counsel of record in the underlying matter.

The Gerffert Co., Inc. v. Dean, 2011 U.S. Dist. LEXIS 15530 (E.D.N.Y. Feb. 16, 2011). Factors
leading to conclusion that the relationship was current included the "absence of an expressed
cessation" of the relationship, Lawyer's continuing to send invoices to the defendant, and
continuing offers to mediate the dispute among the parties.

Poor illustration but one nonetheless, Roderick v. Ricks, 54 P.3d 1119 (Utah 2002).

See, too, D.C. Op. 272 (1997).


What is "Substantial Relationship"?

Model Rule 1.9(a) is quoted in the Introduction. It specifically adopts the "substantial
relationship" rubric. Comments [1], [2], and [11] contain some language suggesting a definition.
New Comment [3], adopted by the ABA House of Delegates in February 2002, does a pretty
good job of explaining what it is. It begins with the following language, then follows with a
number of examples:

[3] Matters are "substantially related" for purposes of this Rule if they involve the same
transaction or legal dispute or if there otherwise is a substantial risk that confidential factual
information as would normally have been obtained in the prior representation would materially
advance the client's position in the subsequent matter. For example, . . .

The Restatement attempts to define "substantial relationship" in the black letter of § 132, and is
similar to the above comment:

(1) the current matter involves the work the lawyer performed for the former client; or?

(2) there is a substantial risk that representation of the present client will involve the use of
information acquired in the course of representing the former client, unless that information has
become generally known.?

The ABA Model Code did not use the term at all. The judge in T.C. Theatre Corp. v. Warner
Brothers Pictures, Inc., 113 F. Supp. 265 (S.D.N.Y. 1953), introduced it in the following
sentence:

The former client need show no more than the matters embraced within the pending suit wherein
his former attorney appears on behalf of his adversary are substantially related to the matters or
cause of action wherein the attorney previously represented him, the former client.

(emphasis added)
The court did not attempt a comprehensive definition of the term, but did apply it to facts before
the court. The court said:

In sum, enough appears to show that Mr. Cooke's present representation deals with matters as to
which his former client reposed confidence[s] in him. Hence, I hold that Mr. Cooke is
disqualified from acting as counsel for the plaintiff in this case in any capacity so long as
Universal is a party defendant, and the motion is granted to this extent.

Thus, the use of confidences gained from the former client plays an important role in application
of the substantial relationship standard. This point is made in Professor Wolfram's article,
Charles W. Wolfram, Former-Client Conflicts, 10 Geo. J. Legal Ethics 677 (1997). This is a
terrific article that covers the subject of the title comprehensively. Anyone wanting an exhaustive
review of a great number of cases and ethics opinions should start with Professor Wolfram's
article. He points out that while the two pillars of conflict of interest rules are loyalty and
confidentiality, loyalty plays (or at least should play) little or no role in defining responsibilities
to former clients. Professor Wolfram also notes that most of the cases, and the better decided
ones, emphasize "the client's legitimate expectation in the confidentiality of information
imparted to the lawyer."

California's Rule of Professional Conduct 3-310(E) does not use the "substantially related"
terminology, but its emphasis is the same:

A member shall not, without the informed written consent of the client or former client, accept
employment adverse to the client or former client where, by reason of the representation of the
client or former client, the member has obtained confidential information material to the
employment.

Following are examples of the different ways courts articulate the substantial relationship test.
Analytica v. NPD Research, Inc., 708 F.2d 1263 (7th Cir. 1983) is frequently cited. It said that a
substantial relationship exists if a "lawyer could have obtained confidential information in the
first representation that would have been relevant in the second." The court said that it is
irrelevant whether the lawyer actually obtained such information. In Integrated Health Services
of Cliff Manor, Inc. v. THCI Co. LLC, 327 B.R. 200 (D. Del. 2005), the court quoted language
from Satellite Fin. Planning Corp. v. First Nat’l. Bank of Wilmington, 652 F. Supp. 1281, 1284
(D. Del. 1987) cautioning that courts should not:

"allow [their] imagination[s] to run free with a view to hypothesizing conceivable but unlikely
situations in which confidential information 'might' have been disclosed which would be relevant
to the present suit".

Substantial Relationship in New Jersey. City of Atlantic City v. Trupos, 2010 N.J. LEXIS 386
(N.J. April 26, 2010). The New Jersey Supreme Court announced this rule:

. . . for purposes of RPC 1.9, matters are deemed to be "substantially related" if (1) the lawyer for
whom disqualification is sought received confidential information from the former client that can
be used against that client in the subsequent representation of parties adverse to the former client,
or (2) facts relevant to the prior representation are both relevant and material to the subsequent
representation.

Explaining Trupos; Finding no Substantial relationship. Twenty-First Century Rail Corp. v. New
Jersey Transit Corp., 2011 N.J. Super. LEXIS 21 (N.J. App. Div. Feb. 3, 2011).

In Harsh v. Kwait, 2000 Ohio App. LEXIS 4636 (Ohio App. 2000), the court said that matters
were substantially related if there is some "commonality of issues" or "clear connection" between
the matters.

In Reardon v. Marlayne, 416 A.2d 852 (N.J. 1980), the court said that a substantial relationship
exists where the "adversity between the interests of the attorney's former and present clients has
created a climate for the disclosure of relevant confidential information."

Kentucky abandoned the "appearance of impropriety" standard when it adopted its version of the
Model Rules. Nevertheless, the court in Lovell v. Winchester, 941 S.W.2d 466 (Ky. 1997),
applied it in a former client situation and ordered the lawyer disqualified. There the lawyer had
obtained information from a client but claims he did not remember any of it. The Arkansas
Supreme Court also based a former representation disqualification on an appearance of
impropriety, even though Arkansas had adopted the Model Rules, McAdams v. Ellington, 970
S.W.2d 203 (Ark. 1998).

Importance of Loyalty in Former Client Analysis. In re I Successor Corp., 321 B.R. 640
(S.D.N.Y. 2005). The court said that loyalty was just as important as confidentiality. Pound v.
Cameron, 36 Cal. Rptr. 3d 922 (Cal. App. 2005), takes the majority view that confidentiality is
key.

Lawyer Attacking Work Done for a Former Client ("Own Work"). While it is our view that the
focus on former-client cases is, or should be, on preserving the former client’s confidences or not
using former client’s confidences against the former client, an exception has been expressed by
some. That is, a lawyer may not harm a former client by attacking the work the lawyer had done
for the former client. For example, a lawyer should not attack a patent the lawyer had obtained
for the former client. Restatement § 132 cmt. d(ii) takes this view. Texas Rule 1.09(a)(1) also
contains this rule. Cases that follow the rule are Oasis West Realty, LLC v. Goldman, 2011 Cal.
LEXIS 4370 (Cal. May 16, 2011) (lawyer should not have lobbied against project that he earlier
worked on); Franklin v. Callum, 782 A.2d 884 (N.H. 2001), Sullivan County Regional Refuse
Disposal Dist. v. Town of Acworth, 686 A.2d 755 (N.H. 1996), and In re Basco, 221 S.W.3d 637
(Tex. 2007). Hazard, Hodes, & Jarvis discuss the concept at §13.6. Cases cited in the Reporter’s
Note to Restatement § 132 cmt. d(ii) are: Griffith v. Taylor, 937 P.2d 297 (Alaska 1997); In re
Breen, 830 P.2d 462 (Ariz. 1992); Gilbert v. Nat’l. Corp. for Housing Partnerships, 84 Cal. Rptr.
2d 204 (Cal. App. 1999); In re Williams, 309 N.E.2d 579 (Ill. 1974); Price v. Price, 733
N.Y.S.2d 420 (N.Y. App. 2001). Florida Bar ethics opinions that agree with the Restatement are
Fla. Ops. 68-16 (1968) and 59-32 (1960). Similar language appears in the Comment to Florida
Rule 4-1.9. Greater Vancouver Reg’l Dist. v. Melville, 2007 BCCA 410 (CanLII) (Ct. App. of
Brit. Col. Aug. 9, 2007) (rule implied). Exterior Systems, Inc. v. Noble Composites, Inc., 175 F.
Supp. 2d 1112 (N.D. Ind. 2001) is somewhat related.
. . . What If the Work Being Attacked no Longer Belongs to Former Client? In Telectronics
Proprietary, Ltd. v. Medtronic, Inc., 836 F.2d 1332 (Fed. Cir. 1988), a lawyer who worked for a
client on a patent application could later challenge the validity of the patent because the patent
had been assigned to a company that the lawyer had never represented. Similarly, in Alchemy II,
Inc. v. YES! Entertainment Corp., 844 F. Supp. 560 (C.D. Cal. 1994), the court, citing
Telectronics, held that a law firm that had defended a copyright could later argue its limits where
the law firm was not opposing a former client, but rather a licensee.

David Hricik and Jae Ellis, Disparities in Legal Ethical Standards Between State and Federal
Judicial Systems: An Analysis and a Critique, 13 Geo. J. Legal Ethics 577 (2000). This article
contains an excellent discussion of how Texas state and federal courts treat the substantial
relationship test.

Patent Litigation. Superguide Corp. v. DirecTV Enterprises Inc., 141 F. Supp. 2d 616 (W.D.N.C.
2001). Plaintiff Superguide hired Dorman to represent it. The defendants filed a third-party
action against Gemstar. Gemstar moved to disqualify Dorman, because Dorman previously
represented Gemstar as lead counsel in all its patent litigation. Dorman had also counseled
Gemstar on a license agreement that is the subject of this action. The court found that there was a
substantial relationship between this litigation and what Dorman had done for Gemstar
previously, and ordered that Dorman be disqualified. In Asyst Techs., Inc. v. Empak, Inc., 962 F.
Supp. 1241 (N.D. Cal. 1997), the court disqualified a law firm challenging two patents that
members of the firm had prosecuted on behalf of the other side. Here are two more patent
infringement cases where the court did not find a substantial relationship, Talecris
Biotherapeutics, Inc. v. Baxter Int’l Inc., 491 F. Supp. 2d 510 (D. Del. 2007), and Arctic Cat,
Inc. v. Polaris Industries Inc., 2004 U.S. Dist. LEXIS 25463 (D. Minn. Dec. 20, 2004).

Purchase of Patent not Substantially Related to Infringement of Same Patent. Reliant
Pharmaceuticals, Inc. v. Par Pharmaceutical, Inc., 2008 U.S. Dist. LEXIS 33461 (D. Del. April
23, 2008).

Real Estate Litigation. Henery v. 9th St. Apt., L.L.C., 2001 Neb. App. LEXIS 117 (Neb. App.
2001). Sherrets represented Cutler in the purchase of a downtown Omaha lot. Sherrets now
represents Henery in connection with a lot that abuts Cutler's lot. Henery claims that
underground footings for his building extend onto Cutler's lot, and he seeks to have Cutler
enjoined from developing his property in a way to jeopardize Henery's building. Cutler moved to
disqualify Sherrets. The Court of Appeals affirmed the trial court's denial of the disqualification.
The court held that the two matters were not substantially related because Sherrets was not aware
of the footings when he represented Cutler in purchasing his lot, and the "encroaching footings"
simply played no role in that transaction. For a similar analysis, see R.I. Op. 2001-08 (November
8, 2001). A lawyer assisted a client in connection with developing Parcel A two years ago. Now
another client wants the lawyer to assist it in developing Parcel B, which adjoins Parcel A. The
opinion says that the second representation does not necessarily violate the "substantial
relationship" test of Rhode Island Rule 1.9.

Suit for Trespass and Quiet Title not Substantially Related to Earlier Suit to Establish
Ownership of the Same Property. Adams Creek Associates v. Davis, 2007 N.C. App. LEXIS
2302 (N.C. App. Nov. 6, 2007). To a similar effect, and, again, referring to the same piece of
property, Center Associates, L.P. v. Superior Court, 2008 Cal. App. LEXIS 1867 (Cal. App.
Nov. 4, 2008); Quicken Loans v. Jolly, 2008 U.S. Dist. LEXIS 48266 (E.D. Mich. June 24, 2008,
Belous v. Bartlett, 2008 Wash. App. LEXIS 2447(Wash. App. Oct. 14, 2008), and Hana Bank v.
South Pac. Petro. Corp., 2010 U.S. Dist. LEXIS 84384 (D. Guam Aug. 13, 2010)

Birth Injury Cases. Vincent v. Essent Healthcare of Conn., 465 F. Supp. 2d 142 (D. Conn. 2006)
.

Malpractice. In Damron v. Herzog, 67 F.3d 211 (9th Cir. 1995), the court held that taking on a
substantially related matter against a former client creates a malpractice cause of action against
the lawyer.

Lawyer Fee Auditor Attempts to Oppose Former Audit Client. Ehrich v. Binghamton City School
District, 210 F.R.D. 17 (N.D.N.Y. 2002), is unique. A lawyer had a side business conducting
audits of legal fees. He did this for the defendant school district. After he ceased doing this for
the school district, he attempted to handle a case adverse to the district. The court disqualified
him because he had audited the legal fees for this very case.

City as Former Client; Changed Administrations. Valdez v. Pabey, 2005 U.S. Dist. LEXIS
38311 (N.D. Ind. Dec. 27, 2005). Law firm represented city for many years. When mayors
changed, the law firm was out. Law firm then attempted to represent plaintiffs against the city.
The court said that the new administration would have a different approach to issues. Therefore,
it was unlikely that the law firm would have learned anything while representing the city that
would be prejudicial to the city in this case.

Suit for Fees not Substantially Related to Underlying Action. In Lankler Siffert & Wohl, LLP v.
Rossi, 287 F. Supp. 2d 398 (S.D.N.Y. 2003), aff’d. 2005 U.S. App. LEXIS 5471 (2d Cir. April 4,
2005), the plaintiff law firm (“LSW”) represented Rossi in a criminal case. LSW used several
consulting firms in the case. When Rossi failed to pay LSW or the consulting firms, LSW filed a
collection action on its own behalf and on behalf of the consultants. Rossi moved to disqualify
LSW from representing the consulting firms. The court denied the motion, holding that the
matters were not substantially related. For another similar holding in a case arising out of the
same criminal case, see FTI Consulting, Inc. v. Rossi, 2004 U.S. Dist. LEXIS 2860 (S.D.N.Y.
Feb. 25, 2004). Consistent with Lankler are: Gross Belsky Alonso LLP v. Edelson, 2009 U.S.
Dist. LEXIS 49260 (N.D. Cal. May 27, 2009); Exact Software N.A., Inc. v. Infocon, Inc., 2008
WL 552625 (N.D. Ohio 2008); and Trope v. Katz, 11 Cal. 4th 274 (1995).

Good Discussion of Test in New York. Hickman v. Burlington Bio-Medical Corp., 371 F. Supp.
2d 225 (E.D.N.Y. May 17, 2005).

S.C. Op. 05-05 (February 2005) holds that a lawyer who represented the purchaser of home
cannot later represent the homeowners’ association in attaching a lien to the former client’s
home.
Court Construes "Personally and Substantially" Test in Rule 1.11(a) (Former Government
Lawyer Rule). Franklin v. Clark, 454 F. Supp. 2d 356 (D. Md. 2006).

Lawyer Had Never Handled Hearing Loss Cases for His Former Client. Best v. BNSF Ry. Co.,
2008 U.S. Dist. LEXIS 5640 (Jan. 10, 2008).

Substantial Relationship and Sewer Service. Shawnee Associates, L.P. v. Village of Shawnee
Hills, 2008 Ohio App. LEXIS 391 (Ohio App. Feb. 4, 2008).

Follow the Assets. Hoelscher v. Baggett, 2008 U.S. Dist. LEXIS 30713 (W.D. La. April 15,
2008). Prior to this action Lawyer represented Plaintiff personally in the purchase of business
assets (“the Assets“). Plaintiff transferred the Assets into a company Plaintiff formed with a
defendant in this case (Defendant). In this case Plaintiff claims Defendant wrongfully transferred
the Assets to yet another business. Defendant’s law firm (“Law Firm”) in this case employs
Lawyer. For that reason Plaintiff moved to disqualify Law Firm. In this opinion the district judge
affirmed the magistrate judge’s denial of the motion. The court held that the earlier
representation was only superficially related to this case.

D.C. Op. 343 (Feb. 2008). This opinion discusses the extent to which a precisely defined and
limited engagement with Client No. 1 can save a lawyer from disqualification in a later
representation against Client No. 1 on behalf of Client No. 2.

Niemi v. Girl Scouts of Minn., 2009 Minn. App. LEXIS 129 (Minn. App. July 14, 2009). In this
case Plaintiff sued Girl Scouts for employment discrimination. Lawyer represents Girl Scouts.
Twenty-five years prior to this case Lawyer had represented Plaintiff in an employment
discrimination case against another employer. Plaintiff moved to disqualify Lawyer in this case,
and the trial court granted the motion. In this opinion the appellate court reversed. The opinion
contains an excellent discussion of the role of obsolete information in a case that is otherwise
"substantially related" to the earlier matter.

What is “Materially Adverse”?

For a lawyer to run afoul of Model Rule 1.9(a), the new matter must be “materially adverse” to
the former client. Obviously, taking on a litigation matter against the former client is being
materially adverse. But, what about taking on a new matter against a third party (not against the
former client), the result of which, if you are successful, will somehow harm the former client.

There is not much authority on what is “materially adverse.” Before the changes to the Model
Rules in 2002-2003, Comment [1] to Rule 1.9 contained this sentence:

The principles in Rule 1.7 determine whether the interests of the present and former clients are
adverse.

Rule 1.7 uses the term “directly adverse.” One might conclude from the quoted sentence that
“materially adverse” is the same as “directly adverse.” In ABA Op. 99-415 (1999) (dealing with
former in-house lawyers being adverse to their former employers) the Committee seemed to
conclude as much. That was also the conclusion in Simpson Performance Products, Inc. v.
Robert W. Horn, P.C., 92 P.3d 283 (Wyo. 2004), a rare and thoughtful opinion attempting to deal
with the phrase “materially adverse” as used in Ruled 1.9. What the court failed to note was the
deletion of the quoted sentence from Comment [1] by the ABA House of Delegates a year or so
prior to the court’s opinion. Obviously, the Wyoming version of Comment [1] had not changed,
and, according to the Wyoming court Web site, still has not changed.

