Risk Update

The Disqualification and The Dispute — Follow that (Privileged?) Email…

Gibson Dunn disqualification over privileged email could be headache for Calif. lawyers” —

  • “On Tuesday, a divided California state appeals court refused to reverse a trial court decision to disqualify Gibson Dunn & Crutcher from defending McDermott Will & Emery in a malpractice suit brought by the patriarch of a family investment business. Gibson Dunn’s fatal mistake, according to the Fourth Appellate District of the California Court of Appeal, was relying on an email distributed by the patriarch, which Gibson Dunn found in McDermott’s own files and produced to the other side.”
  • “If that strikes you as a strange rationale for disqualification, you are not alone. In a strongly worded dissent from the majority opinion by Judge Richard Aronson, Judge David Thompson said the majority had twisted California’s rules for handling disputed discovery material beyond recognition and reason.”
  • “The majority opinion ‘upsets the delicate balance,’ Judge Thompson wrote. ‘It imposes on Gibson Dunn an obligation to respect their opponent’s interests which is greater than and in direct conflict with their primary obligation to zealously represent their own client’s interests.'”
  • “But among the new wrinkles in the Gibson Dunn case, as you will see, are that the disputed email ended up in McDermott’s files before McDermott was in litigation with its former client. Gibson Dunn didn’t trick anyone to get hold of the email to gain a litigation advantage. Nor did McDermott’s former client mistakenly produce the email in discovery in the malpractice case. The email was already sitting in the files of Gibson Dunn’s client when the malpractice case began.”
  • “The backstory on the disputed email is so uniquely convoluted that I doubt any other lawyers will find themselves in precisely the same circumstances as Gibson Dunn in the McDermott case. But as Judge Thompson warned in his dissent, the ruling puts all California lawyers on notice that their own clients’ records may contain privilege pitfalls.”
  • “When Dick’s lawyers realized McDermott had the email, they asked Gibson Dunn to return all copies. Gibson partner James Fogelman refused, asserting that the document was not privileged because Dick had disclosed it to non-lawyers.”
  • “Dick eventually settled his dispute with Rick without any resolution on whether the email was privileged. But the issue came back when he sued McDermott for malpractice, claiming the firm was conflicted in representing various members of the Hausman family. Dick first moved for a ruling that the email was privileged. After the trial judge overseeing Dick’s malpractice actions, Orange County Superior Court Judge Sheila Fell, agreed that it was, Dick asked her to disqualify Gibson Dunn for using the document. The judge did so in a minute order.”
  • “More broadly, the opinion said lawyers don’t have discretion to consider whether the facts strip privilege from presumptively privileged documents. Once the protocol for presumptively privileged material is triggered, the majority said, lawyers don’t have discretion.”
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