Risk Update

Client Relationships and Conflicts — Attorney-Client Non-relationship, State Jurisdiction Dodge

Mississippi Rejects Implied Attorney-Client Relationship As Basis To Disqualify” —

  • “The Mississippi Supreme Court overturned an order disqualifying counsel in litigation”
    • ‘This case presents an issue of first impression: whether an attorney’s representation of a general partnership creates an implied attorney-client relationship between the attorney and the individual members of the general partnership, and, if so, whether the Mississippi Rule of Professional Conduct prohibiting communication by a lawyer with an individual represented by other legal counsel was violated.’
    • ‘James L. Pettis, III, attorney for the plaintiff, appeals an order of the chancery court disqualifying him for a violation of Mississippi Rule of Professional Conduct 4.2, which prohibits a lawyer from communicating with a person they know to be represented about the subject of the representation. After a careful review of the law, this Court reverses the chancery court’s order, renders a judgment in favor of Pettis, and remands for further proceedings.’
    • ‘Sometime in 2019, two years after Rea had disassociated from the Partnership, Rea became aware that Karsten was attempting to sell land belonging to the Corporation. At Newell’s request, Rea and Newell met with Pettis on April 8, 2019, in his office to discuss the attempted sale. On April 11, 2019, Rea spoke with Lawson via telephone and informed her that she had met with Pettis. Pettis met Rea a second time when he attended the meeting of the shareholders and board of directors of the Corporation at Rea’s home on April 15, 2019.’
    • ‘At both meetings with Rea, Pettis asked whether she was represented by Lawson or any other attorney in the underlying litigation. Rea responded on both occasions that she was not represented by anyone, nor did she wish to seek representation in connection with the underlying litigation. Both Rea and Pettis submitted affidavits stating they only discussed how to prevent the sale of the Corporation’s land by Karsten and that Rea was not represented by counsel in connection with the underlying litigation.’
  • “The trial court had disqualified Pettis”
    • ‘We hold that the chancery court erred by finding an attorney-client relationship existed between Lawson and Rea. Additionally, presuming such a relationship did exist, there was no evidence of knowledge or discussion of illicit subject matter which would provide the grounds for Pettis’s disqualification.’
    • ‘The representation of a general partnership by an attorney does not automatically give rise to an attorney-client relationship between the attorney and any of the individual partners.’
    • ‘Even if an attorney-client relationship had arisen between Rea and Lawson, the chancery court erred by disqualifying Pettis because there was no evidence concerning’
    • ‘Although not explicitly argued by the parties, as Hester’s law partner, Pettis’s disqualification does not fall under Rule 1.10 of the Mississippi Rules of Professional Conduct as an imputed disqualification of a law firm due to a conflict of interest because the chancellor only made a finding that Pettis violated Mississippi Rule of Professional Conduct 4.2, not that a conflict of interest existed.’
    • ‘Hester’s disqualification was within the jurisdiction and authority of the chancery court because he was engaged in practices and proceedings before the court as Newell’s attorney in the underlying litigation. Because Rea was not a party to the underlying litigation and because Pettis did not represent Newell in the litigation, no conflict of interest existed. Therefore, this Court finds the disqualification of Pettis under the theory of an imputed disqualification as a member of Hester’s law firm to be untenable.’

NY Attorney Escapes Fiduciary Breach Lawsuit in Texas” —

  • “A New York lawyer who is accused of wrongly advising a company to sign an unfavorable contract escaped a lawsuit in Texas because an attorney-client relationship wasn’t enough for a court in that state to have jurisdiction over him.”
  • “While an attorney-client relationship existed between Hinduja Global Solution, Inc. and Ali Ganjaei, there’s no evidence the lawyer sought clients or otherwise affirmatively promoted personal business in Texas, the Texas Court of Appeals, Fifth District said, affirming the trial court’s decision.”
  • “HGSI specifically claims that Ganjaei, the business’s legal counsel, gave the company bad legal advice by advising it to sign the perpetuity contract. It claims Ganjaei had a conflict of interest because he also worked for another organization, HBI Group Inc., which obtained a majority stock position in Synergy.”
  • “Ganjaei challenged the court’s personal jurisdiction over him, arguing that he’s a resident of New Jersey, and never lived in Texas. He also said he’s licensed to practice law in New York and has never performed legal services in Texas. The trial court granted his motion to dismiss for lack of personal jurisdiction, but HGSI appealed.”
  • “Because Ganjaei was sued in his individual capacity, ‘only his contacts in that capacity are relevant’ to the jurisdictional question, the court said Jan. 13.”
  • “Ganjaei didn’t purposefully avail himself of the benefits and protection of Texas law because there is no evidence Ganjaei personally targeted the state, sought Texas assets, or sought customers there, the court said. ‘The record shows HBI, not Ganjaei acquired an interest in Synergy, and there is no assertion or evidence that HBI is Ganjaei’s alter ego,’ the court added.”