“Firm’s Firing of Conflicted Lawyer Disrupts Disqualification” —

• “The Fifth District Court of Appeal held yesterday that a trial judge rightly denied a motion seeking the disqualification of a firm that had hired an attorney who had represented an opposing party in ongoing litigation, declaring that the prompt termination of the associate was sufficient to avoid a conflict where substantial evidence supported a finding that the lawyer had not shared any confidential information.”
• “Emphasizing that the State Bar Rules of Professional Conduct, as adopted by the California Supreme Court in 2018, govern conflicts of interest, the court rejected the view suggested by earlier cases that disqualification of a firm may be required where an attorney switches sides during pending litigation.”
• “Presiding Justice Brad Hill authored the opinion, joined in by Justices Rosendo Peña Jr. and Arlan L. Harrell, saying: ‘In 2018, the California Supreme Court passed new ethical rules that coalesced…existing case law principles into a defined set of rules. While the case law continues to provide substantial guidance on the history and intent behind a lawyer’s ethical obligations in California, the foundational touchstones of any disqualification motion alleging an ethical violation are the current State Bar Rules of Professional Conduct.'”
• “Those rubrics include Rule 1.9, which provides that ‘[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client,’ and Rule 1.10, which specifies: ‘While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so.'”
• “A carve-out allowing for continued representation by a law office applies if ‘the prohibition is based upon Rule 1.9…and arises out of the disqualified lawyer’s association with a prior firm,’ and ‘the disqualified lawyer is timely screened from any participation in the matter’ and ‘written notice’ as well as ‘certifications of compliance’ are promptly given to any affected party.”
• “Subdivision (b) further instructs that, ‘[w]hen a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer’ unless ‘the matter is the same or substantially related’ and ‘any lawyer remaining in the firm has’ received material confidential information.”
• “The question of disqualification arose after attorney Lisa Horton left the firm of Sagaser, Watkins & Wieland PC to join the Fresno office of Borton Petrini LLP. Her first day at the new firm was April 15, 2024.”
• “During her time with Sagaser, Horton had handled two depositions in litigation between her then-client, Munger Hortifrut North America LLC, and Dan Drake Enterprises LLC, which was represented by attorneys with the Bakersfield office of Borton Petrini.”
• “On April 19, Sagaser attorney Charles Hamamjian informed Dan Drake’s primary counsel, Michael Stump, that Horton had worked on the case and asserted that her hire created a conflict of interest that required Borton Petrini to withdraw from any further representation in the matter.”
• “Borton Petrini immediately took steps to block any direct communications between Stump and the newly hired attorney. The firm also barred Horton from accessing any files relating to the Munger case.”
• “After Munger refused to provide a written waiver to the conflict in exchange for an agreement to maintain a robust ethical screen, Borton Petrini terminated Horton on April 26. One week later, Munder moved to disqualify Borton Petrini from representing Dan Drake in the litigation.”
• “On June 11, 2024, Kern Superior Court Judge Bernard Barmann denied the request, finding that, while there was blame that could be assigned to all counsel in the case, there was no confidential information shared by Horton ‘either before or after she became employed by’ Borton Petrini.”
• “Acknowledging that ‘[t]here is no doubt that hiring Horton created an ethical conflict given rule 1.10,’ Hill said: ‘Under the rules, there are two possible ways to avoid disqualification in these circumstances. Under the first, Borton Petrini could keep Horton as an associated attorney. To avoid disqualification, Borton Petrini would then need to demonstrate that Horton did not substantially participate in the underlying litigation, timely screen Horton from its other lawyers, and provide Munger with adequate written notice under the rules….Under the second, Borton Petrini could end its association with Horton. It would then be free to represent entities adverse to Horton’s past clients unless its remaining lawyers retained material, confidential information derived from representing Munger.'”
• “Hill noted that Munger challenged the timeliness and effectiveness of the screening protocols but remarked: ‘A timely ethical screen is only an express requirement for continuing representation where the prohibited lawyer continues to work at their new firm….Where the prohibited lawyer has been disassociated, the presence and effectiveness of an ethical screen is relevant to the ultimate question whether any lawyers remaining in the firm possess material, confidential client information, but it is not a requirement for avoiding disqualification.'”