We attempted to find out from those close to the Ethics 2000 project why the sentence in
question was deleted. Our contacts could not recall. The “legislative history” at the ABA Web
site does not mention the change. One academic, for whom we have great respect, and who also
has no recollection, said as follows:

[M]y own view is that “directly adverse” [used in Model Rule 1.7] is a much stricter standard.
Keep in mind that “directly adverse” conflicts trigger an obligation not to take a position so far
adverse to your own client that it would significantly undermine the client’s ability to trust you,
regardless what effect it might have on the matter in which you are representing the client.
“Materially adverse” under 1.9 means that there is a significant risk that the client information
you have could be used in a manner that would harm that client.

We will adopt that distinction until a better one comes along.

A number of cases have dealt with the “adversity” feature of Rule 1.9, but not with the care or
precision of the Wyoming Supreme Court in Simpson Performance. In some cases, the court
does not even mention its own version Rule 1.9. Other cases predate the Model Rules or have
ethics rules without an analogue to Rule 1.9. Yet, they manage to deal with the need for some
sort of adversity for the rules on former clients to engage. Here are the ones, of which we have
knowledge: Admiral Ins. Co. v. Heath Holdings USA, Inc., 2005 U.S. Dist. LEXIS 16363 (N.D.
Tex. Aug. 9, 2005); In re Jones & McClain, LLP, 271 B.R. 473 (W.D. Pa. 2001); SIPA
Protection Corp. v. R.D. Kushnir & Co., 246 B.R. 582 (N.D. Ill. 2000); McPhearson v. Michaels
Co., 117 Cal. Rptr. 2d 489 (Cal. App. 2002) (Cal. Rule 3-310(E) just says “adverse”); Fiddelman
v. Redmon, 623 A.2d 1064 (Conn. App. 1993); Jerry Lipps, Inc. v. Postell, 229 S.E.2d 78 (Ga.
App. 1976); In re Estate of James M. Ragen, Jr., 398 N.E.2d 198 (Ill. App. 1979); Adoption of
Erica, 686 N.E.2d 967 (Mass. 1997); In re Epic Holdings, Inc., 985 S.W.2d 41 (Tex. 1998)
(Texas’ version of Rule 1.9 just says “adverse”); State of West Virginia v. Hamilton, 430 S.E.2d
569 (W. Va. 1993).


"Accommodation Client."

This is an expression that appears in a series of cases where the courts did not believe that slavish
adherence to the substantial relationship test did real justice. They had several aspects in
common. Each involved a multiple representation, in which one client was a substantial, long-
standing client, the "primary client," and the other was temporary, the "accommodation client."
The nature of the cases was such that the accommodation client would have no expectation that
anything the lawyer learned from the accommodation client would not be shared with the
primary client. As noted above, the expectation of confidentiality is usually the rationale for
application of the substantial relationship test.
This concept is discussed in the Restatement at § 132, Comment i. The Reporter's Note to cmt. i
lists the following cases, in which the courts applied some form of the "accommodation client"
theory: Allegaert v. Perot, 565 F.2d 246 (2d Dir. 1977); American Special Risk Ins. Co. v. Delta
America Ins. Co., 634 F. Supp. 112 (S.D.N.Y. 1986); E.B. Marks Music. Inc., 558 F. Supp. 57
(S.D.N.Y. 1983); and Anderson v. Pryor, 537 F. Supp. 890 (W.D. Mo. 1982). One case that post-
dates the Restatement, in which the court refused to apply the "accommodation client"
distinction was Universal Studios, Inc. v. Reimerdes, 98 F. Supp. 2d 449 (S.D.N.Y. 2000). It
distinguishes Allegaert, but does not mention the other cases noted above. Another recent case
that adopts the Allegaert approach and cites the Restatement is In re Rite Aid Corp. Securities
Litigation v. Grass, 139 F. Supp. 2d 649 (E.D. Pa. 2001).

Other cases following the Allegaert approach are Kapnis v. Independent Party State Committee
of the State of N.Y., 2010 U.S. Dist. LEXIS 121603 (E.D.N.Y. Nov. 1, 2010); Pacheco Ross
Architects, P.C. v. Mitchell Associates Architects, 2009 U.S. Dist. LEXIS 45294 (N.D.N.Y. May
29, 2009); Simply Fit of N. Amer. v. Poyner, 2008 U.S. Dist. LEXIS 74457 (E.D.N.Y. Sept. 26,
2008); Travelers Cas. & Sur. Co. of Amer. V. Claude E. Atkins Enterprises, Inc., 2006 U.S. Dist.
LEXIS 93189 (E.D. Cal. Dec. 11, 2006); Ello v. Singh, 2006 U.S. Dist. LEXIS 55542 (S.D.N.Y.
Aug. 7, 2006); Frontline Communications Int’l., Inc. v. Sprint Communications Co. L.P., 232 F.
Supp. 2d 281 (S.D.N.Y. 2002); Skidmore v Warburg Dillon Read LLC, 2001 U.S. Dist. LEXIS
6101 (S.D.N.Y. 2001); Host Marriott Corp. v. Fast Food Operators, 891 F. Supp. 1002 (D.N.J.
1995); Bagdan v. Beck, 140 F.R.D. 660 (D.N.J. 1991); Kempner v. Oppenheimer & Co., 662 F.
Supp. 1271 (S.D.N.Y. 1987); In re Zimmerman, 81 B.R. 296 (E.D. Pa. 1987), Rymal v. Baergen,
686 N.W.2d 241 (Mich. App. 2004) (although not mentioning Allegaert or the "accommodation
client" rubric; plus possession of confidences from "former client" might have disqualified the
law firm); and Meyers v. Lipman, 726 N.Y.S.2d 547 (N.Y. App. June 19, 2001). A similar case
that preceded Allegaert by one year is Levin v. Ripple Twist Mills, Inc., 416 F. Supp. 876 (E.D.
Pa. 1976).

The following cases either explicitly, or by implication, reject the Allegaert approach: Securities
Investor Protection Corp. v. R.D. Kushnir & Co., 246 D.R. 582 (N.D. Ill. 2000); Koch v. Koch
Ind., 798 F. Supp. 1525 (D. Kan. 1992); and Casco Northern Bank v. JBI Associates Ltd., 667
A.2d 856 (Me. 1995).

G. D. Mathews & Sons Corp. v. MSN Corp., 763 N.E.2d 93 (Mass. App. 2002). The disqualified
law firm tried to make an accommodation client argument, but did so only in a footnote in its
brief. The court was unimpressed and rejected the argument without discussing it.

Parties Reversed. In Ucar Int'l. Inc. v. Union Carbide Corp., 2002 U.S. Dist. LEXIS 21766
(S.D.N.Y. November 8, 2002), a lawyer for the "principal" client joined the firm now
representing the "accommodation" client. His new firm, in the face of a motion to disqualify,
argued that the "principal" client would have had not expectation of confidentiality when the
parties were aligned. Not so, said the court, who disqualified the new law firm.

Parties in Prior Case on Equal Footing. Goldfarb v. Kuhl, Ct. of Common Pleas, Philadelphia
County, 1st Jud. Dist. of Pa., No. 1825 (Oct. 24, 2005). A family-owned business originally had
three owners, A, B, and C. They had a falling out, and, in a case prior to this case, C sued A and
B. Law firm X represented A and B. That case settled with A and B buying out C. Firm X had no
further involvement with A. A and B subsequently had a falling out, and A sued B (this case).
Firm X appeared for B. A petitioned the court to enjoin X from representing B. The court denied
the petition, holding that, while this case is substantially related to the prior case, A had no
expectation in the prior case that X would not share all A’s information with B. This is the
rationale for the "accommodation client" cases, except that here, A and B appeared to have been
on equal footing in the earlier case insofar as X's representation of them was concerned.

Law Review. For an excellent and concise discussion of some of these cases, see Douglas R.
Richmond, Accommodation Clients, 35 Akron L. Rev. 59 (2001).

Playbook

We are borrowing terminology used by Professor Charles Wolfram in his outstanding article
cited above. Those familiar with materials published by Attorneys' Liability Assurance Society
have seen the phrase "unique insights" to describe the same concept. The issue is when does a
lawyer learn enough about the former client's thought processes and procedures that the new
representation may be deemed "substantially related" to the former one.

Outside Counsel - Not Disqualified. In the following cases the courts held that knowing about
how a former client thinks or approaches litigation is not enough to fall within the substantial
relationship test. Duncan v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 646 F.2d 1020 (5th Cir.
1981); Employers Ins. Co. of Wausau v. Munich Reins. Am., Inc., 2011 U.S. Dist. LEXIS 52048
(S.D.N.Y. May 13, 2011) (court recognized playbook in some circumstances, but not in
reinsurance arbitrations); Morgan Stanley & Co., Inc. v. Solomon, 2009 U.S. Dist. LEXIS 15799
(S.D. Fla. Feb. 19, 2009); Vincent v. Essent Healthcare of Conn., 465 F. Supp. 2d 142 (D. Conn.
2006) (in context of OB/GYN malpractice cases); Mardian Equip. Co. v. St. Paul Ins. Co., 2006
U.S. Dist. LEXIS 14517 (D. Ariz. March 28, 2006) (total rejection of playbook approach);
Pepper v. Little Switzerland Holdings, Inc., 2005 U.S. Dist. LEXIS 14453 (D.V.I. July 6, 2005)
(follows Brice; see below); Arctic Cat, Inc. v. Polaris Industries Inc., 2004 U.S. Dist. LEXIS
25463 (D. Minn. Dec. 20, 2004) (patent infringement case involving different technoloogy); S.D.
Warren Co. v. Yale Industrial Products, Inc., 302 F. Supp. 2d 762 (W.D. Dist. Mich. 2004)
(excellent analysis of concept in products liability context); Spinner v. City of New York, 2003
U.S. Dist. LEXIS 14854 (E.D.N.Y. August 27, 2003) (used to defend strip search cases, now
suing); Secureinfo Corp. v. Bukstel, 2003 U.S. Dist. LEXIS 12189 (E.D. Pa. July 10, 2003)
(same kinds of matters); Briggs v. Aldi, Inc., 218 F. Supp. 2d 1260 (D. Kan. 2002) (sex
discrimination cases involving different stores in different cities and no central management);
Hampton v. Daybrook Fisheries, Inc., 2001 U.S. Dist. LEXIS 19028 (E.D. La. 2001); Brice v.
Hess Oil Virgin Islands Corp., 796 F. Supp. 193 (D.V.I. 1990); Int'l. Paper Co. v. Lloyd
Manufacturing Co., Inc., 555 F. Supp. 125 (N.D. Ill. 1982); Westinghouse Elec. Corp. v. Rio
Algom, Ltd., 448 F. Supp. 1284 (N.D. Ill. 1978), aff'd., 580 F.2d 1311, 1322 (7th Cir.), cert.
denied, 439 U.S. 955 (1978); In re Chantilly Construction Corp., 39 B.R. 466 (E.D. Va. 1984);
Amparano v. Asarco, Inc., 93 P.3d 1086 (Ariz. App. 2004); Ex parte Regions Bank, 914 So. 2d
843 (Ala. 2005); 2004 Ariz. App. LEXIS 83 (Ariz. App. June 16, 2004); Ins. Co. of the State of
Pa. v. Nat. Fire Ins. Co. of Hartford, 2008 Cal. App. Unpub. LEXIS 10011 (Cal. App. Dec. 12,
2008) (“general” playbook information does not disqualify); Schapiro v. Morgan Creek
Productions, Inc., 2001 Cal. App. LEXIS 3318 (Cal. App. December 13, 2001) (former labor
work not substantially related to employment contract dispute); Freiburger v. J-U-B Engineers,
Inc., 111 P.3d 100 (Ida. 2005); Doe v. Chand, 781 N.E.2d 340 (Ill. App. 2002); State ex rel. Wal-
Mart Stores, Inc. v. Kortum, 559 N.W.2d 496 (Neb. 1997) ("routine slip and fall cases"); Reem
Contracting Corp. v. Resnick Murray St. Associates, 843 N.Y.S.2d 3 (N.Y. App. 2007) (nothing
confidential about enforcing construction liens); Bloom v. St. Paul Travelers Cos., Inc., 806
N.Y.S.2d 692 (N.Y. App. 2005); (working on different insurance policies); In re Drake, 195
S.W.3d 232 (Tex. App. 2006); Houghton v. State of Utah, 962 P.2d 58 (Utah 1998) (Utah has
unique version of MR 1.9(a) - "a substantially factually related matter"); State ex rel. Ogden
Newspapers, Inc. v. Wilkes, 566 S.E.2d 560 (W. Va. 2002) (nine years had elapsed since prior
representation, and the law had changed greatly).

Outside Counsel - Disqualified. In the following cases lawyers or law firms were disqualified
because of the insights they had gained while working for a former client. The courts focus on
concepts such as "attitudes," "litigation philosophy," "procedures," "strategies," "policies," and
the like. Frequently, the former relationship had been lengthy. Moreover, the courts emphasized
the nature of confidential information the lawyer had gathered. The courts deal with confidences
in different ways. Many say that there is a presumption that the lawyer has learned confidences
from the former client or has shared former client confidences with his or her entire law firm.
Some say either or both presumptions are irrebuttable. Some apply the appearance of impropriety
standard, which is no longer part of the ethics rules of all but a handful of states. In short, while
this list is a starting point, there is no substitute for doing your own research and reading each
case. In re Riles, 2000 U.S. App. LEXIS 20186 (Fed. Cir. 2000); In re: Corrugated Container
Antitrust Lit., 659 F.2d 1341 (5th Cir. 1981) (appearance of impropriety); North Amer. Specialty
Ins. Co. v. National Fire & Marine Ins. Co., 2011 U.S. Dist. LEXIS 101102 (D. Nev. Sept. 7,
2011); Commonwealth Title Ins. Co. v. St. Johns Bank & Trust Co., 2009 U.S. Dist. LEXIS
87151 (E.D. Mo. Sept. 22, 2009); Halladay & Mim Mack Inc. v. Trabuco Capital Partners Inc.,
2009 U.S. Dist. LEXIS 97040 (C.D. Cal. Oct. 5, 2009); Murphy v. Simmons, 2008 U.S. Dist.
LEXIS 594 (D.N.J. Jan. 3, 2008) (thorough analysis of playbook); Ali v. American Seafoods Co.,
LLC, 2006 U.S. Dist. LEXIS 29880 (W.D. Wash. May 15, 2006); Panebianco v. First Unum
Life Ins. Co., 2005 U.S. Dist. LEXIS 7314 (S.D.N.Y. April 27, 2005) (same players as in Lott
and Battagliola following); Lott v. Morgan Stanley Dean Witter & Co. Long-Term Disability
Plan, 2004 U.S. Dist. LEXIS 25682 (S.D.N.Y. Dec. 23, 2004) (lawyer formerly defended long-
term disability claims for carrier - cannot represent plaintiff against same carrier in long-term
disability claim); Battagliola v. Nat. Life Ins. Co., 2005 U.S. Dist. LEXIS 650 (S.D.N.Y. Jan. 19,
2005) (same players as in Lott; court said screen would work); Edwards v. Gould Paper Corp.,
2005 U.S. Dist. LEXIS 849 (E.D.N.Y. January 18, 2005) (very similar to Lott, just above);
Engineered Products Co. v. Donaldson Co., 290 F. Supp. 2d 974 (N.D. Iowa 2003) (appearance
of impropriety and presumption that lawyer learned confidences "not rebuttable."). Volkswagen
Aktiengesellschaft v. Novelty, Inc., 247 F. Supp. 2d 1076 (S.D. Ind. 2003) (trademark
infringement work for VW, then against VW); Safe-T-Products, Inc. v. Learning Resources,
Inc., 2002 U.S. Dist. LEXIS 20540 (N.D. Ill. October 24, 2002); Mitchell v. Metropolitan Life
Ins. Co., 2002 U.S. Dist. LEXIS 4675 (S.D.N.Y. 2002); Colorpix Sys. of Am. v. Broan Mfg.
Co., 131 F. Supp. 2d 331 (D. Conn. 2001) (same kinds of cases and working with same in-house
lawyer); Superguide Corp. v. DirecTV Enterprises Inc., 141 F. Supp. 2d 616 (W.D.N.C. 2001);
Smith & Nephew. Inc. v. Ethicon, Inc., 98 F. supp. 2d 106 (D. Mass. 2000); Loomis v. Consol.
Stores Corp., 2000 U.S. Dist. LEXIS 12391 (S.D.N.Y. 2000); Est. of Jones v. Beverly Health and
Rehabilitation Services, Inc., 68 F. Supp. 2d 1304 (N.D. Fla. 1999); Cardona v. General Motors
Corp., 942 F. Supp. 968 (D.N.J. 1996); Hammond v. Goodyear Tire & Rubber Co., 933 F. Supp.
197 (N.D.N.Y. 1996); Contant v. Kawasaki Motors Corp., 826 F. Supp. 427 (M.D. Fla. 1993);
Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft, LLP, 81 Cal. Rptr. 2d 425 (Cal. App.
1999); Franco v. Toyota Motor Sales, Inc., 1995 Conn. Super. LEXIS 3509 (Conn. Super. 1995);
Crawford W. Long Mem. Hosp. v. Yerby, 373 S.E.2d 749 (Ga. 1988); Chrispens v. Coastal
Refining & Marketing, Inc., 897 P.2d 104 (Kan. 1995); Mid-States Building Services, Inc, vs.
Richfield Senior Housing, Inc., 2002 Minn. App. LEXIS 1066 (Minn. App. September 17, 2002);
In re Carey, 89 S.W.3d 477 (Mo. 2002); Gray v. Commercial Union Ins. Co., 468 A.2d 721 (N.J.
App. 1983); Clark v. A.O. Smith Water Products, 2010 N.Y. Misc. LEXIS 5411 (N.Y. Sup. Ct.
Nov. 8, 2010); Majestic Steel Service, Inc. v. Disabato, 1999 Ohio App. LEXIS 4919 (Ohio App.
1999); Texaco, Inc. v. Garcia, 891 S.W.2d 255 (Tex. 1995); Skjerpen v. Johnson, 2007 BCSC
1290 (CanLII) (B.C. S. Ct. Aug. 8, 2007).

