California Lawyer
More Full Disclosure


May 2009

The pink slips now come by the thousands?4,200 lawyers and staff laid off nationwide in February; thousands more dismissed in March. And quietly discharged equity and nonequity partners have yet to be counted. Unemployed lawyers now wander the countryside like so many ronin?masterless samurai set loose in feudal Japan.

Leave it to the American Bar Association to try to ease the crisis. At its midyear meeting in February, the ABA's House of Delegates voted to revise Model Rule 1.10, which provides ethics guidance for avoiding imputed conflicts of interest when law firms consolidate, merge, or hire attorneys laterally. In a prepared statement, the ABA's Standing Committee on Ethics and Professional Responsibility argued, "This change permitting private lateral screening is particularly timely now, when law firms are downsizing and new job opportunities are shrinking, and a substantial number of lateral moves by lawyers may be involuntary. In addition, restrictions on mobility affect the interests of other clients in being represented by the lawyer of their choice."

But even dressed up in public-interest clothing, the revised MR 1.10 barely passed. The ABA has been attempting to facilitate lateral hiring since it published Ethics 2000, a report that advocated screening to prevent conflicts of interest in successive representations. A majority of the ethics committee had favored revising MR 1.10 in 2002, but it failed to draw in votes from opponents, represented primarily in the ABA's litigation committee. The rule came before the House of Delegates again in 2008, but a vote was postponed. In February the two committees presented competing proposals: litigation's required a former client's waiver of conflicts or informed written consent to an ethical screen before an attorney could represent an adverse party, while the ethics panel's permitted nonconsensual screens. On a close vote, the House of Delegates voted for nonconsensual screens.

"The vote shows a mood swing," says Steven E. Schon, director of the litigation department at Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco. "It was a recognition of mobility in the profession."

"Actually, the rule is more restrictive than I would have expected," says Richard E. Flamm, a Berkeley legal ethics consultant and author of Lawyer Disqualification: Conflicts of Interest and Other Bases. "Some clients are reluctant to waive the privilege, because disqualification motions are often, in part, tactically motivated."

What's all the fuss about? The wording of the rule tells the story. According to MR 1.10, an exception to the imputed-conflicts prohibition applies if the disqualified lawyer is timely screened, apportioned no part of the fee, and "written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm's and of the screened lawyer's compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures." (MR 1.10(a)(2).)

The former client's consent to these procedures isn't required. "The new rule benefits law firms and migrating lawyers, but it imposes a burden of trust on the former client," says Robert K. Sall, a member of the ethics committees of the Los Angeles and Orange County bar associations and a principal in The Sall Law Firm in Laguna Beach. "Why should the client bear that burden?

Sall questions the effectiveness of implementing ethical screens, which potentially require barring an attorney's access to electronic files, file rooms where an adverse party's pleadings are kept, and social gatherings with other lawyers who may have knowledge of the adverse party. And he contends that the remedies proposed in the revised rule are hollow. "If the former client suspects a breach in the ethical screen, how can he or she ascertain the facts?" he asks. "No law firm will disclose its privileged communications to an attorney's former client."

The ABA's Model Rules are only a template; state bars are free to adopt, modify, or reject them. "I think it will get a mixed reaction," says Mark L. Tuft, a partner in the San Francisco office of Cooper, White & Cooper and vice chair of the State Bar's Commission for the Revision of the Rules of Professional Conduct. "Screens are permitted in 25 states, and some states?such as Oregon and Washington?have ethics rules similar to the new ABA model rule. Some states permit screens unless the lateral attorney was primarily or substantially involved. But can you screen for loyalty? I don't think so."

California has its own rules of professional conduct, none of which specifically address either vicarious disqualification or screening. Instead, the state courts have developed an extensive body of case law, leading to formulation of a "modified substantial relationship test" to determine whether a potentially adverse successive representation is permitted. Under the test, once the court establishes that there is a substantial relationship between the factual and legal issues in successive representations, the burden shifts to the lawyer targeted for disqualification to demonstrate that he or she was not exposed to confidential information at the former firm. (See Adams v. Aerojet-General Corp., 86 Cal. App. 4th 1324 (2001).)

Kevin E. Mohr, consultant to the State Bar's rules revision commission and a professor at Western State University College of Law, says that if a client gives informed consent to a waiver of the disqualifying conflict, California courts permit law firms to erect screens around "tainted" laterals. To ease mobility in and out of government service, they also permit nonconsensual screens involving public-sector lawyers. (See In re Charlisse C., 45 Cal. 4th 145 (2008).) Though state courts have yet to recognize nonconsensual screens in the private sector, some federal courts have suggested that these may be permitted if properly implemented. (See In re County of Los Angeles, 223 F.3d 990 (9th Cir., 2000).)

The real sticking point, however, isn't civil case law but an attorney's ethical duties of confidentiality and loyalty. California has the most restrictive confidentiality rule in the nation, requiring attorneys to "maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client." (Cal. Bus. & Prof. Code ยง 6068(e)(1)) Lawyers also are prohibited, without the informed written consent of a client or former client, from accepting employment adverse to that client where the attorney has obtained confidential information material to the representation.

"Rule 3-310(E) [of the California Rules of Professional Conduct] identifies the evil that the rule is intended to avoid-that a lawyer with confidential information acquired from a former client might represent a new client in a new matter against the former client," says Mohr. "It asks, 'Is the past representation material to the current one?' But the rule doesn't provide a standard."

As luck would have it, the rules revision commission has just taken up a rule on imputation of conflicts of interest, and Tuft is on the drafting team. "We're in the seventh year of a five-year process," he laughs. "We're hoping to draft a rule on imputed conflicts and send it out for public comment later this year."

Tuft acknowledges that lawyer mobility is commonplace, and that the reality of modern law practice will influence the commission's debate. "Some think that vicarious disqualification should be a civil issue alone," he says. "Others think that disqualification is both a civil matter and an ethical concern."

The mass dislocation of lawyers?whether produced by mergers or by layoffs?can only complicate this debate. "With large firms and many lateral attorneys, you could be dealing with a web of screening walls," Tuft says. "Who's going to keep track of all those screens? It could be an administrative nightmare."

Adds Sall, "The changing economic reality will have an impact on attorney migration and ethical screening. Some re-employed attorneys will end up at firms adverse to their former clients."

That prospect evokes a scene from Yojimbo, Akira Kurosawa's 1961 classic film about a footloose ronin in 19th-century Japan. In a feud between two rural gambling clans, actor Toshiro Mifune's character, no longer bearing a duty of loyalty, sells his skills to both sides. After a series of bloody battles that nearly empty the dusty village, the ronin surveys the main street and says, "Now there'll be some quiet in this town."

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