Risk Update

Disqualification News — Sue Your Client, Get DQ’d, But Misspeak and You Could Be Safe

McGuireWoods DQ’d In Hartford’s Trade Secrets Case” —

  • “U.S. Southern District of Indiana Judge Sarah Evans Barker on Wednesday adopted a magistrate judge’s recommendation that McGuireWoods couldn’t represent former employees of Hartford Steam Boiler Inspection and Insurance Co., which is suing them for allegedly sharing trade secrets with their current employer.”
  • “‘The Magistrate Judge’s conclusion that McGuireWoods cannot litigate against its own client, which it plainly seeks to do, clearly aligns with the prohibitions set out in the rules of professional conduct,’ Judge Evans Barker said.”
    “McGuireWoods has, according to the order, been representing Hartford for over 10 years as outside counsel, advising on labor and employment issues. In June, the firm notified the company that it would be representing its direct adversaries: former Hartford employees Michael Campbell and Kiah Jacobs, and their new employer OneCIS Insurance Co.”
  • “McGuireWoods said it could do this because Hartford consented to allowing the firm to represent clients that may be competitors or adversarial in some way when both companies signed a waiver that said McGuireWoods could do so as long as the legal matter was not closely related to the work the firm does for the company.”
  • “However, Hartford argued in its motion to disqualify the firm that McGuireWoods was leaving out an important piece of this agreement. The retainer read: ‘McGuire Woods asks you to consent in advance to McGuireWoods accepting future matters for your adversaries where the matters are unrelated to the work we do for you and do not involve you as a party.'”
  • “And while McGuireWoods argued that Judge McVicker Lynch was wrong to determine that Hartford hadn’t consented to the firm representing adversaries, Judge Evans Barker called that reading of the contract ‘plainly wrong and legally untenable.'”
  • “The judge was also unmoved by McGuireWoods’ reliance on a case in which a judge cautioned that ‘a finding of conflict is not automatically grounds for dismissal.’ Judge Evans Barker pointed out that this case did not involve a firm that was representing a direct adversary to one of its current clients.”

Law Firm Can’t Be Disqualified Based on Its Misstatement of Conflicting Representation” —

  • “An attorney’s flub in saying that his law firm represented five employees of a company that was the firm’s client—where those employees, whom it didn’t represent, had interests that were potentially adverse to the client—was not a sufficient basis for disqualifying the firm from representing the company in a Private Attorneys General Act action against it, the Court of Appeal for this district has held.”
  • “Acting Presiding Justice John L. Segal of Div. Seven wrote the opinion, filed Thursday. The opinion, which was not certified for publication, reverses an order by Los Angeles Superior Court Judge Gregory Keosian.”
  • “The order stemmed from a response by a named partner of the firm, Ryan Saba, to Jamie Stein of the Simi Valley firm of Green Law, counsel for Cortez. Stein queried as to contact information for five specific employees, and Saba advised that his firm represented them and that he would make them available for depositions.”
  • “‘I was mistaken when I stated ‘our firm represents these individuals.’ What I meant to say, is that our firm will coordinate with these individuals and any other LandCare employee so that the individuals will appear for a deposition, upon your request.'”
  • “Keosian subsequently issued his disqualification order. Segal wrote:
    • ‘Rosen Saba’s statements that it represented the potentially aggrieved employees were unilateral statements showing, at most, that Rosen Saba believed, at least for a short period of time, it represented the employees. The statements were not substantial evidence of an attorney-client relationship….Rosen Saba’s statements did not show the aggrieved employees intended to retain Rosen Saba as their attorneys, that Rosen Saba obtained confidential information from the employees, or that Rosen Saba provided legal advice to the employees… That is not to say an attorney’s conduct is never evidence of an attorney-client relationship….Rosen Saba, however, did not make a court appearance or file anything on behalf of the aggrieved employees. Rosen Saba opposed Cortez’s request for a temporary restraining order on behalf of LandCare, not the employees. And, at the time LandCare filed the opposition, none of the aggrieved employees was a party to the action or subject to a subpoena or a notice to appear for deposition. Because Rosen Saba was not appearing on behalf of the employees, its statement that it represented the employees did not raise a presumption the employees knew of or had authorized Rosen Saba to make the statement. The trial court erred in ruling that the statements showed Rosen Saba represented the potentially aggrieved employees and that such representation required disqualification.'”
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