The court found that Plaintiff had a subjective belief that
the relationship existed, but Plaintiff failed to show sufficient evidence that
the belief was objectively reasonable.
Bankruptcy
(posted May 5, 2008) In re Buffalo Coal Co.,
2008 Bankr. LEXIS 1259 (N.D. W. Va. April 30, 2008).
Chapter 7 trustee sought to retain Law Firm for the purpose of suing
VEPCO. While this proceeding was
under Chapter 11, Law Firm represented the creditors’ committee.
VEPCO was a member of the committee.
Several parties objected to retention of Law Firm because of this
relationship. After a confusing
discussion of Bankruptcy Act § 327(a), (c), & (e), the court allowed the
retention. Among other things, the
court said that Law Firm’s representation of the creditors’ committee was
not tantamount to representation of VEPCO.
The court also said that any information Law Firm may have obtained from
VEPCO while representing the creditors’ committee would eventually come to
light in the case between the debtor and VEPCO.
Current Client; Union Organization
(posted May 13, 2008) Operative
Plasterers' & Cement Masons' Int’l Assoc. of the United States and Canada,
Local 222 v. Alberta, 2008 ABQB 225 (CanLII) (Alberta Ct.
Q. B. April 16, 2008). In this case
Law Firm was acting adversely to a union local, which was part of a large
national labor organization. Law
Firm did work for other locals of the national organization.
The union local moved to disqualify Law Firm. In this opinion the court denied the motion.
The court was of a view that Law Firm was not acting adversely to a
current client because Law Firm was not representing this particular local.
Current Client; no Harm, no Foul (posted May 10, 2008) Great
American Ins. Co. v. General Contractors & Construction Mgm’t, Inc.,
2008 U.S. Dist. LEXIS 37015 (S.D. Fla. May 6, 2008).
Great American moved to disqualify the law firm for a defendant (“Law
Firm”) because Law Firm currently represents Great American in another case.
In the other case Law Firm represents two subcontractors and Great
American, their surety in that matter. The
court, acknowledging the violation of Florida’s version of Model Rule
1.7(a)(1), nevertheless denied the motion. The evidence was that Great American never gave confidences
to Law Firm. The court relied
heavily on Prudential Ins. Co. of America v. Anodyne, Inc., 365 F. Supp. 2d 1232, 1236 (S.D. Fla. 2005); and
SWS Financial Fund A v. Salomon Bros., Inc., 790 F. Supp. 1392, 1399 (N.D. Ill. 1992), two prominent “no harm, no
foul” cases. The
court also noted that Great American waited eight months, and one day before the
end of discovery, to make its motion.
Expert Witnesses (posted May
13, 2008) Irving Paper Limited v. Atofina
Chemicals Inc., 2008 CanLII 15903 (Ont. Super. Ct. April 15, 2008).
The court, in not disqualifying an expert witness, held that an expert
could possess confidences of the other side, but not privileged material,
litigation planning, or strategy.
Former Client (posted May 13, 2008) Robbins
& Myers Canada, Ltd. v. Torque Control Systems Ltd., 2008 FC 332
(CanLII) (Fed. Ct. Canada March 12, 2008).
In this patent infringement action the plaintiff moved to disqualify the
defendant’s law firm because the firm contained a lawyer who had assisted the
original owner of the patent in obtaining the patent.
One of the defendant’s defenses is that the patent is invalid. A prothonotary granted the motion, and in this opinion the
judge affirmed.
Former
Client; Relevance of Confidentiality
(posted May 5, 2008) Brookville
Carriers Flatbed GP Inc. v. Blackjack Transport Ltd.,
2008 NSCA 22 (CanLII) (Nova Scotia Ct. App. March 19, 2008).
This opinion is a good discussion of the former client rule in Canada. The relationship analysis was routine, but the court
confirmed that where the matters are related, confidential information need not
be implicated for the lawyer to be disqualified.
The court affirmed the lower court’s order disqualifying the law firm
because both in the prior matter and in this matter the former clients’
honesty was in issue.