In In re: A&T Paramus Co., Inc., 1999 Bankr. LEXIS 1841 (D.N.J. 1999), the court recognized
that knowledge of "litigation strategy, methods and procedures for defending claims" can fall
within the substantial relationship test, but found that the lawyer had not gained enough
information to warrant disqualification.

Jessen v. Hartford Cas. Ins. Co., 3 Cal. Rptr. 3d 877 (Cal. App. 2003). James Wilkins is
attempting to represent the plaintiff in a coverage action against Hartford. Until 1992 Wilkins, at
another firm, had represented Hartford in coverage disputes in approximately 20 different
matters. Hartford moved to disqualify Wilkins in this case. The trial judge denied the motion
because similar motions by Hartford against Wilkins had been denied in two federal district court
cases. Thus, the trial court held, Hartford was estopped from making the motion in this case. The
appellate court reversed, for reasons, it said, contained in an “unpublished portion” of its opinion.
(The portion is indeed unpublished; it does not appear at all.) The appellate court remanded the
case to the trial court with directions “to rehear the motion and, in doing so, to apply the
substantial relationship test.” For some reason, not at all clear from the opinion, the appellate
court felt compelled to describe at great length the nature of the substantial relationship test in
California. For another case involving Wilkins and his disqualification, see Farris v. Fireman’s
Fund Ins. Co., 14 Cal. Rptr. 3d 618 (Cal. App. 2004).

More on Jessen. Fremont Indem. Co. v. Fremont Gen. Corp., 49 Cal. Rptr. 3d 82 (Cal. App.
2006). Extensive discussion of the substantial relationship test and applicability of Jessen v.
Hartford Cas. Ins. Co., 3 Cal. Rptr. 3d 877 (Cal. App. 2003).

Lawyer/Testifying Expert Treated Like Lawyer, and Playbook Analysis Applied. Brand v. 20th
Century Ins. Co., 21 Cal. Rptr. 3d 380 (Cal. App. 2004). Helen Brand sued her insurance
company in a coverage dispute. She hired lawyer Barry Zalma as an expert witness on insurance
coverage issues. Twelve years prior Zalma had represented the insurance company on coverage
and related matters. The insurance company moved to disqualify Zalma as Brand’s expert
witness. The trial court denied the motion. In this opinion the appellate court reversed, finding a
substantial relationship between what Zalma had done for the insurance company and the issues
in this case.
Former In-House Lawyers - ABA Op. 99-415 (1999). This opinion says that the mere fact a
lawyer was in a company's law department does not mean that the company was a former client
for all matters that were pending when the lawyer was there. Nor, does the fact that the lawyer
had overall supervisory responsibility over lawyers who were representing the company mean
that the company is a former client. If the lawyer was involved to the extent that the company
would be deemed a client on that matter, the lawyer can later cure any conflict with consent of
the company under Rule 1.7(a). If such a consent requires the lawyer to maintain confidences
that relate to the new representation, the lawyer will also have to consider obtaining a Rule 1.7(b)
consent from the new client. The opinion also reminds readers that the lawyer may have obtained
confidences at the company requiring the lawyer's (and the lawyer's new law firm) to be
disqualified under Rule 1.9(b). (As to the ability to avoid the firm's disqualification with a
screen, see the section entitled, "Changing Firms - Lawyers and Non-Lawyers.") The following
state ethics opinions are in accord with ABA Op. 99-415: Ariz. Op. 94-06 (1994); N.J. Op. 654
(1991); and Va. Op. 1399 (1991). But, see Mich. Op. RI-35 (1989).

Former In-House Lawyers Disqualified. NCK Org. Ltd. v. Bregman, 542 F.2d 128 (2d Cir.
1976); Chugach Elec. Assoc. v. United States Dist. Ct., 370 F.2d 441 (9th Cir. 1966); Carreno v.
City of Newark, 2011 U.S. Dist. LEXIS 136590 (D.N.J. Nov. 29, 2011); Henry v. Delaware
River Joint Toll Bridge Commission, 2001 U.S. Dist. LEXIS 13462 (E.D. Pa. 2001); Hyman
Cos., Inc. v. Brozost, 964 F. Supp. 168 (E.D. Pa. 1997); Prisco v. Westgate Entertainment, Inc.,
799 F. Supp. 266 (D. Conn. 1992); Webb v. E.I. Du Pont De Nemours & Co., Inc., 811 F. Supp.
158 (D. Del. 1992); Ullrich v. Hearst Corp., 809 F. Supp. 229 (S.D.N.Y. 1992); Stitz v.
Bethlehem Steel Corp., 650 F. Supp. 914 (D. Md. 1987) (former in-house lawyer familiar with
company personnel policies could not handle age discrimination case against company); Global
Van Lines, Inc. v. Superior Court, 192 Cal. Rptr. 609 (Cal. App. 1983); Franzoni v. Hart
Schaffner & Marx, 726 N.E.2d 719 (Ill. App. 2000). Mich. Op. RI-35 (1989) (with company
many years and formerly on board of directors).

Former In-House Lawyer not Disqualified. Caldwell-Gadson v. Thompson Multimedia, SA, 2000
U.S. Dist. LEXIS 16087 (S.D. Ind. October 11, 2000). Plaintiff sued several companies for
copyright infringement and plagiarism. Her husband, who was formerly Senior Patent Counsel
for one of the defendants now represents her. The defendants moved to disqualify the husband
under the substantial relationship test of Rule 1.9(a). The court held that although the husband
had worked on similar matters while with the defendant, he had not worked on that matter and
denied the motion. The court said:

This case is much like the example given in the comment to Rule 1.9: "[A] lawyer who
recurrently handled a type of problem for a former client is not precluded from later representing
another client in a wholly distinct problem of that type even though the subsequent
representation involves a position adverse to the prior client."

To the same effect, see Jamaica Pub. Serv. Co. v. AIU Ins. Co, 684 N.Y.S.2d 459 (N.Y. 1998).
In Wisdom v. Philadelphia Housing Authority, 2003 U.S. Dist. LEXIS 2055 (E.D. Pa. Feb. 12,
2003), the issue was whether the plaintiff had sent her complaint letter on time, so the court was
not impressed that the lawyer had gained knowledge of the former client's approach to handling
complaints. In Jordan v. Philadelphia Housing Authority, 337 F. Supp. 2d 666 (E.D. Pa. 2004),
the former in-house lawyer got disqualified because he tried to use an earlier case he had handled
for the Authority in this case.

Ethics Opinions Finding no Conflict. Ariz. Op. 94-06 (1994); Ind. Op. 3 (1991); N.J. Op. 654
(1991); Va. Op. 1399 (1991).

Not Disqualified, but Unique Facts. Walker v. State of Louisiana, 817 So. 2d 57 (La. May 15,
2002). For ten years, until 1999, Daniel Vidrine worked in the “Road Hazard Section” of the
Louisiana Attorney General’s Office. When he went into private practice, he sent letters to
“various Louisiana attorneys” saying that he was:

. . . very informed in the inner operations of the Department of Transportation and Development
as well as the location of valuable written documents which are essential in proving a case
against the DOTD.

Shortly after leaving the state, Vidrine took on a highway case for a plaintiff against the state.
The court denied the state's motion to disqualify Vidrine, because the state had not shown that
Vidrine had any confidential information relating to this particular case. The court said that
merely handling the same type of case as that he had handled while with the state was not
enough to disqualify him.

Vivid Articulation of Playbook Analysis. Hurley v. Hurley, 923 A.2d 908 (Me. 2007) . Wife hired
Lawyer to represent her to recover her damages resulting from an automobile accident. After that
case concluded, Husband hired Lawyer to represent him in a divorce proceeding against Wife.
Wife moved to disqualify Lawyer, the trial court granted the motion, and in this opinion the
supreme court affirmed. In addition to noting that Lawyer learned about Wife’s health and
earnings history, the court said:

[F]or over two years [Lawyer] observed [Wife’s] reaction to the numerous tribulations of the
litigation process. [Lawyer] personally observed: [Wife’s] ability to testify under oath, her
reactions to her adversary, her patience with the protracted process, her ability to accept
compromise, her ability to handle stress, and the way in which she relates to her attorney.
Disclosing knowledge of [Wife’s] strengths and weaknesses in these areas would be detrimental
to her interests in another litigation, particularly in a contentious divorce action.

Former Outside General Counsel Not Disqualified. Guzewicz v. Eberle, 953 F. Supp. 108 (E.D.
Pa. 1997).

Nursing Home Neglect Cases Different from Product Liability Cases. Health Care and
Retirement Corp. of Amer., Inc. v Bradley, 961 So. 2d 1071 (Fla. App. 2007). Lawyer had
represented a nursing home chain for more than three years. Many of those cases (none of them
this case) involved pressure ulcers and falls, as does this case. Lawyer has joined Law Firm,
which has sued that same nursing home chain in a case (this case), which involves pressure
ulcers and falls. The trial court denied a motion to disqualify lawyer, and in this opinion the
appellate court affirmed (denied cert.). The court distinguished an earlier case in which a lawyer
had defended a certain type of lawnmower and later sued the manufacturer involving the same
type of lawnmower:
Here, [Lawyer] handled a "type of problem" for Manor Care-negligence cases involving patients
who suffered from pressure ulcers or falls; the current case, filed after [Lawyer] left [his prior
firm], is a "wholly distinct problem of that type." Rules Reg. Fla. Bar 4-1.9 cmt. (2006). Unlike
two products liability cases involving the identical product, each negligence case turns on its
own facts. Therefore, the work in this case does not involve [Lawyer] "attacking [the] work that
[Lawyer] performed for the former client." Id. This lawsuit is not "substantially related" to the
earlier cases within the meaning of Rule 4-1.9(a).

Restatement. See cmt. d(iii) to § 132, particularly the last paragraph of that comment.

Treatise. Hazard, Hodes, & Jarvis § 13.7.
                           Waiver/Consent Forms

DISCLAIMER: Lawyers using these forms should do so very carefully to ensure that the
language finally used fits the particular situation for which they are designed. It is not the intent
of these forms to suggest or establish practice standards.

Forms that Follow:

      Litigation - Beauty Contest
      Litigation - Joint/Multiple Representation
      Advance Waiver

      Representing Purchaser and Seller

      Estate Planning - Simultaneous Representation of Husband and Wife

      Estate Planning - Dealing with other Family Members

      Creation of New Business - “I Am not your Lawyer”

      Creation of New Business - Relationship with Minority Shareholders, Limited Partners,
       LLC Members, etc.

      Doing Business with Client - Taking Second Mortgage on House to Secure Fee -
       Compliance with Rule 1.8(a)

      Termination of Representation Letter
      Waivers of Direct Adversity Conflict
      Lawyer Serving on Board of Client


Litigation - Beauty Contest

John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603

Re: Proposed Action against XYZ Corp.

Dear John:

This is to confirm that you will visit this firm August 1. You wish to hire a law firm in this city
to bring an action against XYZ Corp., and the purpose of your visit will be to evaluate the ability
of this firm to handle the action for you. We understand that you will be interviewing other firms
here, as well.

On the telephone, we discussed the possibility that if you do not hire us, XYZ or some other
party in the action may seek to hire us in your case. We have agreed that at our meeting on
August 1 you will not reveal any confidential information to us. We further agreed that nothing
that occurs at the meeting will form the basis for an objection on your part to our representing
one of the other parties in the action.

Thank you very much, and we look forward to our meeting.

Very truly yours,


Sarah Barnes

(See the "Initial Interview - Hearing too Much" page at this site.)


Litigation – Joint/Multiple Representation

John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603

Mr. Morton Jones
1 LaSalle Street
Chicago, Illinois 60603

Re: Newton v. ABC Corp. and Morton Jones – Joint Representation

Gentlemen:

This is to confirm that this law firm will represent both ABC Corp. and Morton Jones in the
captioned action. We have discussed the potential for a conflict of interest to arise between you.
Neither you nor we have as yet detected a basis for a conflict. You both wish this firm to
represent ABC Corp. and Mr. Jones in order to present a united front and to keep expenses down.
ABC Corp. will pay all legal fees and expenses. We do not believe that will in any way
compromise our ability to represent Mr. Jones fairly and effectively.

During this joint representation we will share with both of you all information that we gather
from either of you and from Mr. Newton and from third parties. If we learn something from one
of you that we think the other needs to know, we will disclose the information to the other. If we
learn something in confidence from one of you that we do not believe is relevant to the other and
that the other does not need to know, we will not share the information with the other.
Conflicts under these circumstances sometimes arise. One example would be where we discover
evidence that one of you may have behaved as alleged by the plaintiff. Others could be where
you disagree on trial strategy or the appropriateness of a settlement.

In the event a conflict does develop between ABC Corp. and Mr. Jones, this law firm will have
the right to terminate its representation of Mr. Jones and continue on behalf of ABC Corp. We
will have the right to take positions adverse to Mr. Jones and use information that we obtained
from Mr. Jones during our representation of him. There may be circumstances where this would
not be appropriate, and a court might not permit it.

This is further to confirm that we have urged Mr. Jones to retain other counsel to review this
letter and the arrangement proposed above.

Very truly yours,



Sarah Barnes

Agreed:

Morton Jones:

ABC Corp.

By:

(Caution: this is a highly aggressive letter, particularly the part about being able to stay in the
case. It is based upon the discussion of In re Rite Aid Corp. Securities Litigation v. Grass, 139 F.
Supp. 2d 649 (E.D. Pa. April 17, 2001), and Zador Corp. v. Kwan, 37 Cal. Rptr. 2d 754 (Cal.
App. 1995). Obtaining the agreement is one thing. Defeating a motion to disqualify is quite
another. The tribunal will be most concerned about the sophistication of the individual party and
his or her ability to understand the implications of the agreement.)


Advance Waiver

John Smith, Esq.
ABC Corp.
1 LaSalle Street
Chicago, Illinois 60603

Re: Advance Waiver for Other Matters

Dear John:
ABC Corp. is retaining us to handle a single property tax appeal because property tax appeals
constitute a major part of this firm's practice. In the past we have been adverse to ABC Corp. in
both litigation and transactional matters. We expect to be asked by other clients to be adverse to
ABC Corp. in the future.

ABC Corp. agrees to waive in advance any conflict that might result from our representing
another client adverse to ABC Corp. in a matter unrelated to the property tax appeal matter. This
includes matters that might come up during the course of our representation of ABC Corp. and
includes litigation adverse to ABC Corp. We will not take on a matter adverse to ABC Corp. that
would involve confidential information obtained from ABC Corp. in the property tax appeal
matter.

Thank you very much.

Very truly yours,



Sarah Barnes

Agreed:

ABC Corp.
By:

(While it is clearly not unethical to seek such a waiver, making it stick when the conflict arises is
not foregone. See the discussion of advance waivers at the Waivers/Consents page of this site.
New Comment [22] to Model Rule 1.7, quoted there, emphasizes the need to be specific as to
what the future adverse matters might be. The above letter is not. If you know what the future
matters might be, it would behoove you to state them in the letter. Note the specific reference to
litigation in the form. Several of the cases disapproving an advance waiver turned upon the
failure of the waiver to include a specific reference to litigation.)


Representing Purchaser and Seller

(Caution! This is rarely appropriate. Go to "Commercial Negotiations" at this site for opinions
and decisions on this practice.)


Mr. Clyde Owen
100 Main Street
Jonesville, Illinois 60521

Ms. Molly Bright
222 Grant Street
Jonesville, Illinois 60521

Re: Waiver for Joint Representation in Sale of Molly’s Hardware, Inc.

Dear Clyde and Molly:

This firm has for some years represented each of you and your respective businesses. Now,
Clyde wishes to purchase Molly’s business. You have both asked this firm to represent both of
you in the transaction. I explained it would be best if you each sought another lawyer or law
firm. This is particularly true because we have obtained much confidential information from each
of you over the years. Some of the information from one of you may be important to other in
evaluating the terms of the sale.

You both have persisted in getting us to act for both of you, because that will avoid the cost of
educating new lawyers and the cost of involving two law firms. We have agreed to do so. We
expect you to agree on the principal terms of the sale without our involvement. This is
particularly true as to price. We have explained to you that we must be forthcoming to each of
you about what we know about, or learn from, the other, to enable you to make informed
judgments about the transaction. There cannot be any secrets among us relating to this
transaction.

If, during the transaction, we believe we cannot represent both of you fairly and effectively, we
will have to withdraw from representing both of you.

I urged you both to seek the advice of other lawyers about the wisdom of proceeding on this
basis. If you agree to the above, please sign at the space below.

Very truly yours,



Sarah Barnes

Agreed:

Clyde Owen:

Molly Bright:

(Note: most states adopted ABA Model Rule 2.2. It appears to apply to most multiple
representations in transactions. It also appears to require that whenever multiple clients have a
falling out, the lawyer must withdraw completely. It does not allow for a consent for the lawyer
to continue on behalf of anyone in the transaction. That is why the letter says the lawyer will
withdraw from representing both parties. The ABA House of Delegates removed Model Rule 2.2
in February 2002, and substituted more specific comments to new Rule 1.7.)
Estate Planning – Simultaneous Representation
of Husband and Wife

Mr. and Mrs. James Smith
1 Maple Street
Jonesville, Illinois 60521

Dear Mr. and Mrs. Smith:

We will be representing both of you in the preparation of your estate plans. We encouraged you
to obtain separate counsel, but for reasons of expense, you asked us to represent both of you.

