“Good & Troubling” Developments — Prospective Client Conflicts Rules, Screening, Duties of Loyalty & Client Files

The always insightful Anthony Davis recently published: “The Good and the Troubling—Recent Developments in Professional Responsibility” —

  • “Opinion 492 gives important and useful guidance in understanding the application and operation of New York Rule 1.18… New York Rule 1.18 (a) defines a prospective client as ‘a person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter…’ New York Rule 1.8 (b) prohibits lawyers who learn information from prospective clients from using or revealing that information except as Rule 1.9 would permit with respect to information from a former client.”
  • “New York Rule 1.8 (c), to which opinion 492 is particularly addressed, prohibits lawyers who have received information as defined in (b), and their law firms, from representing ‘a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d).'”
  • “The importance of the opinion is that it gives guidance on the meaning of the phrase ‘information that could be significantly harmful.’ The opinion notes that the potential harm must relate to the new matter, and whether or not the information is “significantly harmful” will depend on such issues as the duration of the communication, the topics discussed, whether the lawyer reviewed documents, whether the information is known by others and the relationship between the information in the new matter.”
  • “In the absence of consent, the law firm may nevertheless represent another party in the same matter if the lawyer who received information from the prospective client has taken ‘reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client;’ and the law firm gives notice to all parties including the prospective client; implements effective screening procedures to prevent the disqualified lawyer from participating in the representation of the current client; the disqualified lawyer receives no part of the fee for that matter; and a reasonable lawyer would conclude that the law firm will be able to provide competent and diligent representation.”

He goes on to explore another Opinion (1195) in detail, with this element catching my eye in particular:

  • “Opinion 1195 is also troubling in another respect. The opinion refers to a dispute between the lawyer and his former firm with respect to the files of the clients whom the lawyer no longer wished to represent. The departing lawyer had formed his own firm, and apparently the former law firm forwarded those clients’ files to the lawyer at the new firm as a means of establishing that the firm no longer represented the clients and the lawyer was obligated to do so at the new firm. This ignores the fact that the former firm is also counsel to the client and has an ongoing responsibility to ensure that the client is not harmed. This is completely contrary to the well-established case law in New York that files belong to the client and can only be transferred upon the direction of the client.”
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