Risk Update

Risk Roundup — Hot-Potato-Dropping Conflicts, Ethical Screen Struggles

Posted Dan Bressler

Nice analysis from two lawyers from the Professional Liability Practice Group of Pullman & Comley: “The Dangers of Resolving Client Conflicts by ‘Dropping the Hot Potato’” —

  • “A 2018 decision by the United States District Court for the District of Massachusetts highlights a risk faced by law firms tempted by the prospect of business from a new client whose interests are, or may be, adverse to those of an existing firm client. Altova GMBH v. Syncro Soft SRL, 320 F.Supp. F.3d 314 (D. Mass. 2018).”
  • “Faced with the opportunity to represent its existing client (Altova) in a new patent dispute against another client (Syncro), the firm was faced with an obvious conflict of interest. It attempted to solve its dilemma as follows: within a few weeks of being contacted by Altova for representation in the patent dispute, the firm wrote to Syncro terminating its relationship with Syncro. The firm described the reason for the termination as “potential conflicts in relation to other clients’ work that [the firm] would like to undertake and that those other clients would like [the firm] to undertake.” 320 F.Supp. 3d at 318. In its letter the Sunstein firm did not identify Altova as one of the “other clients” at issue, let alone ask for Syncro’s consent for the firm to represent Altova in the anticipated patent litigation against Syncro.”
  • “The court slapped down the notion that such a gambit necessarily will convert the dropped client into a “former” client for purposes of conflicts analysis. When a client falls into the category of a “former” client, the law firm’s conflict of interest obligations are governed by the more lenient standards of Rule 1.9 of the Rules of Professional Conduct, rather than the more stringent conflict of interest requirements applicable to a “current” client under Rule 1.7. But given that the Sunstein firm dropped Syncro within mere weeks of being asked to represent Altova against Syncro, the court readily found that Syncro plainly was a “current client” at the time Altova first approached the firm about suing Syncro.”
  • “While a law firm might be entitled to drop one client in favor of another unrelated client when the two clients become embroiled in a dispute that was “unpredictable,” the Sunstein firm had been performing ongoing work for Altova, including having previously sent Syncro a cease and desist letter relating to an alleged copyright infringement involving the same property at issue in the patent dispute. The court found in light of these facts, the 2017 patent “altercation was foreseeable.” Id. at 321.”
  • “As a general rule, courts will not countenance a law firm’s attempt to avoid disqualification in a dispute between two current clients by the firm terminating its representation of the client it deems, for whatever reason, less desirable. The authors of Rule 1.7 command that “a lawyer must not accept a second client if the directly adverse conflict is known in advance and [therefore] must withdraw if the conflict is discovered after the concurrent representation has” begun. Hazard, Hodes & Jarvis, The Law of Lawyering §12.03 (4th ed. 2019).”

“Boeing Seeks DQ After Assistant Switches Sides In ADA Suit” —

  • “Boeing has asked an Oregon federal court to disqualify a law firm handling a disability discrimination suit against the company, saying that it had hired a legal assistant who previously worked on the case while employed by Boeing’s attorneys at Ogletree Deakins Nash Smoak & Stewart PC.”
  • “The Boeing Co. told the court on Friday that it had tried to ensure that The Law Offices of Daniel Snyder properly screened legal assistant Sarah Churchill off from the suit, but Snyder had resisted putting a screen in place and violated the screen just three weeks after agreeing to it.”
  • “…Churchill worked on the case while employed as an assistant for Ogletree attorney James M. Barrett, who is still one of the attorneys of record for Boeing. During that time, Churchill sent or received almost 300 emails related to the case, including emails that contained legal advice on the company’s affirmative defenses, objections to depositions and other discovery, discussions of work product, and other issues, according to the motion. She left the firm in February, the motion said.”
  • “The motion portrays Snyder as being resistant to formally agreeing to the screen, but he did agree to the requested screening procedures in June, according to the motion. Just three weeks later, however, he copied Churchill on an email about the case, the motion said.”