District of Columbia Bar Legal Ethics Committee, Op. 343 (Feb. 2008)

Brief Summary
The District of Columbia Bar Legal Ethics Committee (“Committee”) advised that a lawyer who is asked to handle a matter adverse to a party that the lawyer or the lawyer’s law firm previously represented in a related matter may, in some circumstances, avoid former client conflict by limiting the scope of the new representation to a discrete legal issue or discrete stage in litigation.

Complete Summary
District of Columbia Rule of Professional Conduct (“RPC”) 1.9 contains the former client conflict of interest rules. It provides that “[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent.”   Comment [3] to RPC 1.9 states that “[m]atters are ‘substantially related’ . . . if they involve the same transaction or legal dispute or if there otherwise is a “substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.” Pursuant to RPC 1.2(c), however, a lawyer is generally permitted, with the informed consent of the client, to “limit the objective of the representation.”

The Committee advised that “[r]estrictions on the scope of the representation that effectively ensure that there is no substantial risk that confidential factual information as would normally have been obtained in the prior representation would be useful or relevant to advance the client’s position in the new matter may, under certain circumstances, be sufficient to avoid a conflict of interest.” 

For example, “Client” may hire “Lawyer” to represent Client on a discrete legal claim distinct from the matter in which Lawyer or Lawyer’s law firm represented a former client, albeit arguably related to former representation. In the example provided, Client hires Lawyer to defend Client’s patent against claims by “Former Client” that the patent had not been properly assigned to Client in advance of Client bringing suit. Suppose Lawyer’s law firm had previously represented Former Client in a different case involving infringement claims based on the same underlying technology. Cautioning that it would be important to use a separate litigation team to handle the new case, the Committee advised that “[t]o the extent that Lawyer’s participation in the [new] lawsuit can genuinely be limited to the assignment issues” and to the extent that Client is prepared to accept the costs and inefficiencies of such a structure, Lawyer’s participation in the lawsuit would not violate RPC 1.9.

Second, Client might hire Lawyer to represent it in a discrete portion of litigation. For example, Lawyer might be asked to represent Client against Former Client, a company that Lawyer’s firm previously represented in a substantially related matter. Specifically, Client might be interested in filing a petition for certiorari with the United States Supreme Court to challenge a decision of the court of appeals on the grounds that the appellate court lacked jurisdiction over the particular claim. Lawyer and Client might agree that Lawyer’s engagement will be limited to raising the question of federal jurisdiction, a pure question of law that neither depends on the underlying merits of the case for its resolution nor is connected with the earlier representation. Given the limited scope of Lawyer’s representation in this example, there is no basis to conclude that confidential information of Former Client that would be imputed to Lawyer would be relevant to or useful in Lawyer’s representation of Client. Consequently, RPC 1.9 would not be triggered.

Significance of Opinion
Although it remains to be seen wether other jurisdictions will accept the same approach, the two categories provided by the Committee are potentially useful guidelines in determining the circumstances in which lawyers may represent clients without violating RPC 1.9.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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May 15, 2008: Third Party Claims for Lawyers: Is There Life After Stoneridge

July 16, 2008: Impaired and Poorly Behaving Partners: Managing the Risks

Third Party Claims for Lawyers: Is There Life After Stoneridge

May 15, 2008, Noon-1:30 pm EST

Speakers
Rebecca Lambreth, Partner, Duane Morris LLP
Anthony Davis, Partner, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP

Program Overview
One of the most important (and disturbing) developments in law firm risk management in recent years has been the increased willingness of plaintiff’s lawyers, government agencies, and courts to hold lawyers and law firms culpable for the actions or omissions of their clients. We have seen these so-called “third party claims” in a wide variety of contexts, from securities fraud cases to abusive tax shelter claims to cases involving circumstances of deepening insolvency. In January, the Supreme Court handed down its decision in Stoneridge Investment Partners v. Scientific-Atlanta, a case that affirms the limited ability of plaintiffs in securities fraud cases to reach lawyers and other providers of services to defendant companies.

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Topics to Include

• The circumstances under which lawyers can still be held liable for the actions or omissions of their clients;
• Potential liability for lawyers as third-party defendants in securities fraud cases after Stoneridge, and whether the “aiding and abetting” claim still has relevance;
• The seriousness of the threat of lawyers being held liable for the actions of their clients in deepening insolvency circumstances;
• What lawyers and law firms can do to protect themselves against such claims going forward;
• Red flags” in this area that firm managements should pay attention to.

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Impaired and Poorly Behaving Partners: Managing the Risks

July 16, 2008, Noon-1:30 pm EST

Speakers
Thomas L. Browne, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP
Tom H. Luetkemeyer, Lawyers for the Profession® Practice Group, Hinshaw & Culbertson LLP
Dr. Larry R. Richard, Vice President and Head of the Leadership & Organization Development Practice Group, Hildebrandt International

Program Overview
Dealing with “problem” partners has always been a challenge for law firm leaders. In recent years, however, it has also become a serious area of risk exposure as state bars, regulatory agencies, clients, and plaintiff’s lawyers have been increasingly willing to charge firms with accountability for the “lack of supervision” often evidenced in such behaviors. In this virtual seminar, you will hear three experts ― two professional responsibility lawyers and one lawyer/psychologist ― describe the nature of these risks and offer some practical advice on dealing with these problems.

Topics to Include

• Ways of identifying “problem” partners before the problems cause serious damage;
• Methods for dealing with impaired or poorly behaving partners that protect the interests of the partners and the firm;
• Circumstances in which “problem” partners must be reported to the local bar;
• Understanding the psychological issues that can give rise to problems and how to short-circuit them;
• Discussing “problem” partner issues with clients; and
• Managing the damage to the firm when and if problems become public.

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