It is the policy of this firm to seek an agreement in such cases regarding the sharing of
confidential information. If we learn anything from one of you that we believe the other needs to
know in connection with our representation, we will tell the other. If we learn something in
confidence from one of you that we do not believe is germane to the representation of the other
or that the other does not need to know, we will not tell the other.

Very truly yours,



Sarah Barnes

Agreed:
James Smith:

Emily Smith:

(This provision would be less jarring if tucked into an engagement letter containing the scope of
the engagement and provisions relating to fees.)


Estate Planning – Dealing with other Family Members

Mr. James Smith, Jr.
11 Elm Street
Jonesville, Illinois 60521

Re: Representation of Your Parents

Dear Jim:

As you know we have been representing your parents on estate planning and other matters for
many years. You have now, for the first time, retained us to revise your will and trust. You and I
have discussed the difficulties of representing multiple family members and have agreed upon an
approach to handling family information.

First, while we have no current information that would suggest this would happen, one or both of
your parents could ask us to make changes in their estate plans to your disadvantage. You agree
that we may follow your parents' instructions in this regard.

Moreover, any information regarding your parents’ affairs will remain confidential with us. That
means, for example, if either of them takes some action with respect to his or her estate or
property that is detrimental to you, we will not disclose that action to you. We would hope and
expect that various members of your family will exchange information where appropriate. This
will not be our role, however.

Very truly yours,



Sara Barnes

Agreed:

James Smith, Jr.:

(Note: the above assumes the son already knows that Barnes represents his parents. What if the
son does not know? In that case, Barnes could not get the son's consent without disclosing that
she represents the parents, something the parents may not want the son to know. And, Barnes
cannot go to the parents for consent to tell the son without disclosing to them that she intends to
represent the son, something the son may not want the parents to know. Solution? There may not
be one.)


Creation of New Business – “I Am not your Lawyer”

(Note: this is a very important letter, and you should always write it, particularly where you have
met with people during planning meetings that you have no intention of representing.)


Mr. Owen Smith
999 N. Barksdale St.
Jonesville, Illinois 60521

Re: Who Will Be Clients, and Who Will not Be

Dear Owen:

It was good to meet you yesterday. You and Ned Green are going to start a new business,
tentatively called Green’s Cards. It will probably be a corporation; we are looking into that. The
purpose of this letter is to confirm our conversation yesterday, during which I informed you that
this firm will be representing Ned and the new company. We do not represent you personally.
You will need to consult with your own lawyer on issues relating to you.

We understand that you will be the COO of the new company. We expect to have much contact
with you in that role. Please understand, however, that in that role you, personally, will not be
our client.

Thank you very much, and we look forward to working with you.

Very truly yours,



Sarah Barnes

Agreed:
Owen Smith:

(Go to "Joint/Multiple Representation" - "Unintentional" Joint/Multiple Representation at this
site.)


Creation of New Business –
Relationship with Minority Shareholders or Limited Partners


Mr. Ralph Newland
444 N. Vine St.
Jonesville, IL 60521

Re: Formation of Green’s Cards, Inc.

Dear Mr. Newland:

We understand that you will be one of several minority shareholders of Ned Green’s new
company. As Green’s Cards’ counsel we will have to communicate with you from time-to-time.
While we have have never met you, we did want to make sure that there were no
misunderstandings about whom we are representing. Our clients are, and will continue to be,
Ned individually and Green Cards, Inc. We do not represent, and will not be representing, any of
the minority shareholders, directors, or employees of the company.

Very truly yours,
Sarah Barnes

(It is our view that personal contact with “non-clients” creates the most potential for
misunderstandings about who represents whom. In the case of closely held entities,
misunderstandings may arise even absent personal contact. Thus, a letter like this would seem
advisable, where there are minority shareholders, limited partners, minority members of L.L.C.s,
and so forth. Go to "Joint/Multiple Representation" - "Unintentional Joint/Multiple
Representation" at this site.)


Doing Business with Client – Taking Second
Mortgage on House to Secure Fee –
Compliance with Rule 1.8(a)

Mr. Miles Prescott
666 N. Ross St.
Jonesville, Illinois 60521

Re: North v. Prescott – Change in Fee Arrangement

Dear Miles:

In light of the slow-down at your business and your inability to pay our fees when due, we have
agreed that you will convey to us a second mortgage on your home as security for the payment of
our fees. We have estimated that our remaining fees will be approximately $50,000, so the
mortgage will be in that amount. We will charge interest at the rate of X% per year on fees for
which payment is late. We asked you to ask your accountant what a fair rate would be, and that
is the rate he gave you.

What this means is that if you are unable to pay our fees on the schedule we have agreed upon,
we could foreclose on the second mortgage. If we did that, it would be financially disruptive for
you and could even cause you to lose your home.

We want you to consult with another lawyer before proceeding with the mortgage transaction.
Please do this within the next two weeks, so that we can proceed. If you need more time, let us
know. You have a right not to see another lawyer, but we believe you should.

When you are ready to do so, please sign the copy of the letter at the place indicated on the
bottom. Thank you very much.

Very truly yours,



Sarah Barnes
I have read the above and I agree to it. I believe that I understand it. I (did) (did not) review this
with another lawyer. I had sufficient time to do so. Miles Prescott

(We believe this letter complies with Model Rule 1.8(a). Do not attempt such a waiver without
reviewing the relevant state’s version of that rule. It is our belief that all “mid-stream” fee
changes should comply with that rule.)


Termination of Representation Letter

Mr. Miles Prescott
666 N. Ross St.
Jonesville, Illinois 60521

Re: North v. Prescott – Conclusion

Dear Miles:

Finally! All the appeals are over, and you have paid our fees. You have treated this firm very
well, particularly in agreeing to give the second mortgage. We are grateful your cash position
improved, and we were able to cancel the mortgage.

There is nothing left to be done, and our representation of you has ended. We would very much
like to serve you in the future, if that becomes necessary. If you need our services in the future,
give us a call, and we will prepare a new engagement letter.

Very truly yours,



Sarah Barnes

(The purpose of the letter is to avoid the inference that the firm is going to be looking out for the
former client. It is also to make clear that the former client is not a current client for conflict of
interest purposes. The above form is not “perfect.” A more effective letter would have said:

The case is over, you have paid our fees, and you are no longer a client. That means we have no
further duty to look after your interests on any matters. That also means we are free to sue you
for other clients on matters not related to the completed lawsuit?

Thus, the better the letter, the worse the marketing. For a discussion of when a "current client"
becomes a "former client," click here.)



Waivers of Direct Adversity Conflict
(Situation: Bradley Clark is one of several passengers on an Ajax Transportation bus. It has an
accident. Clark is a real estate client of law firm A. Ajax is a litigation client of A. Clark and
others want to sue Ajax, using law firm B. Ajax wants A to defend the case. The following two
letters are consents from Clark and Ajax allowing this to happen.)


Mr. Bradley Clark
1001 Clark Place
Jonesburg, IL 60521

Re: Smith, et al. v. Ajax

Dear Brad:

This is to confirm our telephone conversation about the captioned lawsuit. You and 26 other
passengers have hired another law firm to sue Ajax Transportation, Inc. because of an accident
that occurred while you were riding on an Ajax bus.

Ajax has asked my partner, Sarah Barnes, to defend Ajax in that case. As I explained to you, she
cannot do so without the consent of both you and Ajax. Ajax has indicated that it will consent.
So have you. I suggested you talk to another lawyer about this before signing a waiver.

There is nothing about the lawsuit that will cause me not to be completely loyal to you on your
real estate matters. Moreover, while I do not believe this law firm has any information about you
that would be relevant to the Ajax law suit, I will ensure that no lawyer working on the law suit
will have access to any information that we may have about you.

If you still agree to waive this conflict, please sign the enclosed copy of this letter and return it to
me.

Thank you very much.

Very truly yours,


Clyde Slick

Agreed:
Bradley Clark
Tom Jones, Esq.
General Counsel
Ajax Transportation, Inc.
111 S. LaSalle St.
Chicago, IL 60603

Re: Smith, et al. v. Ajax

Dear Tom:

This is to confirm our telephone conversation, in which I informed you that one of the 27
passengers on your bus and plaintiff, Bradley Clark, is a current real estate client of my partner,
Clyde Slick. We cannot proceed on your behalf in the lawsuit without a waiver from both of you.
Mr. Clark has agreed to sign such a waiver.

Neither I nor any member of my litigation team know Mr. Clark, and we believe we can
represent you with complete loyalty to Ajax. Accordingly, if you still agree that we can represent
you, notwithstanding our unrelated representation of Mr. Clark, please sign the enclosed copy of
this letter and return it to us.

Thank you very much.

Very truly yours,




Sarah Barnes

Agreed:
Ajax Transportation, Inc.
By:


Lawyer Serving on Board of Client

(To Chairman of Board)

Re: Service on Board
Dear [Chair]:

You have asked that I stand for election for Director of ABC Corp. I have obtained the
permission of my law firm and agree to do so. You and I have discussed several issues that my
service may raise, and I wish to summarize those issues here.

My law firm has represented ABC Corp. for many years on a variety of matters. For the past ___
years I have been the partner at the firm in charge of the firm’s relationship with ABC Corp. We
expect that my firm will continue to represent ABC Corp. as in the past and that I will continue
to be the partner in charge.

Perhaps the single most critical issue of my service as Director is the preservation of the
attorney-client privilege. Communications, oral or written, between ABC personnel and me in
connection with my law firm’s providing legal services to ABC should remain privileged. That
is, absent extraordinary circumstances, adversaries to ABC in litigation should not be able to
obtain those communications. However, communications between ABC personnel and me in
connection with my service as a Director enjoy no such privilege. The difficulty is identifying
which type of communication is which. It will be necessary for me, from time-to-time, to remind
you and other ABC personnel of what capacity I am operating in, so that you know what is, and
is not, privileged. Caution: there is no guarantee that a court or other tribunal will agree with our
characterization of a particular communication as privileged. We will just have to do the best we
can.

[We have agreed that from the time I am elected as a Director I personally will not participate in
any legal representation that my law firm provides to ABC Corp. That means all my
communications with ABC personnel will be as a Director, and none of those communications
will be protected by the attorney-client privilege.]

Another issue relates to the fact that I will not be able to participate in discussing or voting upon
some issues that come before the Board because I will have a conflict. For example, if the issue
of what law firm to hire for a major project comes up, I will probably have to absent myself from
the meeting and not participate in the decision at all. Thus, for purposes of some issues, while
you may have a quorum, you will be operating without a full board.

[My service as a Director for ABA Corp. means that my law firm will not have malpractice
insurance coverage for any work my firm does for ABC Corp.]

[Rule 1.8(a) compliance. I have urged you to discuss my possible service as Director with a
lawyer not in my firm, and you have indicated that you have sought the advice of ABC Corp’s.
General Counsel.]

[Other issues may arise that we simply cannot predict. For example, if my law firm is
representing ABC Corp. in litigation and the opponent objects to my partners and associates
seeing certain of the opponent’s confidential documents, because I am a Director, we may be
limited in how we handle the litigation.]

Very truly yours,

Sarah Barnes

End of Forms
         THE ROLES AND RESPONSIBILITIES OF SUPERVISORY AND
                       SUBORDINATE LAWYERS




                                                                     By




                                                         Douglas R. Richmond*




        *Senior Vice President, Professional Services Group, Aon Risk Services, Chicago,
Illinois. Opinions expressed here are the author’s alone. These materials are derived from
the following articles: Douglas R. Richmond, “Law Firm Partners As Their Brothers’
Keepers,” 96 Ky. L.J. (Forthcoming 2007-08); Douglas R. Richmond, “Professional
Responsibilities of Law Firm Associates,” 45 Brandeis L.J. 199 (2007); and Douglas R.
Richmond, “Subordinate Lawyers and Insubordinate Duties,” 105 W. Va. L. Rev. 449
(2003). All text has been updated and remains the author’s original work.


C:\Documents and Settings\Nathaniel Trelease\My Documents\My
Files\WebCredenza\Teleseminars\Programs\2008\Ethics of Supervisory
and Subordinate Attorneys\Outline 2.DOC
                                       I. INTRODUCTION


       Pity poor Tom Hyde. Succumbing “to the undeniable pressures of being a young

associate and a father,”1 he repeatedly lied to his firm’s clients, did not act in accordance with his

clients’ directions, and falsely billed clients for work that he did not perform.2 The New Mexico

Supreme Court suspended him for practice for one year.3 Of course Hyde probably had it better

than the associates at the Alabama firm of Davis & Goldberg, who were assigned unmanageable

caseloads of up to 600 files per lawyer; who were given scant staff support; and who labored

under policies that further impaired the representation of their clients, such as restrictions on the

amount of time they could spend with clients and working on cases, a quota system that required

them to open a specified number of files in a certain time period, and a policy that forbid them to

return existing clients’ calls so that they could spend more time seeking and establishing

relationships with new clients.4

       On the senior lawyer side of the coin, it is difficult not to feel some sympathy for Georgia

lawyer Larry James Eaton. While Eaton, a paraplegic, was confined to his bed following an

accident, his associate neglected to properly serve pleadings and failed to timely propound

discovery.5 The Georgia Supreme Court reprimanded Eaton for failing to ensure the proper



       1   In re Hyde, 950 P.2d 806, 809 (N.M. 1997).
       2   Id. at 808.
       3   Id. at 809-10.
       4   Davis v. Ala. State Bar, 676 So. 2d 306, 307-08 (Ala. 1996).
       5 See Rachel Reiland, The Duty to Supervise and Vicarious Liability: Why Law Firms,
Supervising Attorneys and Associates Might Want to Take A Closer Look at Model Rules 5.1, 5.2
and 5.3, 14 GEO. J. LEGAL ETHICS 1151, 1154 (2001).



                                                   1
handling of the affected client’s case.6 While Florida lawyer Kristine Nowacki was out of her

office receiving treatment for breast cancer, her associate called the police to deal with a client

who had come to the office seeking a refund of his retainer.7 Suffice it to say that the associate

lacked basic client relations skills. For this and other problems the Florida Supreme Court

suspended Nowacki from practice for just over three months.8

       These cases point out that which should be obvious but all too often escapes lawyers’

attention: significant professional responsibility issues attend the relationship between

supervisory and subordinate lawyers. Neither senior nor junior lawyers can avoid ethical

obligations by passing responsibility downstream or up. These materials examine supervisory

and subordinate lawyers’ professional duties under the Model Rules of Professional Conduct and

the Restatement (Third) of the Law Governing Lawyers. Section II examines the duties of

supervisory lawyers, while subordinate lawyers’ obligations are discussed in Section III.


                         II. THE DUTIES OF SUPERVISORY LAWYERS


       Lawyers’ supervisory duties are rooted in ethics rules and in various other areas of the

law now embodied in section 11 of the Restatement (Third) of the Law Governing Lawyers.9


A.     Model Rule 5.1


       The American Bar Association adopted the Model Code of Professional Responsibility in

1969, and most states adopted it shortly thereafter. The Model Code was silent on supervisory


       6   Id.
       7   Fla. Bar v. Nowacki, 697 So. 2d 828, 831 (Fla. 1997).
       8   Id. at 833.
       9   RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 11 (2000).

                                                  2
lawyers’ supervisory duties and responsibilities. Nonetheless, courts occasionally disciplined

lawyers for supervisory failures based on common law principles,10 and rejected lawyers’ efforts

to defend against charges of professional misconduct by attempting to shift blame to other

lawyers in their firms.11 In re Fata12 is a representative case.

       In re Fata involved two brothers, Francis and Joseph Fata, who practiced high-volume

plaintiffs’ personal injury litigation in New York. Francis surrendered his law license in the face

of numerous disciplinary charges related to fraud, soliciting clients, falsifying medical records

and doctors’ billing statements, and falsifying court documents. Disciplinary authorities

continued their prosecution of Joseph, who denied knowledge of his brother’s misconduct.13

The court rejected Joseph’s defense of ignorance, stating that he had to “share the burden of

responsibility for the acts of his partner even though he claims no actual knowledge of some of

the acts.”14 The court further observed that “[i]n a firm handling the number of negligence cases

that Fata & Fata did, [Joseph] was under a duty to know what was going on” in the practice.15

Despite Joseph’s relative youth, the court disbarred him.16



       10Irwin D. Miller, Preventing Misconduct By Promoting the Ethics of Attorneys’
Supervisory Duties, 70 NOTRE DAME L. REV. 259, 275 (1994).
       11 See, e.g., In re Weston, 442 N.E.2d 236, 239 (Ill. 1982) (rejecting lawyer’s attempt to
blame associate for problems in administration of estate); In re Berlant, 328 A.2d 471, 474 (Pa.
1974) (calling lawyer’s attempt to avoid discipline by blaming associate for drafting fraudulent
contingent fee agreements “unavailing”).
       12   254 N.Y.S.2d 289 (N.Y. App. Div. 1964).
       13   See id. at 290 (describing Joseph Fata’s defense).
       14   Id.
       15   Id.
       16   Id. at 291.


                                                  3
       The ethical duty of supervision that existed during the time that the Model Code was the

predominant measure of lawyers’ professional responsibilities was imprecise. Lawyers had no

clear standard against which to measure their conduct. Courts attempting to enforce supervisory

duties fashioned discipline based on the nature and severity of the underlying misconduct, the

degree of supervising lawyers’ carelessness or neglect, and the reasonableness of supervisory

lawyers’ claims that they were unaware of their subordinates’ or peers’ professional lapses.

