DQ Is an Equitable, Not Per Se, Standard

Antelope Valley Groundwater Cases, No. F078517 (D5 Dec. 20, 2018)

Firm represents two water districts. District 1 has been embroiled in a litigation for almost two decades. District 2—for which a Firm partner acted as outside general counsel—was originally not in that litigation. But it was eventually brought in, although it retained different counsel. For twelve years, Firm represented District 1 in the litigation and District 2 as its general counsel. The litigation resolved through a settlement that resulted in entry of judgment. A month later, District 2 terminated the GC relationship. And then six months after that, District moved to DQ Firm from representing District 1 in the litigation due to conflicts.  

Normally, former Rule of Professional Conduct 3-310 (since superseded by a comprehensive amendment to the Rules that took effect in November) would prohibit firm from representing District 1 in litigation against District 2 while both districts were clients. And then once District 2 ceased to be Firm’s client, Firm still couldn’t represent District 1 if it had obtained information from District 2 that was material to the litigation. As outside general counsel, one would assume that to be the case. 

Of course, the Rule further provided that these conflicts could be waived through informed written consent of both clients. Here, however, Firm 2 never signed a waiver or expressly consented to a simultaneous representation.

The trial court nonetheless declined to disqualify Firm, noting that notwithstanding the lack of a written waiver, District 2 was aware of the representation of Firm's representation of District 1 for a decade and never complained about it as well as the fact that the litigation was essentially over. 

The Court of Appeal affirms. It holds that although the representation likely violated the rules for lack of a written waiver, disqualification is not per se and can take into account more than literal compliance. Among the equitable factors that can be taken into account are whether the moving client had implicitly consented to the representation notwithstanding a conflict, whether Firm actually used any of Client 2’s information, Client 2’s delay in seeking disqualification, and the fact that the litigation had already progressed to a judgment. The Court of Appeal also affirms on the alternative ground that Client 2’s delay equitably estopped it from moving to disqualify.

Affirmed.