Thirty Day Holding Area
MISCELLANEOUS ETHICS AND
LIABILITY NEWS
[Note:
occasionally we will come across an item relating to legal ethics or lawyer
liability, not necessarily related to conflicts of interest, that we think this
audience would like to know about. Examples are cases and opinions on Rule
4.2, privilege/work product, confidentiality, and others. We will post
such items here at "Miscellaneous Ethics and Liability News."
These items will be archived at the "This and That" page, which is
noted at the end of the Table of Contents.]
4.2
(posted May 10, 2008) Consky
v. Famous Players Inc., 2008 CanLII 15768 (Ont. Super. Ct. April 7, 2008).
Slip and fall case. A
question arose as to the ownership of the theater where the fall occurred, so
the plaintiff’s lawyer communicated with the Senior Vice President and General
Counsel of one of the defendants about the ownership issue.
Based upon this contact the defendant moved to disqualify the
plaintiff’s lawyer. In this
opinion the court granted the motion, citing, in part, Rule
6.03(7) of the Rules of Professional Conduct of The Law Society of Upper
Canada, Ontario’s version of ABA Model Rule 4.2.
Liability; not Conflicts-Related
(posted May 10, 2008) Shoemaker v.
Gindlesberger, 2008 Ohio LEXIS 1192 (Ohio May 7, 2008).
The opinion's “Overview” explains:
The
beneficiaries said the attorney's negligent
preparation of a deed, at the decedent's request, depleted the
decedent's estate. The supreme court held it was not appropriate to expand a limited exception to the
strict rule of privity, which imposed liability only if the
attorney acted fraudulently or maliciously. The
beneficiaries had to either show that they were in privity
with the attorney's client or that the attorney was
fraudulent or malicious. They were not in privity with
their mother, the attorney's client, because they were only
potential beneficiaries to her will and their rights as
beneficiaries did not vest until her death. She retained the
right to revoke or amend her will during her lifetime. The
beneficiaries did not plead the attorney's fraud, bad faith,
collusion, or malice. Public policy considerations did not
mandate a departure from the current rule requiring the
beneficiaries to strictly show privity.
Other
(posted
May 5, 2008) Tinn v. EMM Labs, Inc.,
2008 U.S. Dist. LEXIS 35888 (D. Ore. April 29, 2008).
Plaintiff moved to disqualify Lawyer as a witness in this case, claiming
Lawyer had earlier represented Plaintiff in a negotiation closely related to
this case. This opinion is a useful
discussion of when a lawyer-client relationship is established.
The court said:
In
Oregon, an implied attorney-client relationship is established where "the
putative client [holds] a subjective belief that the relationships exists,
coupled with an objectively reasonable basis for the belief" Admiral
Ins. Co. v. Mason, Bruce & Girard, Inc., 2002 WL 31972159, *1 (D. Or.
Dec. 5, 2002) (citing In re Wittemyer, 328 Or. 448, 456 (1999)).
The court found that Plaintiff had a subjective belief that
the relationship existed, but Plaintiff failed to show sufficient evidence that
the belief was objectively reasonable.
CONFLICTS -
UNCATEGORIZED
Conflicts cases not
fitting into the categories below will appear here. They will archived at
the "This and That" page.
Nothing current.
APPEALABILITY OF DISQUALIFICATION (To read full article, click here.)
Nothing current.
ARBITRATION OF MALPRACTICE
CLAIMS (To read full
article, click here.)
(posted
April 27, 2008) Harris v. Albany Lime
& Cement Co., 2008 Ga. App. LEXIS 470 (Ga. App. April 24, 2008).
Court held that arbitration clause inserted by lawyer in business agreement with
client was not enforceable. Not a lawyer malpractice context.
BANKRUPTCY (To read full
article, click here.)
(posted
May 5, 2008) In re Buffalo Coal Co.,
2008 Bankr. LEXIS 1259 (N.D. W. Va. April 30, 2008).
Chapter 7 trustee sought to retain Law Firm for the purpose of suing
VEPCO. While this proceeding was
under Chapter 11, Law Firm represented the creditors’ committee.