These ambiguities created the potential for senior lawyers to insulate themselves against liability

or professional discipline by blaming junior lawyers for misconduct. The drafters of the Model

Rules of Professional Conduct, which succeeded the Model Code, recognized the importance of

promoting lawyers’ supervisory responsibilities, and the problems posed by sporadic case law

development of lawyers’ supervisory duties. They accordingly fashioned Model Rule 5.1, which

now provides:

                (a) A partner in a law firm, and a lawyer who individually or
                together with other lawyers possesses comparable managerial
                authority in a law firm, shall make reasonable efforts to ensure that
                the firm has in effect measures giving reasonable assurance that all
                lawyers in the firm conform to the Rules of Professional Conduct.

                (b) A lawyer having direct supervisory authority over another
                lawyer shall make reasonable efforts to ensure that the other
                lawyer conforms to the Rules of Professional Conduct.

                (c) A lawyer shall be responsible for another lawyer’s violation of
                the Rules of Professional Conduct if:

                       (1) the lawyer orders or, with knowledge of the specific
                       conduct, ratifies the conduct involved; or

                       (2) the lawyer is a partner or has comparable managerial
                       authority in the law firm in which the other lawyer
                       practices, or has direct supervisory authority over the other
                       lawyer, and knows of the conduct at a time when its




                                                  4
                        consequences can be avoided or mitigated but fails to take
                        remedial action.17

Although the rule speaks of “partners” in law firms, it applies equally to shareholders in

professional corporations and to members of other organizations authorized to practice law,

including corporate law departments, government agencies, prosecutors’ offices and so on.


       1.        Model Rule 5.1(a)


       Rule 5.1(a) broadly states the supervisory duties owed by all partners. It prevents the

most influential lawyers in a firm—partners—from ignoring the behavior of other lawyers in

their firms.18 Moreover, because partners share in firm profits and are indirectly responsible for

all legal work done in their firms, it is reasonable to make them accountable for the professional

conduct of all of their lawyers.19

       Model Rule 5.1(a) exposes all law firm partners to professional discipline regardless of

their “remoteness from the violating attorney, regardless of the partner’s knowledge or suspicion

of any misconduct and technically, regardless of any misconduct at all.”20 Partners cannot

escape Rule 5.1(a) violations by claiming to be unaware of other lawyers’ misconduct.21 The

rule does not, however, impose vicarious liability.22 The issue when another lawyer violates


       17   MODEL RULES OF PROF’L CONDUCT R. 5.1 (2007).
       18   In re Anonymous Member of the S.C. Bar, 552 S.E.2d 10, 14 (S.C. 2001).
       19 See id. (explaining partners’ responsibilities under Rule 5.1 based on their overall
responsibility for work done in their firms).
       20   Miller, supra note 10, at 279.
       21   In re Anonymous, 552 S.E.2d at 15.
       22Id. at 14; Stewart v. Coffman, 748 P.2d 579, 581-82 (Utah Ct. App. 1988) (involving
shareholder in law firm structured as professional corporation).


                                                 5
ethics rules and potentially subjects a partner to professional discipline is whether the partner

satisfied her own responsibilities under Rule 5.1(a).23 If a partner fails to make reasonable

efforts to ensure that the firm has in effect measures giving reasonable assurance that all of its

lawyers conform to ethics rules, she may be sanctioned completely apart and independent from

any discipline imposed on the lawyers to whom her failure relates. On the other side of the coin,

a partner who fulfills his duties under Rule 5.1(a) will not be disciplined for its alleged breach no

matter how egregious the other lawyers’ misconduct.24

       Rule 5.1(a) does not specify what measures constitute “reasonable efforts” or what level

of confidence qualifies as “reasonable assurance” in terms of achieving lawyers’ compliance

with ethics rules. These determinations are fact-specific. They turn in part on the size of the

firm and the nature of its practice.25 Large law firms may require elaborate policies and

procedures, while in small law firms informal supervision may suffice.26 Firms with multiple

offices typically require greater individual efforts by partners and more structural safeguards than

firms with a single office. More elaborate policies and procedures also may be required if a firm

practices in areas characterized by complex professional responsibility issues.27 A comment to

Rule 5.1(a) seems to indicate that all firms, regardless of size, must institute policies and


       23   In re Anonymous, 552 S.E.2d at 14.
       24   See id. at 15 (explaining the Rule 5.1(a) scheme).
       25   MODEL RULES OF PROF’L CONDUCT R. 5.1 cmt. 3 (2007).
       26  Id. But see Ky. Bar Ass’n v. Weinberg, 198 S.W.3d 595, 597 (Ky. 2006) (involving
failure of informal supervision in small law firm; court noted that the firm did not have internal
controls, such as a tickler system, diary system, etc.).
       27 See In re Myers, 584 S.E.2d 357, 361 (S.C. 2003) (quoting a comment to the South
Carolina version of Rule 5.1 and explaining that a prosecutor’s office “is a law office where
complex ethical questions arise, which necessitate[s] a more elaborate system to ensure that the
attorneys in the . . . [o]ffice comply with the [ethics] [r]ules”).

                                                  6
procedures “designed to detect and resolve conflicts of interest, identify dates by which actions

must be taken in pending matters, account for client funds and property and ensure that

inexperienced lawyers are properly supervised.”28 Clearly, though, Rule 5.1(a) does not make

law firm partners guarantors of their colleagues’ professional conduct.29

       An interesting question is whether, under Rule 5.1(a), law firm leaders can be held to a

higher standard of conduct than partners generally. This question arises out of the Delaware

Supreme Court’s decision in In re Bailey.30 In that case, the court disciplined James Bailey, a

law firm managing partner, in connection with the mishandling of the firm’s books and records.

In short, Bailey was guilty of a “sustained and systematic failure” to supervise the firm’s

employees to ensure compliance with Delaware Lawyers’ Rule of Professional Conduct 1.15,

which governs client trust accounts.31 In suspending him from practice for six months, the court

stated: “A lawyer who accepts responsibility for the administrative operations of a law firm

stands in a position of trust vis-à-vis other lawyers and employees of the firm. The managing

partner must discharge those responsibilities faithfully and diligently.”32 The court supported

that statement by citing a comment to Rule 5.1(a), which would become effective in Delaware

two months after the case was decided.33




       28   MODEL RULES OF PROF’L CONDUCT R. 5.1 cmt. 2 (2007).
       29  In re Anonymous, 552 S.E.2d at 14 (stating that partners “are not required to guarantee
that other lawyers in their firm will not violate the Rules of Professional Conduct”).
       30   821 A.2d 851 (Del. 2003).
       31   Id. at 864.
       32   Id. at 864-65 (footnote omitted).
       33   Id. at 865 n.31.


                                                 7
       To be sure, law firm leaders—managing partners, chairpersons, executive or management

committee members, and the like—share a special relationship with the partners they lead, and

may be deemed to owe their fellow partners duties greater than those typically required by the

fiduciary nature of partnership.34 These enhanced fiduciary duties do not derive from Rule

5.1(a), however, which makes no attempt to distinguish between partners in leadership roles and

others who are not. Rather, law firm leaders’ enhanced duties to their co-partners flow from

partnership law, which imposes a greater fiduciary duty on managing partners.35 Insofar as law

firm leadership or management and Rule 5.1(a) overlap, the lesson is that law firm leaders are

more likely to violate the rule than are average partners, because partners holding leadership

positions are best positioned to enact policies or implement procedures intended to assure that all

lawyers in the firm adhere to ethics rules.


       2.       Model Rule 5.1(b)


       Rule 5.1(b) requires a lawyer with direct supervisory authority over another lawyer to

make reasonable efforts to ensure that the supervised lawyer conforms to ethics rules.36 Whether

a lawyer has direct supervisory authority over another lawyer depends on the facts.37 Although

courts most often apply Rule 5.1(b) in cases where partners fail to supervise associates,38 or



       34
       Douglas R. Richmond, Law Firm Management and Professional Responsibility, 9
ROGER WILLIAMS U. L. REV. 187, 202 (2003).
       35Riddle v. Simmons, 922 So. 2d 1267, 1282 (La. Ct. App. 2006); Welder v. Green, 985
S.W.2d 170, 175 (Tex. App. 1998).
       36   MODEL RULES OF PROF’L CONDUCT R. 5.1(b) (2007).
       37   In re Anonymous Member of the S.C. Bar, 552 S.E.2d 10, 13 (S.C. 2001).
       38 See, e.g., Fla. Bar v. Nowacki, 697 So. 2d 828 (Fla. 1997) (disciplining lawyer who
delegated entire caseload to new associate); In re Farmer, 950 P.2d 713 (Kan. 1997) (hiring

                                                 8
senior government lawyers fail to supervise junior lawyers,39 it is common for law firm partners

to directly supervise the work of other partners, and the rule clearly applies in that context.40

       A partner need not be the day-to-day supervisor of the lawyer committing the related

misconduct for the rule to apply.41 A partner may violate the rule in connection with misconduct

by a lawyer she directly supervises even if she did not control the details of the other lawyer’s

work. A supervisory lawyer may be disciplined in connection with misconduct by lawyers he

directly supervises even if he is unaware of it.42 Indeed, because Rule 5.1(b) imposes upon

supervisory lawyers an obligation to make reasonable efforts to ensure that the lawyers they

directly supervise conform to ethics rules, a partner may be disciplined even where the lawyers

she is responsible for violate no rules themselves. In this way, Rule 5.1(b) is like Rule 5.1(a)—

both impose preventive or prophylactic duties. Again as with Rule 5.1(a), partners’ liability

under Rule 5.1(b) is direct rather than vicarious.43


inexperienced lawyer to staff satellite office); Andrews v. Ky. Bar Ass’n, 169 S.W.3d 862, 863
(Ky. 2005) (disciplining lawyer for failing to supervise associate who committed misconduct
after being suspended for failing to pay bar dues); Ky. Bar Ass’n v. Devers, 936 S.W.2d 89 (Ky.
1997) (disciplining lawyer who sent unqualified associate to creditors’ meetings in bankruptcy
case); Attorney Grievance Comm’n of Md. v. Ficker, 706 A.2d 1045 (Md. 1998) (sending
inexperienced lawyer to try drunk driving case); In re Disciplinary Action Against Geiger, 621
N.W.2d 16 (Minn. 2001) (assigning inexperienced lawyers to represent client in employment
litigation); In re Moore, 494 S.E.2d 804 (S.C. 1997) (disciplining lawyer who turned over all
discovery in a case to an associate).
       39 See, e.g., In re Myers, 584 S.E.2d 357, 360-61 (S.C. 2003) (finding that prosecutor
violated Rule 5.1(b) by failing to supervise deputy).
       40See, e.g., Ky. Bar Ass’n v. Weinberg, 198 S.W.3d 595, 599 (Ky. 2006) (reprimanding
lawyer under Rule 5.1(b) for failing to supervise fellow partner and associate).
       41   In re Anonymous, 552 S.E.2d at 13.
       42   See, e.g., In re Wilkinson, 805 So. 2d 142, 146-47 (La. 2002).
       43 In re Anonymous, 552 S.E.2d at 14; Stewart v. Coffman, 748 P.2d 579, 581-82 (Utah
Ct. App. 1988) (involving shareholder in law firm structured as professional corporation).


                                                  9
       Rule 5.1(b) does not specify what a lawyer must do to have made “reasonable efforts” to

ensure professionally responsible conduct by lawyers he directly supervises. At the very least,

supervisory lawyers “must be available to answer questions from other lawyers and if they notice

that a supervised lawyer’s conduct raises a question as to whether an ethical problem exists, the

supervisory lawyer must address the situation promptly.”44 In this context, “being available”

requires more than a supervising partner’s presence in an office.45 Rather, senior lawyers with

direct supervisory responsibility must invite questions from those they supervise, appropriately

inquire into the status of matters they supervise, and reasonably consult with supervised lawyers

on the manner in which they are carrying out those representations. The risk for senior lawyers

directly supervising peers is that they will feel no need to ensure professionally responsible

behavior by those they supervise, assuming that those lawyers’ seniority cinches their good

judgment in situations with ethical implications. Where they would carefully scrutinize junior

lawyers’ activities, they will not similarly monitor other senior lawyers’ conduct. Unfortunately,

seniority does not guarantee lawyers’ ethical or lawful behavior.


       3.      Model Rule 5.1(c)


       Under Rule 5.1(c), a lawyer is responsible for another lawyer’s violation of ethics rules if

(1) the lawyer orders, or knowing of the specific conduct involved, ratifies it;46 or (2) the lawyer


       44
       RONALD D. ROTUNDA & JOHN S. DZIENKOWSKI, LEGAL ETHICS: THE LAWYER’S
DESKBOOK ON PROFESSIONAL RESPONSIBILITY § 5.1–2(b), at 892 (2007-08).
       45 See In re Ritger, 556 A.2d 1201, 1203 (N.J. 1989) (reminding lawyers that fulfilling
their supervisory responsibilities over other lawyers requires more than simple availability).
       46 MODEL RULES OF PROF’L CONDUCT R. 5.1(c)(1) (2007); see, e.g., In re Asher, 772
A.2d 1161, 1169-70 (D.C. 2001) (disbarring lawyer who, among other things, violated Rule
5.1(c) by instructing subordinate lawyer to lie to court). By its plain language, Rule 5.1(c)(1)
also applies where the lawyers involved practice in separate firms. See Neilson v. McCloskey,

                                                 10
is a partner in the law firm in which the other lawyer practices or has direct supervisory authority

over the other lawyer, and knows of the other lawyer’s conduct “at a time when its consequences

can be avoided or mitigated but fails to take remedial action.”47 Rule 5.1(c)(1) is consistent with

Model Rule 8.4(a), which makes it “professional misconduct” for a lawyer to “knowingly assist

or induce” another lawyer to violate ethics rules, or to violate ethics rules through the acts of an

agent.48 A lawyer who violates Rule 5.1(c)(1) necessarily violates Rule 8.4(a) as well.49 Rule

5.1(c)(2) imposes corrective or curative duties on lawyers. The rule plainly applies where the

lawyer responsible for the underlying misconduct is another partner.50

       Although Rule 5.1(c) superficially appears to make partners vicariously liable for

misconduct by other lawyers in their firms,51 that perception is incorrect.52 As the South

Carolina Supreme Court explained in In re Anonymous Member of the South Carolina Bar,53


186 S.W.3d 285, 286 (Mo. Ct. App. 2005) (“Joint responsibility for the representation [by
separately-employed lawyers] entails the obligations stated in Rule 5.1 for purposes of the matter
involved.”).
       47   MODEL RULES OF PROF’L CONDUCT R. 5.1(c)(2) (2007).
       48   Id. R. 8.4(a).
       49See, e.g., In re Asher, 772 A.2d at 1169-70 (finding Rule 5.1(c) and 8.4(a) violations
where lawyer instructed a lawyer formerly in his employ to lie to court).
       50 See, e.g., In re Brown, 886 A.2d 1277, 2005 WL 2883963, at *1 (Del. Oct. 18, 2005);
In re Anonymous, 724 N.E.2d 1101, 1102-03 (Ind. 2000); In re Jones, 894 So. 2d 338 (La.
2005); In re Whelan’s Case, 619 A.2d 571, 572-73 (N.H. 1992); In re Disciplinary Proceedings
Against Mandelman, 714 N.W.2d 512, 528-29 (Wis. 2006).
       51See, e.g., John M. Burman, The Supervisory Responsibility of Lawyers, WYO. LAW.,
Apr. 2001, at 13, 16 (asserting incorrectly that Rule 5.1(c) creates vicarious liability).
       52 See, e.g., Stewart v. Coffman, 748 P.2d 579, 581-82 (Utah Ct. App. 1988) (concluding
that Rule 5.1 did not create vicarious liability for lawyer who was shareholder in firm organized
as a professional corporation).
       53   552 S.E.2d 10 (S.C. 2001).


                                                 11
liability under Rule 5.1(c) is not vicarious “because the obligation does not arise merely from the

relationship between the attorneys.”54 A partner’s violation of Rule 5.1(c) depends on his

participation in the underlying misconduct, or his failure to prevent or mitigate it.55 On the other

hand, if a partner does not know of the underlying misconduct, he is not subject to discipline

under the rule. As with ethics rules generally, a lawyer’s knowledge for Rule 5.1(c) purposes

may be inferred from the circumstances.56

       Of course, states may modify Model Rules and some modifications have profound

implications for lawyers, as In re Cohen57 illustrates. In re Cohen involved Herbert Cohen, a

partner in a twelve-lawyer firm. Cohen’s firm represented Dr. Carl Schleicher and his company,

MRF, in registering the trademark “ESSIAC” with the United States Patent and Trademark

Office (“PTO”).58 MRF had a business arrangement with David Dobbie, who was slated to be

the exclusive distributor of products bearing the ESSIAC trademark. That arrangement pre-

dated Schleicher’s and MRF’s retention of Cohen’s firm. Hebert Cohen’s son, Jonathan, who

was an associate in the firm, handled most of the day-to-day work for Schleicher and MRF.59


       54   Id. at 13.
       55 Id. (explaining why Rule 5.1(c) liability is not vicarious); see, e.g., In re Galloway, 729
N.E.2d 574, 575 (Ind. 2000) (involving agreed Rule 5.1(c)(2) violation); Attorney Grievance
Comm’n of Md.v. Hines, 783 A.2d 656, 663-65 (Md. 2001) (suspending lawyer who knowingly
allowed other lawyers in his firm to represent client in violation of conflict of interest rules for
violating Rule 5.1(c)); In re Myers, 584 S.E.2d 357, 362 (S.C. 2003) (disciplining prosecutor
under Rule 5.1(c)(2) for failing to remedy deputy’s known misconduct).
       56MODEL RULES OF PROF’L CONDUCT R. 1.0(f) (2007); see, e.g., In re Disciplinary
Proceedings Against Mandelman, 714 N.W.2d 512, 528-29 (Wis. 2006) (discussing lawyer’s
knowledge in light of his claims that he was unaware of his partner’s misconduct).
       57   847 A.2d 1162 (D.C. 2004).
       58   Id. at 1163.
       59   Id. at 1164.


