No Bar Doesn't Bar DQ

O’gara Coach Co. v. Ra, No. B268730 (D2d7 Jan. 7, 2018)

This is kind of a tricky one. Attorney went to law school but didn’t take the bar. He eventually became the CEO of a Company that is the defendant in this case. Company doesn’t have a GC, but because of his law training, one of (then unlicensed) Attorney’s responsibilities is in interacting with Company various outside counsel. 

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.  

Informed Consent Is Cruicial to a Conflicts Waiver

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc., No. S232946 (Cal. Aug. 30, 2018)

Back in 2016, the Court of Appeal vacated an arbitration award in an attorney fee arbitration, holding that a law firm’s retainer agreement (and the arbitration clause within it) was completely void under Rule of Professional Conduct 3-310(C)(3) due to an undisclosed conflict of interest. At the time the client engaged the firm, the firm was adverse to the client in an unrelated matter. Thus, notwithstanding the agreement’s general forward conflicts waiver, there was no informed consent because the actual conflict was not specifically disclosed. And that meant the law firm couldn’t get paid anything and had to disgorge what it had been paid to date. The Supreme Court granted review.

Vicarious Conflicts

Fluidmaster, Inc. v. Fireman’s Fund Ins. Co., No. G055469 (D4d3 Jul. 24, 2018)
 
Firm’s OC office is defending Insurance Carrier in some coverage litigation. Attorney A worked on the other side of case as a manager for Plaintiff’s e-discovery vendor. Attorney A subsequently got hired by Firm’s LA office. She was asked about conflicts, and screened from the coverage dispute. Firm informed Plaintiff of the hiring and the screen.

Plaintiff successfully moved to DQ Firm. But while appeal was pending, A left Firm. And (based on supplemental briefing) there’s no evidence that A actually shared any confidential information she obtained in her prior employment.

The court assumes that acting in the capacity as an attorney for a client’s e-discovery vendor is enough to potentially create a conflict. So the question is whether the screen was effective, particularly given A’s departure from the firm before the appeal was decided.

Vicarious disqualification generally isn’t the rule in California. But even setting that aside, a prior case—Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th 776 (2010)—specifically addresses the situation where a conflicted attorney quickly leaves. The pertinent question is: Did she spill the beans while there? And in connection with that, the court needs to consider the efficacy of any screening put in place. And that requires an assessment of seven different factors, which are set out in Kirk.

Since none of that analysis was done by the trial court, the case gets sent back for it to be done in the first instance.

Reversed and remanded.

Conflicts and the Pretend Partnership

Lynn v. George, No. G053563 (D4d3 Sept. 21, 2017)

This case presents an interesting quandary about how to deal with a scenario where the facts relevant to a motion to disqualify a lawyer substantially overlap with the merits of the case where the DQ motion is brought.

Conflicts and the Closely Held Corporation

Beachcomber Mgmt. Crystal Cove, LLC v. Superior Court, No. G054078 (D4d3 Jul. 28, 2017)

This case addresses the interpretation Rule of Professional Conduct 3-310—the rule on client conflicts—in the somewhat unusual context of a stockholder derivative action. 

Client Conflicts Confound Counsel on Class Claims

Walker vs. _________, No. D069713 (D4d1 Oct. 28, 2016)

Counsel represents plaintiffs in two wage-and-hour class actions against the same Employer. The class in the first case is certified. A non-exempt Employee who is a member of the class in Case #1 subsequently got promoted to an exempt position as a low-level manager. She’s now a potential Employer witness in this second—yet-to-be-certified—class case. Indeed, she fired some of the employees in Class #2. So Employer moves to DQ Counsel in Case #2 on the grounds that he might have to cross examine his own client. The trial court agreed.

Trouble with Clients, Present and Past

Ontiveros v. Constable, No. D066412 (D4d1 Mar. 14, 2016)

and

Costello v. Buckley, No. D068536 (D4d1 Mar. 16, 2016)

These are a pair of attorney disqualification appeals decided by Division One of the Fourth District in a three-day period last month.

Undisclosed Conflicts Prevent Law Firm from Getting Paid

Sheppard, Mullin, Richter & Hampton LLP v. J-M Mfg. Co., Inc., No. B256314 (D2d4, as modified, Feb. 26, 2016)

Law Firm represented Client 1 in as a defendant in a qui tam litigation where the plaintiff/government agency intervenor was also arguably current client, albeit in totally unrelated labor and employment matters. There’s no specific waiver in Client 1’s retainer letter permitting Law Firm to represent the agency in unrelated cases. And given the current representation of an adverse party at the time the letter was signed, the general advance waiver that was in the letter was potentially inadequate to give the requisite informed consent. 

Conflicts and the Dissolving Partnership

Coldren v. Hart, King & Coldren, Inc., No. G050202 (D4d3 Aug. 5, 2015)

Departing Partner in a 50/50 two-partner law firm sued his Firm and his Remaining Partner over the terms of his retirement. Firm and Remaining Partner sued back. Remaining Partner and Firm were represented in the litigation by the same Attorney, who had never previously represented Firm or Departing Attorney. Departing Partner brought a DQ motion, claiming that Attorney couldn’t represent both Remaining Partner and the Firm—in which Departing Partner continued to claim his 50 percent stake. After waffling on the tentative, the trial court granted the motion. 

But the court of appeal reverses. The decision rests on two grounds.