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Commonwealth of Massachusetts


March 2006

SIDEWAYS: Lateral Hires and Conflicts of Interest

by
Constance V. Vecchione, First Assistant Bar Counsel

How can attorneys changing firms — whether hiring or being hired— avoid importing a conflict of interest that will disqualify the law firm that the newcomer is joining? And is the problem any different if the conflict at issue involves a former, rather than a current, client?

A helpful way to analyze these problems is to begin by asking yourself whether you would be disqualified from representing a client’s adversary if you had not changed firms, that is, would you have a conflict of interest with another client if you were still at your old firm. These situations arise both as to conflicts between current clients under Mass. R. Prof. C. 1.7 and conflicts with former clients under Mass. R. Prof. C. 1.9(a). If you would not have had a conflict at your former firm, then obviously you do not have a conflict at your new firm and the new firm is not disqualified. See Rule 1.9(b)(2). However, if you would have had a conflict of interest had you stayed at your old firm, you do not shed the conflict when you change firms.

If the new hire does have a conflict, the question then is whether the new firm is also disqualified. The starting point for a discussion of these issues in Massachusetts is Mass. R. Prof. C. 1.10, the imputed disqualification rule. Mass. R. Prof. C. 1.10(a) sets out the traditional per se rule that forms the basic standard: while lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by the rules on conflicts of interest with current and former clients, Rules 1.7, 1.8(c), or 1.9.

Rule 1.10 is premised on the undivided loyalty owed to a client, as well as the presumption that lawyers associated in a firm share or have access to confidential information concerning each other’s clients. Cinema 5 v. Cinerama, 528 F.2d 1384 (2nd Cir. 1976), Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir. 1978). Thus, for example, an attorney cannot represent a client in a personal injury case while his partner is suing the same client for specific performance of an entirely unrelated option agreement. McCourt C., Inc. v. FPC Properties, Inc, 386 Mass. 145 (1982).

Under the ABA Model Rules of Professional Conduct, the discussion as to current clients essentially ends there. If the former firm of the new hire is representing an adversary of the new firm in the same or a substantially related pending matter, and the transplanted lawyer has any material confidential information, the new firm is disqualified, period. In essence, the ABA’s analysis is that, since the lawyer changing firms would himself be disqualified under either Rule 1.7 or Rule 1.9, his new firm is also disqualified.

Massachusetts, however, and some other jurisdictions, provide for a narrow exception permitting the representation in limited circumstances even when the new hire is, as characterized in Mass. R. Prof. C. 1.10(d), a “personally disqualified lawyer.” Which personally disqualified lawyers are subject to screening and how the screening is to be implemented are explained in Rules 1.10(d)(1) and (2) and (e).

First and foremost, absent informed consent from the clients on both sides of the case, there is nothing that can be done to prevent disqualification of the new firm if the newly associated attorney is in possession of substantial material information or had substantial involvement in the pending matter at his or her old firm. In these circumstances, screening is not an adequate protection and the new firm will have to withdraw. See comments 10 and 11 to Mass. R. Prof. C. 1.10(d).

On the other hand, what if the new hire has no material protected information about the case from the old firm? In an ongoing case, the new hire is still personally disqualified from representing the opposing party at the new firm in that same or a substantially related matter, but the conflict is not imputed to the firm. The new firm is not disqualified from representation and the screening procedures set forth in Rule 1.10(e) do not need to be implemented. See comment 9 to Rule 1.10(d)(1). And if the new hire’s, or the former firm’s, representation of a client had terminated before the adversary came to the new firm, the new hire, under Rule 1.9(b), is in fact not even “personally disqualified.”

In the middle of these extremes is the only circumstance in which screening applies, specifically, a new hire who had some involvement in or material information about a case at the old firm but neither the information nor the involvement was substantial. The new lawyer obviously has a conflict and is personally disqualified. However, in this situation and only in this situation, Mass. R. Prof. C. 1.10(d)(2) provides that the new firm is not disqualified if the new hire is promptly screened from participation in the matter and receives no part of the fee paid to the new firm.

Rule 1.10(e) then sets out in detail the requirements for adequate screening: 1) material information in the possession of the personally disqualified attorney must be isolated from the firm 2) the personally disqualified attorney must be isolated from contact with the client and with witnesses for or against the client 3) the personally disqualified attorney and the firm cannot discuss the matter with each other 4) notice and an affidavit from the personally disqualified attorney containing certain prescribed information are required to be sent to the former client and 5) the personally disqualified attorney and the new firm must reasonably believe that the screening will be effective in preventing disclosure of material information to the new firm or its client.

When deciding whether screening is permissible, it is critical to look carefully at Mass. R. Prof. C. 1.10(e)(5) (item 5 in the previous paragraph). For example, suppose a two-lawyer firm that represents a wife in a pending divorce is hiring a third attorney whose former firm is representing the husband. The new associate had some tangential involvement in the matter at his old firm. In theory, since the new attorney’s involvement in the divorce case at the old firm was minimal, it would seem that the new hire could be screened and the new firm would not be disqualified. In practice, however, and as noted in comment 10 to the rule, it may be impossible in such a small firm to set up an effective screen. Unless the husband and wife both consent to the new firm’s continued representation, the new firm may have to withdraw.

There is another additional concern that applies regardless of how large or small the firm is, namely, the possibility that there are other potential conflicts that neither the new hire nor the new firm remembers or knows about. The question then is what type of conflict-checking is permitted in advance of a move to prevent surprise disqualifications from major ongoing cases.

In an ethics opinion from May 2004, the Boston Bar Association concluded that lawyers changing jobs may reveal to prospective firms or employers, without the consent of the affected clients or ex-clients, “conflict-checking information” including the identity of the lawyer's previous clients and the general subject matter of the representation if not embarrassing or detrimental to the client and limited to that reasonably necessary to check for conflicts. See Boston Bar Association Ethics Committee Opinion 2004-1, http://www.bostonbar.org/sc/ethics/op04_1.pdf .

Finally, what about the new hire’s former firm? Can the old firm represent a new client in bringing an action against an ex-client who had been represented by the lawyer who left the firm? The analysis is very similar to the situation with the new firm when the potential conflict involves former clients. The old firm is not necessarily disqualified from representing a client with interests adverse to those of an ex-client who had been represented by the former partner or associate. However, the firm is not permitted to undertake the representation if the new matter is the same or substantially related to the former representation and if any attorney remaining in the firm has material confidential information. See Mass. R. Prof. C. 1.9(b).

At bottom, the rules on imputed disqualification are an attempt to balance a client’s right to loyalty and confidentiality against a lawyer’s need to be able to change jobs without violating ethical requirements. A careful reading and application of these rules will protect the interests of all concerned.



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