                                                 12
         The firm initially communicated with Schleicher concerning the representation. Over

time, Schleicher’s and Dobbie’s relationship soured, but Schleicher nonetheless directed the firm

to communicate with Dobbie instead of him. As his relationship with Dobbie worsened,

Schleicher revoked that directive. Herbert Cohen knew of the acrimony between Schleicher and

Dobbie. Nonetheless, at Dobbie’s direction, Jonathan Cohen filed an application to withdraw

MRF’s trademark application. The withdrawal application was critical because, were the PTO to

cancel the prior registration, the ESSIAC trademark would become available and Dobbie would

be free to register it on his own, free of all ties to MRF.60 This posed a clear conflict of interest

between Schleicher and MRF on the one hand, and Dobbie on the other.61 When Schleicher

inquired of Jonathan Cohen concerning the status of the matter, Jonathan Cohen lied to him or

ignored his requests for information. Schleicher repeatedly complained to Herbert Cohen in

correspondence that the firm was mistreating him.62 When it became clear that Schleicher was

seriously displeased with the firm’s representation, Herbert Cohen obtained a legal opinion that

Schleicher remained a client of the firm and thus that a conflict of interest existed.63 The firm

thereafter took steps to rectify the problems which had arisen, but Schleicher filed a disciplinary

complaint against Herbert Cohen.64

       The central issue in the case was Cohen’s alleged violation of District of Columbia Rule

of Professional Conduct 5.1(c)(2), which provides:


       60   Id.
       61   See id. at 1165 (discussing disciplinary hearing committee’s unchallenged findings).
       62   Id. at 1164.
       63   See id. (explaining that the opinion confirmed that Schleicher was a client).
       64   Id. at 1164-65.


                                                  13
                 (c) A lawyer shall be responsible for another lawyer’s violation of
                 the Rules of Professional Conduct if:

                                *       *      *

                 (2) The lawyer has direct supervisory authority over the other
                 lawyer or is a partner in the firm in which the other lawyer
                 practices, and knows or reasonably should know of the conduct at
                 a time when its consequences can be avoided or mitigated but fails
                 to take reasonable remedial action.65

The emphasized text points out the key difference between the District of Columbia rule and

Model Rule 5.1(c)(2)—the duties imposed under the District of Columbia rule go beyond those

imposed by the Model Rule.66

       Cohen argued that it was unfair to discipline him for his son’s dishonesty when he did not

know of it, pointing out that Model Rule 5.1(c)(2) requires that a partner or supervising lawyer

know of the underlying misconduct for there to be a violation. The court disagreed, explaining:

                 [I]n going beyond the model rule, [District of Columbia] Rule
                 5.1(c)(2) reflects what this jurisdiction has determined to be a fair
                 and necessary balance. On the one hand, it is not a rule of imputed
                 liability for the underlying conduct. . . . One the other hand, Rule
                 5.1(c)(2) in this jurisdiction represents a judgment that attorneys
                 supervising other lawyers must take reasonable steps to become
                 knowledgeable about the actions of those attorneys in representing
                 clients of the firm. As the [disciplinary authorities] explained, the
                 “reasonably know” provision was carefully crafted to encourage—
                 indeed to require—supervising attorneys to reasonably monitor the
                 course of a representation such as [Cohen’s] firm had undertaken
                 on behalf of Dr. Schleicher, denying them the ostrich-like excuse
                 of saying, in effect, “I didn’t know and didn’t want to know.”67

       In determining that Cohen violated Rule 5.1(c)(2), the disciplinary authorities took into

account the nature of the case, the length of the representation, the small size of the firm, and the


       65   Id. at 1165 (emphasis added).
       66   Id. at 1166.
       67   Id. (footnote omitted).


                                                   14
degree of supervision or lack thereof. They concluded that he “reasonably should have known of

the withdrawal application and should have been able to take reasonable remedial action to avoid

its consequences,” and that “a lawyer of reasonable prudence and competence would have made

the inquiry necessary to determine the status of the application proceeding.”68 The court adopted

these conclusions and suspended Cohen for thirty days.69

       In re Cohen involved underlying misconduct by an associate, but it is easy to conceive of

similar situations involving co-partners. For example, consider a case in which a corporate or

tax partner has a client with intellectual property needs, and therefore asks a partner in her firm’s

IP practice group to represent the client in those matters. Alternatively, a litigation partner might

land a client with corporate or real estate matters requiring representation, and accordingly ask

partners in those practice groups within his firm to assist the client. Partners with transactional

practices routinely rely on litigation partners to handle clients’ trials and appeals. Regardless, the

partner assigning or referring the work is not absolved of her responsibilities under Rule 5.1(c)

either by the fact that the lawyers to whom she allocated responsibility are partners, or by the fact

that the matters involve substantive areas of the law that are outside her scope of expertise.

       Finally, with respect to Rule 5.1(c)(2), some ethics commentators suggest that the rule is

subject to “knowledge creep,” meaning that courts and disciplinary authorities may impose a

constructive knowledge requirement on supervisory lawyers in cases where those lawyers have

not satisfied their duties under Rules 5.1(a) or (b).70 While it is arguably true that the Rule


       68   Id. at 1167.
       69   Id.
       70Arthur J. Lachman, What You Should Know Can Hurt You: Management and
Supervisory Responsibility for the Misconduct of Others Under Model Rules 5.1 and 5.3, PROF.
LAW., 2007(1), at 1, 2.


                                                 15
5.1(c)(2) duty to rectify misconduct is likely to arise in the wake of Rule 5.1(a) and (b)

violations, the plain language of Model Rule 5.1(c)(2) imposes an actual knowledge

requirement,71 and basic interpretive principles compel the conclusion that its drafters intended

the language used.72 If the drafters of Model Rule 5.1(c)(2) intended for supervisory lawyers to

sometimes face potential discipline based on alleged constructive knowledge, they surely would

have added the phrase “or reasonably should have known” to the rule, as did the District of

Columbia in its version of Rule 5.1(c)(2),73 or as New York has done in its equivalent rule.74

The fact that they did not is telling. Accordingly, courts and disciplinary authorities should

refrain from reading into Model Rule 5.1(c)(2) or state rules like it a constructive knowledge

requirement that clearly does not exist.75


       71 MODEL RULES OF PROF’L CONDUCT R. 5.1(c)(2) (2007) (stating that responsibility will
lie where the managerial or supervisory lawyer “knows of the [other lawyer’s] conduct at a time
when its consequences can be avoided or mitigated but fails to take reasonable remedial action”)
(emphasis added).
       72  In ascertaining the meaning of a rule of professional responsibility, courts are guided
by basic principles of statutory interpretation. Rubenstein v. Statewide Grievance Comm’n, No.
CV020516965S, 2003 WL 21499265, at *3 (Conn. Super. Ct. 2003). When reviewing a statute,
of course, a court proceeds with the understanding that the responsible legislative body “‘says in
a statute what it means and means in a statute what it says there.’” Hartford Underwriters Ins.
Co. v. Union Planters Bank, N.A., 530 U.S.1, 6 (2000) (quoting Conn. Nat’l Bank v. Germain,
503 U.S.249, 254 (1992)) (discussing Congress).
       73  D.C. RULES OF PROF’L CONDUCT R. 5.1(c)(2) (2007) (providing for discipline where a
partner, lawyer with comparable managerial authority, or lawyer with direct supervisory
authority over another lawyer “knows or reasonably should know of the conduct at a time when
its consequences can be avoided or mitigated but fails to take reasonable remedial action”).
       74 N.Y. CODE OF PROF’L RESPONSIBILITY DR 1-104(d)(2) (2005) (providing for discipline
where a partner or supervisory lawyer “knows of [unethical] conduct, or in the exercise of
reasonable management or supervisory authority should have known of the conduct” in time to
remedy it, or avoid or mitigate its consequences).
       75 The “vast majority of jurisdictions” have enacted versions of Model Rule 5.1 that
require actual knowledge of misconduct by partners or managerial or supervisory lawyers for the
imposition of professional discipline. Lachman, supra note 70, at 4. The District of Columbia

                                                 16
B.     Restatement Section 11 and Other Law


       Section 11 of the Restatement (Third) of the Law Governing Lawyers is very similar to

Model Rule 5.1. Section 11 provides:

                 (1) A lawyer who is a partner in a law-firm partnership or a
                 principal in a law firm organized as a corporation or similar entity
                 is subject to professional discipline for failing to make reasonable
                 efforts to ensure that the firm has in effect measures giving
                 reasonable assurance that all lawyers in the firm conform to
                 applicable lawyer-code requirements.

                 (2) A lawyer who has direct supervisory authority over another
                 lawyer is subject to professional discipline for failing to make
                 reasonable efforts to ensure that the other lawyer conforms to
                 applicable lawyer-code requirements.

                 (3) A lawyer is subject to professional discipline for another
                 lawyer’s violation of the rules of professional conduct if:

                        (a) the lawyer orders or, with knowledge of the specific
                        conduct, ratifies the conduct involved; or

                        (b) the lawyer is a partner or principal in the law firm, or
                        has direct supervisory authority over the other lawyer, and
                        knows of the conduct at a time when its consequences can
                        be avoided or mitigated but fails to take reasonable
                        remedial measures.76

       Although section 11 refers to the remedy of professional discipline, the Restatement

addresses lawyers’ civil liability.77 In this way it is distinct from Rule 5.1, which is clearly

focused on professional discipline. A lawyer may violate Rule 5.1 without incurring tort

liability, because while ethics violations do not depend on harm to the client, tort liability

requires monetary damages.


and New York are the only jurisdictions that presently appear to impose constructive knowledge
standards in their versions of Rule 5.1. Id. at 5.
       76   RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 11 (2000).
       77   Id. Foreword, at xxi.

                                                  17
       Like Model Rule 5.1, section 11 does not impose vicarious liability.78 The issue under

section 11 is whether the lawyer being sued has satisfied her own obligations as a supervisor.

Lawyers’ supervisory failures may expose them to sanctions or contempt of court penalties.79

Such failures clearly may breach lawyers’ duty of care to clients.80 Courts generally recognize

negligent supervision as a valid cause of action in the lawyer liability context.81 In Federal

Deposit Insurance Corp. v. Nathan,82 for example, the FDIC sued the law firm of Lackshin &

Nathan and its lawyers in connection with the failure of Continental Savings Association. A

partner, Bernard Fischman, argued that the FDIC’s complaint failed to state a claim against him

because he did none of the work at issue. The court rejected Fischman’s argument because the

complaint alleged that he was directly liable for failing to supervise the other Lackshin & Nathan

lawyers, and for failing to deter their negligent and unethical conduct.83

       Insofar as law firm principals’ liability for the torts of their co-partners or fellow

shareholders goes, the most significant development in tort and partnership law in recent years

has been the proliferation of limited liability partnerships (“LLPs”).84 The LLP movement


       78   THOMAS D. MORGAN, LAWYER LAW 690 (2005).
       79 See, e.g., In re Aguilar, 97 P.3d 815, 820 (Cal. 2004) (finding that lawyer committed
contempt of court when he failed to assign a substitute lawyer to argue an appellate case in place
of a subordinate lawyer who left the firm shortly before scheduled oral argument).
       80   RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 11 cmt. a (2000).
       81
        See, e.g., Anderson v. Hall, 755 F. Supp. 2, 5 (D.D.C. 1991) (discussing District of
Columbia law in case in which partners allegedly failed to supervise associate).
       82   804 F. Supp. 888 (S.D. Tex. 1992).
       83   Id. at 898.
       84 Additionally, a number of law firms have organized as limited liability companies, or
LLC’s. For a shareholder in an LLC to be liable for another lawyer’s misconduct, she must have
participated in the misconduct or directly supervised the wrongdoer. See, e.g., Keszenheimer v.

                                                 18
started in Texas in the wake of the savings and loan (“S&L”) crisis.85 As the government went

about recouping the billions of dollars it spent cleaning up the S&L mess, it sued the directors

and officers of failed thrifts, as well as the professionals who served the institutions in their

heyday.86 The government’s allegations against the law firms and lawyers included both direct

and vicarious liability theories. As a result, the Texas legal community saw the need to limit the

liability of lawyers who were neither negligent nor participants in alleged wrongdoing, and the

first LLP statute was born. All states now permit general partnerships to register as LLPs.87

       Most LLP statutes now limit partners’ vicarious liability for all partnership debts and

obligations, thus providing so-called “full shield” protection. For example, the Minnesota statute

provides in pertinent part:

               An obligation of a partnership incurred while the partnership is a
               limited liability partnership, whether arising in contract, tort, or
               otherwise, is solely the obligation of the partnership. A partner is
               not personally liable, directly or indirectly, by way of contribution




Boyd, 897 So. 2d 190, 193-94 (Miss. Ct. App. 2004) (finding no liability); Babb v. Bynum &
Murphrey, PLLC, 643 S.E.2d 55 (N.C. Ct. App. 2007) (declining to hold partner liable for
failing to investigate fellow partner’s possible misconduct where he was unaware of it); In re
Disciplinary Proceedings Against Reitz, 694 N.W.2d 894, 901-02 (Wis. 2005) (explaining
lawyers’ personal liability when practicing in limited liability organizations in a case in which
the respondent practiced in a firm organized as an LLC).
       85 Kelly L. Jones, Comment, Law Firms as Limited Liability Partnerships: Determining
the Scope of the Liability Shield: A Shield of Steel or Silk?, 7 DUQUESNE BUS. L.J. 21, 22 (2005);
Ethan S. Burger, The Use of Limited Liability Entities for the Practice of Law: Have Lawyers
Been Lulled Into a False Sense of Security?, 40 TEX. J. BUS. L. 175, 178-79 (2004).
       86  See Ted Schneyer, From Self-Regulation to Bar Corporatism: What the S & L Crisis
Means for the Regulation of Lawyers, 35 S. TEX. L. REV. 639, 640 (1994) (noting that law firms
and their insurers paid more than $400 million to settle claims brought by government agencies
arising out of the S&L crisis).
       87Susan Saab Fortney, High Drama and Hindsight: The LLP Shield, Post-Andersen,
BUS. L. TODAY, Jan./Feb. 2003, at 46, 47.


                                                  19
                  or otherwise, for such an obligation solely by reason of being or so
                  acting as a partner. . . .88

Illinois has an identical full shield statute.89

        Other statutes providing varying degrees of so-called “partial shield” protection. For

example, the Texas LLP statute provides:

                  (2) A partner in a limited liability partnership is not individually
                  liable, directly or indirectly, by contribution, indemnity, or
                  otherwise, for debts and obligations of the partnership arising from
                  errors, omissions, negligence, incompetence, or malfeasance
                  committed while the partnership is a registered limited liability
                  partnership and in the course of partnership business by another
                  partner or a representative of the partnership not working under the
                  direction of the first partner unless the first partner:

                  (A) was directly involved in the specific activity in which the
                  errors, omissions, negligence, incompetence, or malfeasance were
                  committed by the other partner or representative; or

                  (B) had notice or knowledge of the errors, omissions, negligence,
                  incompetence, or malfeasance by the other partner or
                  representative at the time of occurrence and then failed to take
                  reasonable steps to prevent or cure the errors, omissions,
                  negligence, incompetence, or malfeasance.90

        Under both full and partial shield statutes, law firm partners remain liable for their own

errors, and partners in direct supervisory roles may be liable for their related failures.91 And,

even though individual partners may avoid vicarious liability, the entity remains liable for

partners’ actions. Thus, partners still bear financial risk in cases in which their capital

contributions to the LLP are exposed, or where a plaintiff attempts to satisfy a judgment out of



        88   MINN. STAT. ANN. § 323A.0306(c) (West 2006).
        89   805 ILL. COMP. STAT. 206/306(c) (2007).
        90   TEX. REV. CIV. STAT. ANN. art. 6132b, § 3.08(a)(2) (Vernon 2006).
        91   Fortney, supra note 87, at 47-48.


                                                   20
the firm’s accounts receivable, thereby starving the firm of income.92 If a plaintiff attempts to

use Model Rule 5.1 to establish a partner’s standard of care, LLP statutes may foreclose a

partner’s tort liability in situations where the partner’s acts or omissions violate the rule.93

Unfortunately for partners, the LLP remains a relatively recent creation and the scope of its

liability protection is unclear.94 Related case law is not richly developed.95

       The problem with LLPs from a professional responsibility perspective, some scholars

contend, is twofold. First, this organizational form diminishes partners’ willingness to devote

time and resources to risk management.96 While general partners with potentially unlimited

liability have an incentive to supervise the work of other partners, that incentive is eliminated by

LLP statutes’ vicarious liability shield.97 Second, in states where the LLP statute permits

supervisory liability, that potential exposure discourages partners from supervising their

colleagues or from engaging in broader risk management.98 Neither argument is persuasive.

       First, the argument that LLP statutes’ elimination of vicarious liability diminishes

partners’ willingness to supervise their peers assumes that partners appreciate their supervisory



       92   These risks are most likely to be realized where a firm does not have professional
liability insurance, the firm’s policy limits are inadequate, or the firm’s policy does not provide
coverage for some reason.
       93  See, e.g., Kus v. Irving, 736 A.2d 946, 947 (Conn. App. Ct. 1999) (explaining that
even if plaintiff came forward with admissible evidence that two partners violated Rules 5.1(a)
and (c), the Connecticut LLP statute defeated that claim on the facts presented).
       94   Jones, supra note 85, at 21.
       95   Burger, supra note 85, at 176.
       96   Fortney, supra note 87, at 47.
       97   Id.
       98   Id.