VEPCO was a member of the committee.
Several parties objected to retention of Law Firm because of this
relationship. After a confusing
discussion of Bankruptcy Act § 327(a), (c), & (e), the court allowed the
retention. Among other things, the
court said that Law Firm’s representation of the creditors’ committee was
not tantamount to representation of VEPCO.
The court also said that any information Law Firm may have obtained from
VEPCO while representing the creditors’ committee would eventually come to
light in the case between the debtor and VEPCO.
(posted
April 27, 2008) In re Winterville Marine
Services, Inc., 2008 Bankr. LEXIS 1112 (N.D. Miss. April 16, 2008). Chapter 7 bankruptcy. Trustee
sought to employ Law Firm as special counsel pursuant to §327(a) of the
Bankruptcy Act to bring an adversary action against other parties.
Several parties objected because Law Firm represented several creditors
of the estate. The court approved
the appointment because the interests of the estate and Law Firm’s other
clients were identical.
BANKS/TRUST DEPARTMENTS (To
read full article, click here.)
Nothing current.
BOARD POSITIONS (To read
full article, click here.)
Nothing current.
CHANGING FIRMS - LAWYERS AND NON-LAWYERS (To
read full article, click here.)
Nothing current.
CLASS ACTIONS/REGULATORY PROCEEDINGS (To read full article, click here.)
Nothing current.
CLIENT MERGERS/ASSET SALES (To
read full article, click here.)
Nothing current.
CO-COUNSEL/JOINT DEFENSE (To
read full article, click here.)
Nothing current.
COMMERCIAL NEGOTIATIONS (To
read full article, click here.)
Liability
from representing both sides of asset sale.
(posted April 15, 2008)
Sitar v. Sitar, 2008 N.Y. App. Div. LEXIS 2964 (N.Y. App. April 1, 2008).
To read more about the case go to "Malpractice . . ." below.
CORPORATIONS (INCLUDING CLOSE CORPORATIONS) (To read full article, click here.)
Nothing
current.
CORPORATE FAMILIES (To
read full article, click here.)
Nothing current.
CRIMINAL PRACTICE (To read
full article, click here.)
Nothing current.
CURRENT CLIENT AND DIRECT ADVERSITY (To
read full article, click here.)
Union organization; who's the client?
(posted
May 13, 2008) Operative
Plasterers' & Cement Masons' Int’l Assoc. of the United States and Canada,
Local 222 v. Alberta, 2008 ABQB 225 (CanLII) (Alberta Ct.
Q. B. April 16, 2008). In this case
Law Firm was acting adversely to a union local, which was part of a large
national labor organization. Law
Firm did work for other locals of the national organization.
The union local moved to disqualify Law Firm. In this opinion the court denied the motion.
The court was of a view that Law Firm was not acting adversely to a
current client because Law Firm was not representing this particular local.
No harm, no foul.
(posted May 10, 2008) Great
American Ins. Co. v. General Contractors & Construction Mgm’t, Inc.,
2008 U.S. Dist. LEXIS 37015 (S.D. Fla. May 6, 2008).
Great American moved to disqualify the law firm for a defendant (“Law
Firm”) because Law Firm currently represents Great American in another case.
In the other case Law Firm represents two subcontractors and Great
American, their surety in that matter. The
court, acknowledging the violation of Florida’s version of Model Rule
1.7(a)(1), nevertheless denied the motion. The evidence was that Great American never gave confidences
to Law Firm. The court relied
heavily on Prudential Ins. Co. of America v. Anodyne, Inc., 365 F. Supp. 2d 1232, 1236 (S.D. Fla. 2005); and
SWS Financial Fund A v. Salomon Bros., Inc., 790 F. Supp. 1392, 1399 (N.D. Ill. 1992), two prominent “no harm, no
foul” cases. The
court also noted that Great American waited eight months, and one day before the
end of discovery, to make its motion.
(posted May 3, 2008) 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.
DERIVATIVE ACTIONS (To
read full article, click here.)
