Risk Update

Risk Q&A — When Lateral Leavers’ Departing Clients Create Conflicts Concerns

Mark Hinderks, Stinson LLP’s legal ethics and professional responsibility practice writes: “Is It a Conflict of Interest to Be Adverse to a Former Firm Client Who Has Left With a Departing Lawyer?”

  • Question: I am a lawyer with a midsized firm. With the mobility of lawyers moving laterally in recent years, it is not uncommon for a lawyer to join us as a new partner with their own set of clients whose matters they bring with them to the firm. Regrettably, we also sometimes lose partners to other firms, who then depart with some or all of the clients with whom they have built relationships. This type of movement seems to be a part of the modern practice of law but creates sometimes confusing conflict of interest issues.”
  • “Recently, one of our partners left the firm to join another firm. We were able to amicably and jointly communicate to clients for which she was responsible about her departure, some of which chose to stay with our firm and some of which determined to transfer their files and matters to the exiting partner’s new firm. X Company, a client that the partner had earlier brought to the firm chose to move all their matters with her to her new firm. She took all of the client files (paper and electronic), and also took with her the only associate who had worked on any of X Company’s matters. “
  • “Now, a couple of months later, a dispute has erupted between one of my clients and X Company, and they want me to represent them in a suit against X Company. I am concerned that the company was also a client of our firm only about 60 days ago. Does this create a conflict issue for us either under the former client Rule 1.9, or the imputation of conflicts Rule 1.10?”
  • Answer: These facts present an interesting twist on the Model Rules’ protection of the interests of ‘former clients.’ Rule 1.9 duties to former clients seek to prevent a lawyer from using confidential information gained in a previous representation from being used to the former client’s disadvantage when representing a different client, and to prevent a changing of sides. The rule accomplishes this by limiting adversity in the ‘same or substantially related’ matters. See Rule 1.9, Comments 1-2.”
  • “In your situation, however, these interests are not implicated because your firm no longer has in its possession any confidential information relating to the matters of the former client X Company; there is no lawyer remaining at the firm who was exposed to X Company’s confidential information, and there is no lawyer remaining at the firm who would be ‘switching sides’ if you or another lawyer at the firm were to now be adverse to X Company.”
  • “This situation is expressly accounted for in Rule 1.10(b), which provides that when a lawyer has terminated their association with a firm, the firm is not thereafter prohibited from being adverse to a client represented by that formerly associated lawyer, and not currently represented by the firm, unless it is the same matter or substantially related to that in which the formerly associated lawyer represented the client while at the firm; or any lawyer remaining in the firm has confidential information protected by Rules 1.6 and 1.9(c) that is material to the matter, in any form, paper, electronic or in their head.”
  • “Here, all the records are gone, and the only lawyers who had knowledge of the former client’s confidential information in their heads are also gone. Therefore, provided the new matter is not the same or substantially related to a matter for X Company while the partner who left represented them at your firm, neither you nor your firm have a conflict of interest that precludes current adversity. Good luck with the new matter.”