                                                  21
obligations when practicing in general partnerships. That is uncertain. Second, the argument

ignores the fact that most law firms purchase professional liability insurance in amounts

adequate for their practices, such that on a daily basis partners do not weigh personal liability

exposure in their relations with colleagues. Third, this argument overlooks the fact that law

firms’ reputations give them “an incentive to perform risk-reduction functions even without, or

as a supplement to, strong liability rules.”99 Individual partners rely on their firms’ reputations

to supplement their own.100 Most partners are or should be motivated by reputational risk to

ensure colleagues’ professionally responsible behavior.101 Fourth, partners’ misconduct may

harm an entire firm by impairing important client relationships, or by causing key clients to

terminate engagements. Fifth, a partner’s supervisory failures are likely to be deemed to be a

basis for direct liability rather than an aspect of vicarious liability, or are likely to fall within one

of the exceptions for liability found in partial shield statutes. Either way, LLP status affords

partners no protection and therefore provides no disincentive. Sixth, while practice in an LLP

may allow lawyers to avoid tort liability, it does not shield them from professional discipline

under Rule 5.1(b).102 Seventh, even as many law firms have transitioned to limited liability

partnerships, so are they devoting significant resources to risk management. This is partly

evidenced by the emergence of the law firm general counsel position.103 If LLP shields are a


        99Larry E. Ribstein, Limited Liability of Professional Firms After Enron, 29 J. CORP. L.
427, 438 (2004).
        100   Id. at 439.
        101   Id. at 443.
        102   ABA Comm. on Ethics & Prof’l Responsibility, Formal Op. 96-401, at 400 (1996).
        103
          See Elizabeth Chambliss, The Scope of In-Firm Privilege, 80 NOTRE DAME L. REV.
1721, 1721-22 (2005) (discussing law firms’ increasing reliance on general counsel and noting
firm counsels’ contribution “to firm-wide compliance with professional regulation”).

                                                   22
disincentive to partners’ attempted assurance of colleagues’ professional responsibility, one

would expect to see opposite trends. Eighth, partners in LLPs must accept supervisory

responsibility because it is an integral part of law firm risk management and firms must manage

their risks as a means of reducing professional liability insurance costs. Insurers expect firms to

embrace risk management, and tend to favor from a pricing standpoint those that do.

       The argument that personal exposure on a supervisory liability basis under partial shield

statutes effectively discourages partners in LLPs from supervising colleagues or participating in

risk management fares no better. For example, how is supervisory liability under LLP statutes

less desirable than the liability to which general partners are exposed? If, as critics contend, LLP

status discourages partners’ supervision of colleagues by eliminating the economic incentive to

supervise that vicarious liability as a general partner creates, how can the allowance of

supervisory liability via an LLP statute be negative? The permission of liability in this context is

simply a restoration of the economic incentive to supervise that scholars desire.

       It is further difficult to understand how supervisory liability under an LLP statute can

discourage partners from exercising supervisory responsibilities when the same obligation exists

under Rule 5.1(b). Basic business principles also dictate partners’ supervision of colleagues.

Firms must deliver acceptable service to maintain client relationships, and quality assurance in

the form of partner supervision is an indispensable service component. Finally, there is no

empirical evidence that partners in LLPs have retreated from supervisory roles as a result of

perceived liability exposure.


                  III. SUBORDINATE LAWYERS’ RESPONSIBILITIES


       The Model Rules of Professional Conduct address the responsibilities of subordinate

lawyers in Rule 5.2. That rule provides:

                                                23
                        (a) A lawyer is bound by the Rules of Professional Conduct
                notwithstanding that the lawyer acted at the direction of another
                person.

                        (b) A subordinate lawyer does not violate the Rules of
                Professional Conduct if that lawyer acts in accordance with a
                supervisory lawyer’s reasonable resolution of an arguable question
                of professional duty.104

       Subordinate lawyers’ duties are also expressed in section 12 of the Restatement (Third)

of the Law Governing Lawyers:

                       (1) For purposes of professional discipline, a lawyer must
                conform to the requirements of an applicable lawyer code even if
                the lawyer acted at the direction of another lawyer or other person.

                        (2) For purposes of professional discipline, a lawyer under
                the direct supervisory authority of another lawyer does not violate
                an applicable lawyer code by acting in accordance with the
                supervisory lawyer’s direction based on a reasonable resolution of
                an arguable question of professional duty.105

Rule 5.2 and section 12 are discussed in order below.


A.     Associates’ Duties Under Model Rule 5.2


       All lawyers, including junior lawyers, are responsible for their own misconduct.106

Model Rule 5.2(a) simply makes clear that subordinate lawyers should not defer all decisions

involving professional responsibility issues to their superiors.107 Furthermore, Model Rule

5.2(a) states that a lawyer is bound by applicable ethics rules notwithstanding the fact that she



       104   MODEL RULES OF PROF’L CONDUCT R. 5.2 (2007).
       105   RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 12.
       106 See In re Howes, 940 P.2d 159, 164 (N.M. 1997) (noting that caselaw upholds the
theory “that an attorney is always answerable for his or her own actions”).
       107   See McCurdy v. Kan. Dept. of Transp., 898 P.2d 650, 653 (Kan. Ct. App. 1995).


                                                 24
acted at the direction of another person, as compared to another lawyer.108 Junior lawyers

therefore remain accountable for their actions where they act at the direction of a client or a non-

lawyer manager, such as a law firm executive director.

       While Model Rule 5.2(a) is straightforward, Model Rule 5.2(b) has proven somewhat

troublesome. Critics contend that it provides junior lawyers with a “Nuremberg” defense.109

People asserting a Nuremberg defense argue that their misconduct should be excused because

they were simply functionaries following superiors’ orders. Scholars further contend:

                 [Ethics] rules should inspire every lawyer to stop and consider the
                 propriety of his actions. Rule 5.2(b) does just the opposite. It tells
                 the subordinate lawyer that he may sit back and let his supervisor
                 make the decision on close ethical questions. Because the senior
                 lawyer takes the responsibility for any misjudgment, the junior
                 lawyer has little incentive to even consider tough ethical issues, let
                 alone raise them. In sum, Rule 5.2(b) singles out precisely the
                 issues that need ethical debate—the arguable questions—and chills
                 that debate.110

       In fact, Rule 5.2(b) precludes a Nuremberg defense,111 because it protects a subordinate

lawyer only where the question of professional duty is arguable and the supervisory lawyer’s

resolution of it is reasonable. The rule affords junior lawyers no defense in cases where the

professional duty allegedly breached was clear, nor is it any help where their professional duty

was uncertain but a supervisory lawyer ignored the issue or resolved the question in an obviously

unsatisfactory fashion. Supervisory lawyers are not, as critics contend, responsible for any


       108   MODEL RULES OF PROF’L CONDUCT R. 5.2(a) (2007).
       109Carol M. Rice, The Superior Orders Defense in Legal Ethics: Sending the Wrong
Message to Young Lawyers, 32 WAKE FOREST L. REV. 887, 888-89 (1997).
       110   Id. at 890.
       111 See Wallace v. Skadden, Arps, Slate, Meagher & Flom, 715 A.2d 873, 884 (D.C.
1998) (stating that Rule 5.2’s “main thrust is to foreclose any ‘Nuremberg defense’”).


                                                  25
misjudgment—only for their own. Subordinate lawyers must always consider the propriety of

their actions and address tough ethical issues; again, Rule 5.2 does not allow them to escape

responsibility by claiming they were just following orders.112 It is acceptable for junior lawyers

to let their superiors decide close ethical questions because those senior lawyers presumably

have more experience and greater professional knowledge on which to draw. Finally, Rule

5.2(b) does not chill debate between junior and senior lawyers. The rule simply recognizes that

lawyers in law firms and other organizations must often act in unison, and thus permits a junior

lawyer to defer to a senior lawyer’s reasonable determination of an arguable issue once debate is

exhausted and a decision must be made.

       In the end, it falls to courts to determine whether a question of professional responsibility

was “arguable” or a supervisory lawyer’s resolution of it was “reasonable.” Case law suggests

that subordinate lawyers should take little comfort in Rule 5.2(b).113

       In In re Okrassa,114 for example, a prosecutor who prosecuted a former client from his

days as a public defender was charged with violating Rule 1.9, which governs conflicts of


       112   In re Howes, 940 P.2d 159, 164 (N.M. 1997).
       113 See, e.g., In re Okrassa, 799 P.2d 1350, 1353-54 (Ariz. 1990) (rejecting junior
prosecutor’s defense based on consultation with superiors); People v. Casey, 948 P.2d 1014,
1015-18 (Colo. 1997) (sanctioning associate); Statewide Grievance Comm. v. Glass, No.
CV950144258 S, 1995 WL 541810, at *2 & n.1 (Conn. Super. Ct. Sept. 6, 1995) (declining to
excuse associate’s dishonesty); Attorney Grievance Comm’n of Md. v. Kahn, 431 A.2d 1336,
1351 (Md. 1981) (stating that junior lawyers may never act unethically simply because their
employers so direct them); In re Douglas’ Case, 809 A.2d 755, 761-62 (N.H. 2002) (rejecting
Rule 5.2(b) defense because question of professional duty was not arguable); In re Kelley’s
Case, 627 A.2d 597, 600 (N.H. 1993) (rejecting associate’s Rule 5.2(b) defense because “there
could have been no ‘reasonable’ resolution of an ‘arguable’ question of duty”); In re Howes, 940
P.2d 159, 164 (N.M. 1997) (rejecting junior prosecutor’s defense based on New Mexico version
of Rule 5.2(b) principally because “there was no ‘arguable question of professional duty’”); In re
Bowden, 613 S.E.2d 367, 368-69 (S.C. 2005) (reprimanding associate).
       114   799 P.2d 1350 (Ariz. 1990).


                                                26
interest in successive representations. The prosecutor, Okrassa, had discussed the case with the

County Attorney and his chief criminal deputy before taking it, and neither believed that the

situation presented a problem.115 The Arizona Supreme Court rejected Okrassa’s attempt to

raise that consultation as a defense to discipline, reasoning that “[e]ven minimal research” would

have revealed that his conduct was unethical.116 The court suspended him for ninety days.

       The lawyer in People v. Casey,117 William Casey, represented a client who had given the

police her friend’s driver’s license at her arrest. She was arrested and jailed under her friend’s

name, and Casey perpetuated that fraud. Casey consulted with the senior partner at his law firm

about his conduct, although the details of the conversation were never revealed. The fraud was

exposed and Casey was charged with several ethics violations. He invoked Rule 5.2(b), and

claimed that he had been caught in a close question between his duty of loyalty to his client and

his duty of candor to the trial court. The Colorado Supreme Court disagreed, reasoning that

Colorado Rule 3.3(b), which required a lawyer to be truthful to a court even if doing so meant

disclosing confidential information, “clearly” resolved Casey’s “claimed dilemma.”118 Thus, it

was not arguable that Casey’s duty to his client prevented him from honoring his duty of candor

to the court. The court briefly suspended Casey and imposed other sanctions.

       In In re Bowden,119 the associate managing a small firm’s South Carolina branch office,

John Bowden, learned that it was the firm’s practice to inflate government recording fees on


       115   Id. at 1351.
       116   See id. at 1353.
       117   948 P.2d 1014 (Colo. 1997).
       118   Id. at 1016.
       119   613 S.E.2d 367 (S.C. 2005).


                                                 27
HUD-1 settlement statements. Bowden’s superior was Robert Forquer, who kept his office in

North Carolina. When Bowden questioned Forquer about inflating the fees, Forquer assured him

“that the practice was legal and ethical.”120 Bowden thus allowed the practice to continue in his

branch office. The South Carolina Supreme Court reprimanded him for violating a number of

ethics rules, including Rule 5.2.

       The practical problem for junior lawyers is that their superiors may see no reason to

justify decisions to them. In the law firm context, for example, partners certainly do not view

themselves as answering to associates. What then should an associate do when a partner

instructs her to act in a manner that the associate believes to be unethical? How is an associate

who raises a professional responsibility question with a partner supposed to judge whether the

question is arguable, or the partner’s resolution of it reasonable?

       As for the situation in which a partner instructs an associate to engage in conduct that the

associate considers unethical, the associate should first consult another associate whose judgment

she trusts to see whether she perceives the issue correctly. She might also consult a partner

whom she considers a mentor. Assuming that her colleagues validate her concern, the associate

should then explain to the partner instructing her why she believes the conduct is unethical. This

conversation does not have to accusatory or confrontational and, indeed, it should not be, since

the associate may not have all the facts necessary to make an informed judgment about the issue

or the partner’s reasons for the original instruction. The associate may simply be wrong.

       Assuming that the associate is right, the partner may agree and rescind her instructions.

If the partner does not relent, and the associate remains convinced that her assignment is

unethical, she has four choices. Her first and best option is to seek the assistance or guidance of


       120   Id. at 368.


                                                 28
a senior lawyer. This might be her partner mentor or another partner she trusts, her practice

group leader, the firm’s ethics partner or general counsel, or a member of the firm’s executive or

management committee. Ideally, this senior lawyer will explain why the assigning partner’s

judgment is correct, or intervene tactfully to resolve the problem in a responsible fashion.

Second, she can refuse to obey the partner’s instructions. Third, she can request that the matter

be reassigned, thus avoiding the offending instructions. Fourth, and as a last resort, she can

resign from the firm. If she pursues the second, third or fourth options, she still should discuss

the matter with firm management or the general counsel.121 Depending on the facts, the

associate may be compelled to report the partner to disciplinary authorities. Regardless, she

cannot obey a partner’s command that she knows is wrong.

       Suppose that the situation is less clear, and the partner decides how the issue is to be

resolved. May the associate consider the issue settled and move on? There is authority for the

proposition that the associate is obligated to conduct factual or legal research to determine

whether the question is arguable and whether the partner’s resolution is reasonable.122 That

approach is impractical in many cases, but the associate should ask the partner how she resolved

the issue and why she resolved it as she did. Beyond the obvious learning opportunity, the

associate needs this information to judge whether she has satisfied her obligations under Rule

5.2. If the partner’s explanation is unsatisfactory, the associate may have to conduct research. If


       121 These lawyers may intervene to the associate’s benefit. Regardless, they need to be
aware of the situation for the good of the firm. Rule 5.2 does not require the associate to report
her concerns to supervisory lawyers. Wallace v. Skadden, Arps, Slate, Meagher & Flom, 715
A.2d 873, 884 (D.C. 1998).
       122 See, e.g., In re Okrassa, 799 P.2d 1350, 1353 (Ariz. 1990) (stating that had
subordinate attorney conducted “[e]ven minimal research,” he would have learned that intended
conduct was unethical); In re Rivers, 331 S.E.2d 332, 333 (S.C. 1984) (“It is the duty of
attorneys to discover and comply with . . . [ethics] rules. . . .”) (emphasis added).


                                                 29
that research suggests that the question was not in fact arguable, or that the partner’s resolution

may be unreasonable, the associate is in the same position as the associate who sensed at the

outset that her instructions would lead to misconduct.

       Some commentators suggest that junior lawyers facing this kind of ethical quandary

consider consulting a former law professor or a lawyer from another firm who specializes in the

law of lawyering.123 This is good advice in some cases, although associates who look outside

their firms for guidance must be careful not to reveal client information in the process.124

Associates who reveal client information to outsiders in this situation may be able to justify

doing so on the basis that the client has impliedly authorized disclosure to carry out the

representation, but confidentiality clearly is less worrisome in jurisdictions that have adopted

Model Rule 1.6(b)(4), which expressly permits this sort of consultation.125 Associates must also

be aware that reliance on the advice of a practicing lawyer or professor perceived to be a

professional responsibility expert is no defense to misconduct allegations. Courts do not

recognize advice of counsel as a defense in disciplinary cases,126 although they may consider it

as a mitigating factor when settling on a sanction.127


       123
       See, e.g., LAWRENCE J. FOX & SUSAN R. MARTYN, RED FLAGS: A LAWYER’S
HANDBOOK ON LEGAL ETHICS 309 (2005).
       124See id. at 121-22 (explaining how this may be done); ABA Comm. on Ethics & Prof’l
Responsibility, Formal Op. 98-411 (1998) (discussing lawyer-to-lawyer consultations).
       125 MODEL RULES OF PROF’L CONDUCT R. 1.6(b)(4) (2007) (permitting a lawyer to
“reveal information relating to the representation of a client to the extent the lawyer reasonably
believes necessary . . . to secure legal advice about the lawyer’s compliance with these Rules”).
       126People v. Katz, 58 P.3d 1176, 1187 (Colo. 2002); Attorney Grievance Comm’n of
Md. v. Pennington, 876 A.2d 642, 656 (Md. 2005); In re Hilson, 863 N.E.2d 483, 494 (Mass.
2007).
       127   See, e.g., Ky. Bar Ass’n v. Gidugli, 967 S.W.2d 587, 589 (Ky. 1998).