(posted April 19, 2008) Evans
v. Perl, 2008 N.Y. Misc. LEXIS 2105 (N.Y. Misc. April 9, 2008). In this derivative action the court denied a motion to
disqualify Law Firm from representing an individual defendant as well as the
companies she ran and partly owned. The
court discussed how it may not make sense to require the companies to obtain
separate counsel where they are closely held, this being such a case.
ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To
read full article, click here.)
Nothing
current.
EXPERT WITNESSES (To read
full article, click here.)
(posted May 13,
2008) Irving Paper Limited v. Atofina
Chemicals Inc., 2008 CanLII 15903 (Ont. Super. Ct. April 15, 2008).
The court, in not disqualifying an expert witness, held that an expert
could possess confidences of the other side, but not privileged material,
litigation planning, or strategy.
FORMER CLIENTS - THE SUBSTANTIAL RELATIONSHIP TEST (To read full article, click here.)
(posted May 13,
2008) Robbins & Myers Canada, Ltd. v.
Torque Control Systems Ltd., 2008 FC 332 (CanLII) (Fed. Ct. Canada March 12,
2008). In this patent infringement
action the plaintiff moved to disqualify the defendant’s law firm because the
firm contained a lawyer who had assisted the original owner of the patent in
obtaining the patent. One of the
defendant’s defenses is that the patent is invalid. A prothonotary granted the motion, and in this opinion the
judge affirmed.
(posted
May 5, 2008) Brookville
Carriers Flatbed GP Inc. v. Blackjack Transport Ltd.,
2008 NSCA 22 (CanLII) (Nova Scotia Ct. App. March 19, 2008).
This opinion is a good discussion of the former client rule in Canada. The relationship analysis was routine, but the court
confirmed that where the matters are related, confidential information need not
be implicated for the lawyer to be disqualified.
The court affirmed the lower court’s order disqualifying the law firm
because both in the prior matter and in this matter the former clients’
honesty was in issue.
(posted April 27,
2008) Reliant Pharmaceuticals, Inc. v. Par
Pharmaceutical, Inc., 2008 U.S. Dist. LEXIS 33461 (D. Del. April 23, 2008).
Plaintiff is suing Defendant for infringement of Patent “’588.”
In 2003 Law Firm represented Plaintiff in its purchase of ‘588.
In this case Law Firm is representing Defendant.
Plaintiff moved to disqualify Law Firm, and in this opinion, the district
judge denied the motion. In its
substantial relationship analysis, here is the crux of the court’s ruling:
.
. . [T]he Court concludes that Reliant has not
demonstrated that disqualification of
[Law Firm] is
required. The present action concerns issues of
infringement, validity and
unenforceability of the '588
patent.
It does not implicate the underlying
transaction with Abbott through which
Rythmol(R) was acquired
nor does it involve any of the provisions,
warranties or representations contained
in the agreements governing
the transaction.
(posted April 19, 2008) 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.
GOVERNMENT ENTITIES - SUING ONE PART/REPRESENTING ANOTHER PART (To
read full article, click here.)
Nothing current.
“HOT POTATO” DOCTRINE (To
read full article, click here.)
Nothing current.
INITIAL INTERVIEW -
HEARING TOO MUCH (To read full article, click here.)
(posted April
27, 2008) Leathem v. City of LaPorte,
2008 U.S. Dist. LEXIS 32820 (N.D. Ind. April 17, 2008).
Plaintiff moved to disqualify a lawyer (“Lawyer”) for one of the
defendants because Plaintiff had earlier met with Lawyer and discussed the facts
of this case with Lawyer (“the Conversation”). After the Conversation Lawyer said he could not represent
Plaintiff. But,
then Lawyer showed up representing a defendant.
In this opinion the magistrate judge denied the motion, holding that a
lawyer-client relationship had not been formed during the Conversation, and that
the facts discussed had all surfaced during the litigation.
[Note: the court spent too much
time analyzing whether a lawyer-client relationship had been formed in the
Conversation and ignored Indiana Rule 1.18, which was in effect at the time of
the Conversation.]
IN-HOUSE LAW DEPARTMENTS (To
read full article, click here.)
