July 2018 | Earn one hour of MCLE Credit in Legal Ethics
By Andrew Dilworth
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For decades California case law recognized screening only as a potential means of addressing conflict issues in the context of government lawyers, typically those moving in and out of civil service. It was generally held that if a non-governmental lawyer had a disqualifying conflict of interest in a civil matter the conflict would be imputed to other lawyers in his or her firm who would then be vicariously disqualified. An ethical screen was insufficient to prevent imputation.
The increased mobility of lawyers, however, eventually led to a greater receptiveness by the California courts to the possibility of screening in fact-specific circumstances that could prevent automatic vicarious disqualification.
Unlike states that follow the ABA Model Rules, California historically has not had Model Rule 1.10, nor any other rule of professional conduct addressing imputation or screening. Instead, these concepts have developed over time in California through case law.
In 2010 a court of appeal in Kirk v. First Am. Title Ins. Co. (2010) 183 Cal.App.4th 776 conducted a lengthy analysis of the state of the law in California regarding screening of non-governmental lawyers in civil matters.
The Kirk court recognized that the law in California regarding vicarious disqualification remained unsettled, and that in certain circumstances screening of a tainted lawyer in a civil matter might be a means of rebutting a presumption of shared confidences and therefore avoiding vicarious disqualification of the rest of the firm. Kirk involved a lawyer who received confidential information during an inquiry about possible retention as a consultant (that attorney declined the retention).
Summarizing the state of the law at the time, the Kirk court explained that there were two principles that could be discerned from existing California case law. First, when a tainted attorney “switches sides” during a case, the attorney’s new firm will be automatically disqualified. Screening the tainted lawyer will not prevent imputation. Second, in other appropriate cases, including situations where the attorney in question previously represented a party opposing his current firm in a substantially-related but different case, the court should conduct a “case-by-case analysis” with a focus on screening procedures implemented by the attorney’s new firm, to determine whether the firm should be vicariously disqualified from the case at hand.
In those cases in which a case-by-case analysis is appropriate, Kirk lays out a two-step burden shifting process. The party moving for disqualification must first establish that the lawyer in question is “tainted” with confidential information adverse to that party. The taint might be established through evidence that the lawyer actually possesses material confidential information, or through evidence that there is a “substantial relationship” between the former matter the tainted lawyer worked on and the current matter, in which case it will be presumed that the tainted lawyer possesses material confidential information adverse to the former client. A substantial relationship exists whenever the subjects of the prior and current representations are linked in “some rationale manner.”
If it is established that a lawyer is tainted, then a “rebuttable presumption” arises that the tainted lawyer shared such confidential information with his firm, the non-moving party’s counsel. The burden shifts to the non-moving party to rebut the presumption of shared confidences by establishing that the lawyer’s firm imposed screening that will effectively prevent sharing of confidences in the particular case.
A recent opinion out of the Eastern District of California, National Grange v. California Guild 2017 WL 2021731 (E.D. Cal. 2017), which denied a disqualification motion based in part on the timely implementation of an ethical wall in a substantially-related conflict scenario, opined that Kirk’s summary of California’s vicarious disqualification law, which includes articulation of the two above-referenced principles, has not been disputed in any subsequent California case law.
Following the Kirk analysis, the federal court in National Grange refused to disqualify a law firm where the tainted lawyer was shown to have been screened since his arrival at the new firm, the lawyer performed no work on the related matter at the new firm, and declarations were submitted by the firm employees and lawyers working on the matter at the new firm attesting to the fact there had been no communication with the tainted lawyer about his work on the other matter at his prior law firm.
Even more recently, in California Self-Insurers’ Security Fund v. Superior Court (2018) 19 Cal.App.5th 1065, a California appellate court considered the Kirk analysis in deciding whether to disqualify a firm after a tainted lawyer had departed. The tainted lawyer worked on the moving party’s (defendant’s) matter while at his old firm. He then moved to a new firm that represented the plaintiff in the same matter. While at the new firm he did no work on the matter and within approximately a month, had left the firm.
Defendants argued that under the Kirk analysis the situation was a “side-switching” case and therefore vicarious disqualification of the rest of the firm, even after the tainted lawyer’s departure, was automatic.
The court stated there would be “no question” that if the tainted lawyer were seeking to represent plaintiff he could not do so. Nor would there be any question that if the tainted lawyer had continued to work at the firm, the entire firm would be disqualified.
The question posed, according to the court, however, was whether the firm and its remaining attorneys were also prohibited from representing plaintiff given all the relevant facts, including that the lawyer was no longer at the firm, and had only been there for a very brief period.
After a lengthy analysis of Kirk, the court in California Self-Insurers’ Security Fund affirmed its agreement that whether disqualification of the entire firm is automatic is an “open question.” The court noted that the facts at issue were unlike any of the published cases the court had found. The court rejected the notion that because the tainted lawyer had worked for the defendant on the matter at issue while at his prior firm, disqualification of the lawyer’s second firm, following his departure from that firm, was automatic.
Instead, the court held that an analysis needed to be conducted as to whether confidential information was indeed transmitted by the tainted lawyer to the lawyers working on the plaintiff’s matter at the second firm. The court reasoned that “[i]ndividual assessment of the facts, rather than automatic disqualification, is a modern rule that better reflects the current realities of law firm life in the 21st century.” The court further noted that the rationale behind automatic disqualification is substantially diminished when the attorney in question no longer works at the firm sought to be disqualified.
The tainted lawyer in California Self-Insurers’ Security Fund had also operated out of a different office during his brief tenure at the second firm from the office in which the second firm’s other lawyers were representing plaintiff. A screen had been implemented. And, there was evidence no confidential information had been shared. In such a situation, the court held, “[a]utomatically finding that [the tainted attorney’s] very short tenure [at the firm] is sufficient to impute knowledge to the entire firm, including attorneys working on the matter in a different office, places form over substance.”
Looking once again to Kirk, the court emphasized that disqualification is not intended to be punitive nor formalistic, but rather prophylactic. Disqualification is inappropriate simply to punish a dereliction that will likely have no substantial continuing effect on future judicial proceedings.
As demonstrated by these recent decisions, the application of vicarious disqualification in California continues to develop. The suggestion in Kirk – and other decisions – that the law regarding vicarious disqualification remains an “open question” continues to be endorsed by various California courts.
The effectiveness of screening as a measure to prevent such disqualification in civil matters involving non-governmental lawyers also continues to evolve, and will undoubtedly be directly influenced by how the California courts refine and further address the issue of vicarious disqualification in future fact-specific matters.
 On May 10, 2018 the California Supreme Court Filed an Order Re Request For Approval of Proposed Amendments to the Rules of Professional Conduct of the State Bar of California. The Order approves, among other proposed rules, Rule 1.10 Imputation of Conflicts of Interest: General Rule. The approved rule will become effective November 1, 2018. At that time, California lawyers will have a rule addressing imputation as well as prior case law to guide their evaluation of imputation issues.
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