                                                 30
       While a young lawyer who acts at a superior’s direction may sometimes invoke Rule

5.2(b) to avoid discipline, a lawyer’s mere youth or inexperience never excuses professional

misconduct. As with reliance on advice of counsel, a lawyer’s youth or inexperience is at most a

mitigating factor to be weighed when imposing discipline,128 but even then courts give it little

consideration in cases of serious misconduct.129 Similarly, young lawyers cannot avoid or lessen

professional discipline by attributing their errors to a lack of supervision. For that matter, courts

may treat associates’ claims’ of insufficient supervision as unwillingness to accept responsibility

for their actions and thus an aggravating factor supporting enhanced discipline.130


       128 See, e.g., In re Burton, 625 N.E.2d 457, 458 (Ind. 1993) (finding lawyer’s
inexperience a mitigating factor in case involving Rule 1.1, 1.3, 1.4 and 8.4(d) violations);
Attorney Grievance Comm’n v. Jaseb, 773 A.2d 516, 526 (Md. 2001) (noting young lawyer’s
inexperience when deciding on sanction); Disciplinary Counsel v. Johnson, 835 N.E.2d 354, 360
(Ohio 2005) (accounting for associate’s inexperience and reliance on senior lawyer when
suspending her for fraudulent billing); In re Billewicz, 641 A.2d 368, 369 (Vt. 1994) (taking
lawyer’s inexperience into account when imposing discipline for breaching confidentiality).
       129  See, e.g., In re Helman, 640 N.E.2d 1063, 1065 (Ind. 1994) (“[A]lthough Respondent
had been admitted to practice for only a brief time before the misconduct at issue here, we do not
give that fact significant weight as a mitigating circumstance in this case [involving blatant
deceit].”); In re Landrith, 124 P.3d 467, 485-86 (Kan. 2005) (disbarring young lawyer who first
engaged in misconduct after practicing four months; all misconduct for which he was disbarred
occurred in first three years of practice); In re Johnson, 32 P.3d 1132, 1142-43 (Kan. 2001)
(suspending lawyer indefinitely while noting that misconduct was perhaps the result of
inexperience; lawyer had been practicing for roughly five years); In re Watley, 802 So. 2d 593,
597 (La. 2001) (considering in mitigation that lawyers “were relatively inexperienced in the
practice of law . . . having been admitted for just over five years,” the court nonetheless imposed
a one-year suspension); Attorney Grievance Comm’n v. Kahn, 431 A.2d 1336, 1350-52 (Md.
1981) (disbarring lawyer who had been out of law school for about three years at the time of
serious misconduct); In re Petition for Disciplinary Action Against Pierce, 706 N.W.2d 749, 757
(Minn. 2005) (“The fact that an attorney is relatively new to the profession is not a mitigating
factor where serious misconduct . . . is present.”); In re Disciplinary Action Against Ward, 563
N.W.2d 70, 72-73 (Minn. 1997) (rejecting recommended 90-day suspension that took into
account lawyer’s youth and inexperience and instead suspending the lawyer for six months
because “youth and inexperience do not mitigate acts of dishonesty”).
       130See, e.g., In re Eager, 708 N.E.2d 584, 586 (Ind. 1999) (suspending associate and
recognizing as an aggravating factor associate’s claim that “a lack of supervision from the senior
members of the law firm where he worked was at the root of his problems”).

                                                 31
B.     Duties of Subordinate Lawyers According to Restatement § 12


       Model Rule 5.2(b) affords subordinate lawyers broader protection than does the regime

expressed in § 12(2) of the Restatement. The rule does this by allowing a subordinate lawyer to

act in accordance with the directions of “a supervisory lawyer” in appropriate situations, while

the § 12(2) approach protects a subordinate lawyer only when he acts at the direction of “the”

lawyer who has “direct supervisory authority” over him.131 This difference has practical

implications. Consider the situation in which a law firm associate seeks the guidance of his law

firm’s general counsel on an arguable question of professional duty, rather than the partner

supervising his work on the case in which the question arises. Under Rule 5.2(b), the associate is

shielded from professional discipline if he acts in accordance with the general counsel’s

reasonable resolution of the issue. He is not shielded under the Restatement approach, however,

because the general counsel is not his direct supervisor on the subject case. The same result

obtains where the associate seeks the advice of his practice group leader, a member of his firm’s

executive committee, his partner mentor, or any other partner besides his direct supervisor.

       The Rule 5.2(b) approach clearly is better. It permits associates and other junior lawyers

to seek guidance from senior lawyers other than their direct supervisors, who often will be mired

in the problems spawning questions of professional duty. In this way Rule 5.2(b) increases the

probability of a reasonable resolution by involving an objective lawyer in the decision-making

process. Furthermore, assuming that a firm’s general counsel or ethics partner, or a similar

lawyer in another organization, has greater knowledge of the law of lawyering than does the




       131 Compare MODEL RULES OF PROF’L CONDUCT R. 5.2(b) (2007), with RESTATEMENT
(THIRD) OF THE LAW GOVERNING LAWYERS § 12(2) (2000).


                                                32
average partner or other senior lawyer, encouraging junior lawyers to approach this lawyer

increases the likelihood that questions of professional duty will be reasonably resolved.

       Although § 12 refers to the remedy of professional discipline, the Restatement addresses

lawyers’ civil liability. As § 12 suggests, then, law firm associates who breach professional

duties may face malpractice liability even if their errors are partly attributable to inadequate

supervision. In Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin,132 for

example, a junior associate, Jane Seidl, botched some franchising documents. She had no

experience in franchising law. She defended herself by arguing that she gave drafts of the

documents to the responsible partner, Goldman, and another senior lawyer, Dansky, to review.

She assumed that “‘somebody was . . . watching, taking care of looking at [her] work.’”133

       The client sued the law firm and the lawyers involved. The client prevailed in a bench

trial and the defendants appealed. The Connecticut Supreme Court reversed the judgment on

issues of causation and damages, but reasoned that the trial court reasonably could have found

that Seidl committed malpractice because, “as a junior associate, she failed to seek appropriate

supervision.”134 Had she sought appropriate supervision she could have competently

represented the client, and thus satisfied her duty of competence under Rule 1.1.135 She failed to

do so. Her pursuit of supervision went no further than giving copies of her work to Goldman and

Dansky. Seidl’s “passivity” was a breach of the standard of care.136


       132   717 A.2d 724 (Conn. 1998).
       133   Id. at 730 (quoting Seidl’s trial testimony).
       134   Id.
       135   Id.
       136   Id.


                                                   33
       Though not a disciplinary case, Beverly Hills establishes that junior lawyers cannot

invoke Rule 5.2(b) to avoid discipline for incompetence. The duty of competence includes a

duty to seek appropriate supervision. Being left by one’s superiors to sink or swim is not a

“reasonable resolution” of anything, and senior lawyers’ abdication of supervisory responsibility

is not “an arguable question of professional responsibility” in light of their duties under Model

Rule 5.1(a).137

       With rare exception,138 junior lawyers are also responsible for their own misconduct

when facing sanctions under procedural rules,139 as Levin v. Siegel & Capitel, Ltd.,140 illustrates.

In that case, the law firm of Siegel & Capitel represented Spivey in a suit against First Midwest

Bank. Siegel & Capitel associate Samuel Levin was the attorney of record and signed all of the

pleadings. First Midwest won at summary judgment and then sought sanctions against Spivey,

Siegel & Capitel, and Levin for filing a frivolous action. In response, Levin filed a complaint for

contribution or indemnity against Siegel & Capitel. He alleged that the law firm’s partners

supervised his handling of Spivey’s lawsuit, and that he was acting in the course and scope of his

duties as an associate at the time. Thus, he contended, under agency law principles Siegel &

Capitel should be held jointly and severally liable for any sanctions imposed against him.141 The

trial court dismissed the complaint and Levin appealed.


       137   See MODEL RULES OF PROF’L CONDUCT R. 5.1(a) (2007).
       138  See, e.g., Blue v. United States Dept. of the Army, 914 F.2d 525, 546 (4th Cir. 1990)
(reversing Rule 11 sanctions against “a very junior associate” who came into the case late and at
a very difficult time, and who was placed in untenable position by senior lawyer).
       139   Roberts v. Lyons, 131 F.R.D. 75, 84 (E.D. Pa. 1990).
       140   733 N.E.2d 896 (Ill. App. Ct. 2000).
       141   Id. at 897.


                                                    34
       The Levin court held that contribution and indemnity were not available to Levin. First

Midwest’s sanctions motion was not a tort action, such that Levin and his firm were not joint

tortfeasors. Rather, the motion was premised on Illinois Supreme Court Rule 137, which is

specifically intended to prevent “the abuse of the judicial process by punishing individuals who

sign pleadings bringing vexatious or harassing litigation based upon unfounded statements.”142

Rule 137 imposes responsibility on the person who signs a pleading to validate its truth and legal

reasonableness.143 “This personal responsibility is nondelegable and not subject to principles of

agency or joint and several liability.”144 It was Levin’s responsibility—not his superiors’—to

ensure that the allegations made in the pleadings he signed were in all ways proper.145


                                      IV. CONCLUSION


       It is perhaps tempting in these days of astronomical associate salaries for partners and

other senior lawyers to assume that such compensation ought to purchase lawyers who can

function without supervision. Senior lawyers in government and corporate law departments may

think that their junior lawyers—many of whom are hired after gaining experience in private

practice—have the judgment and skills to work without any oversight. These assumptions are

unwise in light of Model Rule 5.1, which should signal to supervisory lawyers that they have no

right to assume that subordinate lawyers are competent.146 Rule 5.1 imposes a number of serious


       142   Id. at 898.
       143   Id. at 899.
       144   Id.
       145   Id. (quoting Pavelic & LeFlore v. Marvel Entm’t Group, 493 U.S. 120 (1989)).
       146
         See, e.g., Attorney Grievance Comm’n of Md. v. Ficker, 706 A.2d 1045, 1050-52
(Md. 1998).


                                                35
responsibilities on law firm partners and other supervisory lawyers. The bottom line is that

supervisory lawyers must supervise, or risk professional discipline for their failure to do so.

       Subordinate lawyers are not shielded from professional responsibility by their youth or

inexperience. Rule 5.2(a) makes clear what law firm associates and subordinate lawyers in other

environments should know anyway: they are bound to act ethically even when acting at a

superior lawyer’s direction. While Model Rule 5.2(b) may provide a defense to a subordinate

lawyer who follows a supervisory lawyer’s reasonable directions in the case of an unclear ethical

question, such situations are quite rare. Young lawyers must reasonably and responsibly assert

themselves on issues of professional responsibility.




                                                 36
PEBN
Ethical Issues of Social Media
Michael Lackey, Partner
202 263 3224
mlackey@mayerbrown.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States;
Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which
Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
Ethics in the Context of Social Media

• Agenda
   – What Is Social Media?
   – How Is Social Media Being Used in Litigation and Government
     Investigations?
   – What Are the Ethical Issues Associated with the Use of Social
     Media?




                                 2
Ethical Issues and the Use of Social Media


• Proliferation of sources: Facebook, Twitter, MySpace,
  LinkedIn, Legal OnRamp, YouTube, Plaxo, Digg,
  FourSquare, not including those created within
  organizations
• Facebook has more than 600 million users and growing
• More than 70% of lawyers are members
• For millenials, email is now passé; some universities no
  longer giving email accounts




                              3
Ethical Issues and the Use of Social Media

 • Powerful tool
     – Creation and protection of brand
     – Tremendous credibility: Nielsen study found that 70% of
       internet users trust online recommendations
     – Reach clients and potential clients
 • Investigative tool
 • But use with care
     – A legal “wild west” that can raise ethical issues
     – ABA Ethics Committee recently asked members if they want
       guidance on these issues




                               4
Ethical Issues and the Use of Social Media



 • “Adopting” information about you or your firm on an
   independent web site that collects comments from
   peers and/or clients (e.g., Avvo, etc.)
    – Ethical issues?




                               5
Ethical Issues and the Use of Social Media


“Adopting” a listing
• Ok, but beware of issues like those discussed in SC Ethics
  Advisory Op. 09-10:
    – the lawyer must monitor the “claimed” listing to make sure all
      comments are in conformity with the ethical rules, especially
      the rules for attorney advertising writing of things like
      testimonials, client endorsements that create unjustified
      expectations, and comparisons


• Be careful when linking to another site!




                                   6
Ethical Issues and the Use of Social Media



“Recommendations”
• LinkedIn allows parties to “recommend” the work of a
  another participant. Issues?

• What about asking a client to recommend your work?




                              7
Ethical Issues and the Use of Social Media


• Be mindful of rules that place limitations on the use and
  content of testimonials

• Model Rule 4.1 (duty of candor) prohibits the making of a
  false statement of material fact to a third person
   • Beware of possible exaggerations regarding your biography,
     experience, etc.

• What about announcing on Facebook or LinkedIn that you
  just won a big jury trial or negotiated a big deal?




                                 8
Ethical Issues and the Use of Social Media


• Depending on the rules in your jurisdiction, this could
  require you to add a disclaimer along the lines of
  “results will vary in each case” or similar language.

• A related issue, depending on the content of your blogs
  or tweets, could they be governed by your state’s
  restrictions on lawyer advertising? If so, what are your
  obligations?




                               9
 Ethical Issues and the Use of Social Media


• Texas: must file video postings seeking clients with the
  Advertising Review Committee

• Connecticut: sending LinkedIn invitation that links to
  page describing law practice is an advertisement subject
  to all relevant rules

• LinkedIn allows users to provide professional
  information under “specialties,” are there any issues
  with that?



                               10
Ethical Issues and the Use of Social Media


• Depending on the content, it could run afoul of bar rules,
  such as Illinois Rule 7.4(c) and NY Rule 7.4(a), that
  prohibit attorneys from claiming they are “specialists” in
  a certain field




                               11
Ethical Issues and the Use of Social Media


  Friending Issues
  • Are there are issues with respect to whom an attorney
    can friend?




                              12
Ethical Issues and the Use of Social Media


 • In most jurisdictions, a judge and attorney who appears
   before the judge can be “friends”
    • NY Op. 08-176 (2009)
    • SC Op. 17-2009 (2009)
    • Ky. Op. JE-119 (2010)
    • Ohio Op. 2010-7 (Dec. 3, 2010)

 • But NOT in Florida, Op. 2009-20 (2009)
     – A judge cannot lend the prestige of her office to advance the
       private interests of others or convey an impression that some
       are in a special position of influence



                                   13
Ethical Issues and the Use of Social Media


 • Other friending issues with judges?
 • In re Public Reprimand of Terry, Inquiry No. 08-234 (Apr.
   1, 2009)
 • N.C. child custody and support case
    – Judge friended defense counsel and saw information posted by
      the defense counsel about the case:
        • Asking how he could prove the negative that his client did not have
          an affair
        • Noting that he had a wise judge (to which the judge responded
          that he had two very good parents to choose from)
        • Asking how long the trial would last




                                     14
Ethical Issues and the Use of Social Media


 • Blogging and other interactive media
 • Protect Confidential Information
    • Duty to protect client confidences, avoid waiver of
      attorney-client or other privileges
 • One attorney, an assistant public defender, has already
   faced disciplinary action for publishing information on a
   blog about her cases
    – Disparaging judges is a frequent theme (“Evil, Unfair
      Witch,” “Judge Clueless”)




                              15
Ethical Issues and the Use of Social Media


• LinkedIn allows users to post and answer questions;
  bloggers and tweeters often address legal issues;
  and sites like “Counsel.net” allow users to seek
  answers to legal questions.
• This is a particularly risky area. Any issues?




                            16
Ethical Issues and the Use of Social Media

Conflicts of Interest
• With whom are you communicating?
    – What if it is with a party with an adverse interest to a client of
      the firm? (Model Rules 1.7, 4.2)


• Other issues?




                                     17
Ethical Issues and the Use of Social Media

Inadvertent Creation of an Attorney-Client Relationship
• The discussion could lead to a situation where a
  “prospective” client relationship is formed, which has
  several consequences

• Must keep that information confidential (Model Rule
  1.18)

• Obtaining this confidential information could lead to
  disqualification with respect to existing clients who
  would have an interest in knowing that information


                              18
Ethical Issues and the Use of Social Media

• Depending on the circumstances, this could run afoul
  of rules prohibiting the unlicensed practice of law – or
  it could inadvertently create an attorney-client
  relationship

• An organization needs a good policy to address these
  issues – things to consider
   –   Keep it general
   –   Restrict recipients, follower, etc.
   –   Use a disclaimer (“general informational purposes”)
   –   Do not post confidential information . . . .




                                     19
Ethical Issues and the Use of Social Media



 • Beware of advertising issues

 • Be careful with judicial relationships

 • Avoid deception and act transparently

 • Keep confidences confidential

 • Establish and follow a policy for interactive contact


                                20
PEBN
Ethical Issues of Social Media
Michael Lackey, Partner
202 263 3224
mlackey@mayerbrown.com
                                                                                                                                                                                                                   February 2, 2012
Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States;
Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which
Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
Ethics Update: Part 2


Michael E. Lackey, Jr.
Mayer Brown LLP
          Ethical Issue Implicated


• Duty of competency, confidentiality, and
  supervision

• Requirement to safeguard privileged
  communications
         Wireless Communications


• Caution with client communications
    Includes WiFi, PDAs, cellphones, etc.
• An attorney may violate his duty of
  confidentiality under Model Rule 1.6
• An attorney may accidentally (or cause his
  client to) waive attorney-client privilege
             ABA Op. 99-413
• Addresses email, fax machines, and cordless,
  wireless phone communications

• Approves use of unencrypted e-mail
  communications – use does not violate Model
  Rule 1.6
    What about anti-spyware software? Password
     protection locks on PDAs?
             ABA Op. 99-413
• Preserving confidentiality ethically includes
  choosing a means of communication in which
  the lawyer has a “reasonable expectation of
  privacy”

• Not reasonable to avoid a mode of
  communication because interception is
  “technologically possible,” especially when
  unauthorized interception of the information is a
  violation of the law
Statutory Support for Reasonableness

  Electronic Communications Privacy Act,
   which prohibits the unauthorized
   interception or disclosure of an E-
   communication

  Computer Fraud and Abuse Act, which
   prohibits the unauthorized access of a
   computer
                ABA Op. 99-413
• Client consent if “highly sensitive”

• “When the lawyer reasonably believes that confidential
  client information being transmitted is so highly
  sensitive that extraordinary measures to protect the
  transmission are warranted, the lawyer should consult
  the client as to whether another mode of transmission,
  such as special messenger delivery, is warranted.”
                     NY Op. 782

• Issued in December 2004
• Addresses ethical standard for emailing a document
  that has metadata with “client confidences”
• Must exercise “reasonable care” to prevent the
  disclosure of client confidences in metadata
• “Reasonable care” may require the attorney to “stay
  abreast of technological advances and the potential
  risks in transmission”
               Issues “in the cloud”

• Approval to do so
• Obligation is to exercise “reasonable care” in handling
  client confidences
• “Reasonable care” may require the attorney to conduct
  due diligence to understand fully the risks to the client
  data before having it stored in the cloud
• Consistent with thrust of NY Op. No. 782 requiring
  attorneys to stay abreast of technological advances
Ethics Update: Part 2


Michael E. Lackey, Jr.
Mayer Brown LLP
February 3, 2012

								
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