Nothing current.
INVESTING IN CLIENTS/STOCK FOR FEES (To
read full article, click here.)
(posted
April 27, 2008) Harris v. Albany Lime
& Cement Co., 2008 Ga. App. LEXIS 470 (Ga. App. April 24, 2008). Lawyer entered into a business arrangement with Lawyer’s
son-in-law (“SIL”). SIL was
sued by third parties in connection with that business arrangement.
Lawyer represented SIL in that litigation.
During the litigation Lawyer prepared a contract with SIL and backdated
it to the time of the original business arrangement.
Lawyer inserted an arbitration clause in the backdated contract.
Later, Lawyer made a claim against SIL and demanded arbitration.
In this case SIL moved for a stay of arbitration.
The trial court denied the motion for stay, holding that the arbitration
clause was enforceable. In this
opinion the appellate court reversed, saying that Lawyer’s conflict of
interest rendered the arbitration clause enforceable only upon the election of
SIL. The court mentioned Georgia’s version of Model Rule 1.8(a)
only in passing.
ISSUE OR
POSITIONAL CONFLICTS (To
read full article, click here.)
Nothing current.
JOINT/MULTIPLE REPRESENTATION (To
read full article, click here.)
Nothing current.
LAWYER AS EXPERT WITNESS OR CONSULTANT (To read full article, click here.)
Nothing current.
LAWYERS REPRESENTING LAWYERS (To
read full article, click here.)
Nothing current.
MALPRACTICE LIABILITY/FEE FORFEITURES (To
read full article, click here.)
(posted May 3, 2008) In
re Estate of Spencer, 2008 N.J. Super. LEXIS 90 (N.J. Super. April 23,
2008). This is a suit against a
lawyer for failing to report the theft of funds from several estates by a fellow
lawyer. It is very state specific
and the interrelationships are complex. At
bottom, here is the court’s holding:
. . .
[A]n attorney such as Averna who has a close and interdependent business
relationship with another lawyer, and who is performing
legal work for a common client at that lawyer's request,
has a duty to report that lawyer if he or she develops
actual knowledge that the lawyer has been stealing funds
from their common client.
(posted
April 15, 2008) Sitar v. Sitar, 2008 N.Y. App. Div. LEXIS 2964 (N.Y. App.
April 1, 2008). In this opinion the Appellate Division reversed the trial
court’s order granting a motion to dismiss in favor of Lawyer.
Lawyer had represented both sides in the sale of business assets.
This is a classic illustration of the tension created in a multiple
representation between the duty of confidentiality and the duty to keep clients
informed. In the words of the
court:
Here, the plaintiffs alleged that McGraw
represented both sides of the transaction, and was thereby burdened by a
conflict of interest, and that he was aware of information critical to the
purchase price of Business Computing but withheld that information from the
plaintiff John Sitar, who was his client. These allegations were sufficient to
state a cause of action to recover damages for legal malpractice . . . .
OF COUNSEL (To read full
article, click here.)
Nothing current.
OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (To read full article, click here.)
Nothing current.
PARTNERSHIPS (INCLUDING LIMITED PARTNERSHIPS) (To read full article, click here.)
Nothing current.
SETTLEMENT AGREEMENTS (To
read full article, click here.)
Nothing current.
STANDING (To read full
article, click here.)
(posted
May 10, 2008) Clemens v. McNamee, 2008 U.S. Dist. LEXIS 36916 (S.D. Tex. May 6,
2008). Roger Clemens/Andy Pettitte/Rusty
Hardin. In this thorough discussion
of standing in the Fifth Circuit, the court denied a motion to disqualify based
upon lack of standing.
TRADE (AND OTHER) ASSOCIATIONS (To
read full article, click here.)
Nothing current.
“UNDERLYING WORK” PROBLEM (To
read full article, click here.)
Nothing current.
WAIVERS/CONSENTS (To read
full article, click here.)
Nothing current.
WITNESS -
ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.)
Nothing current.
ZERO SUM GAMES (To read
full article, click here.)
Nothing current.
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