“Homebuilder claims lawyer stole its secrets, then worked against it” —

• “A former Fox Rothschild attorney stands accused of stealing 170,000 documents from that firm, including a local homebuilder’s most sensitive secrets, in the months before he switched sides and went to work for a firm suing the homebuilder.”
• “Adam Gentile ‘breached some of the most fundamental duties a lawyer owes to his or her client — those of confidentiality and loyalty — by stealing tens of thousands of his client’s files to fuel his new career on the other side of the v,’ Century Communities alleged in a lawsuit June 25, using an industry term for switching from a defense attorney to plaintiff’s attorney.”
• “Gentile submitted his resignation from Fox Rothschild on April 14, 2025, according to Century’s lawsuit. The next day, the firm’s chief information security officer reportedly determined that Gentile had moved 169,777 firm files to external hard drives over the prior three months.”
• “Gentile left Fox Rothschild for Hearn & Fleener, a small Denver firm known for suing developers. Hearn & Fleener sued Century six times while Gentile was at Fox Rothschild and has two pending, multimillion-dollar arbitration cases against it now, according to Century.”
• “‘Mr. Gentile took Century’s documents intentionally, over a period of months, while planning to join Hearn & Fleener — the very law firm that regularly sues Century — without any notice or disclosure to Century,’ the homebuilder alleges in its lawsuit.”
• “‘This filing follows Century’s unsuccessful efforts to disqualify our firm over the same underlying dispute, efforts that were rejected multiple times and by two judges after the evidence was heard,’ Fleener told BusinessDen. ‘We’re confident this will fare no better.'”
• “Century is suing Gentile for theft, negligence and breach of fiduciary duty. It wants a Denver judge to prohibit him from keeping or using any stolen documents. Century’s lawyers are Jeff Pagliuca and Jim Fogg with Haddon, Morgan and Foreman in Denver, who declined to discuss it.”

“Inside the $5.8 Million Clifford Chance Clawback And The Brutal New Reality of Big Law’s Lateral Wars” —

• “The glittering promises of the Big Law lateral market have hit a multi-million dollar roadblock with the Clifford Chance legal battle that pulls back the curtain on the closely guarded mechanics behind biglaw partnership agreements.”
• “Clifford Chance, a lucrative biglaw firm providing rich partner rewards, is aggressively pursuing millions of dollars in compensation clawbacks from two of its former top US partners.”
• “The letters outlined a massive financial hit with Clifford Chance demanding a $4.4 million clawback from Cone and $1.4 million from Sabin, both of whom defected to Sidley Austin, quickly retained veteran partnership counsel and have been locked in a fierce dispute ever since.”
• “How a firm can legally demand millions back from historically paid compensation lies deep within Clifford Chance’s dense, 200-plus-page global partnership agreement.”
• “Under a complex provision, equity partners holding more than 300 units (on a ladder scaling up to 1,500 units) face severe retroactive penalties if they leave for a direct competitor. If leadership determines a departing lawyer is competing against the firm, their unit allocation can be retroactively slashed to just 280 units for the preceding three years.”
• “The court filings offer a rare, fascinating look into the elite compensation tiers of a Magic Circle heavyweight.”
• “Beyond the millions at stake, the unsealed partnership agreement reveals the astonishing minutiae governing Clifford Chance’s upper echelon.”
• “If management has ‘good reason to believe’ a partner is planning a departure, the firm retains the right to completely freeze them out, which includes withholding confidential information, banning them from meetings, and stripping them of voting rights.”
• “Yet, amidst the aggressive financial penalties and ironclad corporate protections, the agreement retains a uniquely British touch. In the section detailing when and how partners may interact with members of the press, the 200-page document explicitly commands: ‘A Partner who is in any conversation with a journalist must be polite.'”

“In Clifford Chance pay dispute, a rare look inside a law firm partnership agreement” —

• “Two months after resigning, Clifford Chance’s global managing ​partner, Charles Adams, sent them each a letter detailing millions of dollars he said the firm was entitled to claw back under the firm’s partnership agreement, according to copies of the letters included in the court filings. Based on a ‌complex provision in the agreement, some partners who leave for a competitor can have their compensation recalculated as if they held fewer partnership units during the prior three years.”
• “In the lawsuit filed this week, the former Clifford Chance partners cite an interesting ethics opinion issued last year from the New York City Bar Association that doesn’t seem to have garnered much attention.”
• “In the opinion, which isn’t binding, the bar association’s professional ethics committee warns firms that any policies aimed at discouraging or deterring competition are likely to run afoul of New York’s rules of professional ​conduct.”
• “That could include clawing back bonuses, conditional loan forgiveness, deferred compensation or capital deductions, the ethics opinion said. The former Clifford Chance lawyers acknowledge in their lawsuit that they must go to mediation or arbitration but are asking a U.S. judge to issue a ruling that New York ​law, not English law, should govern when they do so.”
• “Leslie Corwin, a New York lawyer at Duane Morris who is representing Cone and Sabin in their ‌dispute, said the ⁠ethics opinion reflects what he sees as a growing phenomenon of firms trying to make it more difficult for partners to leave.”
• “U.S. law firms have long been limited in how they can restrict partner movement, with traditional noncompete clauses generally prohibited by ethics rules. The concept, Corwin said, is rooted in a desire to protect the best interests of clients.”