How far does DQ extend? NY appeals court says not that far, reinstating co-counsel

Feb. 16, 2017

By Karen Rubin

When a conflict of interest crops up during a case, Ethics 101 tells us that the “taint” of that conflict can spread, and potentially disqualify all the lawyers of the affected firm.  Model Rule 1.10, “Imputation of Conflicts” explains the rule.  But how far does that disqualification go?  A New York appeals court examined this question in December, and reversed a DQ order in a personal injury suit.

“Associated in a firm”?

In Kelly v. Paulsen, the firm (“HHK”) represented two plaintiffs who had been injured in a motorcycle accident allegedly caused by the defendant.  HHK filed suit on plaintiffs’ behalf in 2009.  Four years later, a sole practitioner joined the plaintiffs’ team as co-counsel.  Very shortly before trial in 2015, the defendant learned—allegedly for the first time—that HHK was representing plaintiffs.  On the first day of trial, the defendant moved to disqualify HHK because the firm had also represented the defendant in “personal and business matters” for the previous 30 years.  (The court didn’t explain these somewhat singular facts, particularly how a party doesn’t learn the identity of opposing counsel’s firm for six years while a suit is pending.)

Based on the conflict, HHK withdrew, leaving the solo as plaintiffs’ only lawyer.  Defendant then moved to disqualify the solo as well, and the trial court granted the motion.  On appeal, the Third Department reversed.

The court of appeals said that New York’s Rule 1.10(a) (like the Model Rule), bars lawyers who are “associated in a firm” from representing a client when a conflict of interest would preclude any one of them from doing so if the lawyer were practicing alone.

This imputation rule thus has the potential for spreading the “taint” (a word courts often use) of the primarily-disqualified lawyer to others.

Although the Rules don’t define the phrase “associated in a firm,” the court in Kelly found that the well-established meaning extends beyond partners and associates who are employed in the same firm—it also can include “of counsel” relationships, for instance.

Nonetheless, the court wrote, “not every lawyer who has any connection or relationship with a firm is considered to be ‘associated’ with that firm” for conflicts and imputation purposes.  The question requires a factual analysis, and turns on whether the lawyer’s relationship with the firm is “sufficiently close, regular and personal.”

More like a contract lawyer

Here, the facts showed that the solo had his own separate office, didn’t receive any support services from HHK, and HHK didn’t “supervise” his work.  The key factor, however, was that the solo averred that he never had access to any HHK files except plaintiffs’, never represented the defendant, was not aware of him or his business affairs before the motorcycle case, and never got any confidential information about the defendant from HHK or had access to such information.

The defendant argued that HHK had “undeniably shared” his confidential information with the solo practitioner, based on plaintiffs’ demand for a high settlement figure.  Defendant said the demand indicated that the solo had received confidential information about his finances.  But the court viewed that argument as mere speculation.

The solo’s role here, said the court, is “more akin to that of a contract lawyer” who gets a case referral and works from his or her own office as co-counsel.  The court noted a 1999 New York ethics opinion that such a contract lawyer is not “associated” with the employing firm for conflicts purposes, and analogized that principle to the solo lawyer.

Key: Sharing confidential information

There are a number of courts that, like Kelly, have held that taint doesn’t affect co-counsel, at least where there is no showing that co-counsel received confidential information about the party moving to disqualify.  The always-excellent Freivogel on Conflicts collects the cases.  But there are still decisions that go the other way, too.  See, e.g., j2 Global Communications Inc. v. Captaris Inc., (C.D. Cal. 2012) (imputing “outside in-house counsel’s” disqualification to firm).  Bottom line:  while information-sharing remains key, this is a fact-specific area, and it pays to be aware of nuances that can vary the outcome.

Content courtesy of The Law for Lawyers Today: Ethics, Professional Responsibility and More blog. Ohio State Bar Association member Karen Rubin is an attorney for Thompson Hine.


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