State Bar of Arizona Ethics Opinions
95-06: Conflict of Interest; Imputed Disqualification; Former Client
Once a lawyer who has a conflict leaves a firm, the remaining members of the firm are no longer subject to imputed disqualification if none of the remaining lawyers possess any confidential information related to the former client of the departed lawyer. [ER 1.10]
From 1987 to 1989, Attorney A was employed as an associate in law Firm 1. During the period, Attorney A and Law Firm 1 actively represented Individual Client in a civil matter adverse to the interest of Corporate Client. In 1989, Attorney A left Law Firm 1 and became a Deputy County Attorney. In 1992, Attorney A joined Law Firm 2 as an associate. In December 1994, Attorney A left Law Firm 2 and joined Law Firm 3. Law Firm 2 is, and has been for many years, general counsel to Corporate Client. Attorney A brought no files with her to Law Firm 2 concerning Individual Client, nor did she ever disclose confidences, work product or other confidential information learned from her representation of Individual Client to any person previously or now with Law Firm 2.
During Attorney A's employment with Law Firm 2, a dispute arose between Individual Client and Corporate Client which was substantially related to the matter that Attorney A and Law Firm 1 handled. Law Firm 2 pointed out the conflict and the resultant imputed disqualification issues. Law Firm 2 requested a waiver, which was not granted by Individual Client. Law Firm 2 immediately ceased representation of Corporate Client on this particular matter. After Attorney A resigned from Law Firm 2, Law Firm 1 was advised that the conflict no longer existed. Law Firm 1 advised Law Firm 2 that the conflict continued for Law Firm 2 even though Attorney A had resigned.
When an attorney with a former affiliation that creates a conflict leaves a firm, does the imputed disqualification of the remaining members of the firm cease?
RELEVANT ETHICAL RULES
ER 1.10 IMPUTED DISQUALIFICATION: GENERAL RULE
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(c) When a lawyer has terminated association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer unless:
(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
(2) any lawyer remaining in the firm has information protected by ER 1.6 and 1.9(b) that is material to the matter.
(d) A disqualification prescribed by this Rule may be waived by the affected client under the conditions stated in ER 1.7.
An imputed disqualification occurs when a lawyer formerly associated with a different firm has represented, in the same or substantially related matter at such former firm, a client whose interests are adverse to a client of his or her current firm. In such situations, the current law firm must withdraw from representation of such matter unless the client of the former firm consents.
Imputed (also known as vicarious or infectious) disqualification exists for multiple purposes. The most basic purpose is to give effect to the principle of loyalty to the client. Each lawyer is bound by the responsibility of loyalty owed by all other members of the firm. Therefore, imputed disqualification prevents lawyers from circumventing the ethical rules by allowing partners or employees to perform services that one lawyer would otherwise be prohibited from performing.
Ethical Rule 1.10(c) recognizes, however, that imputed disqualification may cease at a later date under certain circumstances. Specifically, when the attorney with the actual conflict has terminated association with the firm, the law firm as a whole is no longer disqualified as long as confidential information obtained by such attorney was not disclosed to remaining members of the firm.
Section 204 of the Restatement of the Law Governing Lawyers recognizes the same principle. Imputation can be removed under certain circumstances:
"The restrictions upon an affiliated lawyer . . . do not restrict
that lawyer when:
(1) The affiliation between the lawyer and the personally-prohibited lawyer that created the imputed prohibition has been terminated and no confidential information of the client, material to the matter, has been communicated to the lawyer or any other lawyer who remains affiliated with the lawyer . . . ."
The presumption exists that all lawyers of a firm have access to confidential client information, and as such, it is shared among the attorneys of the firm. See Cinema 5, Ltd. v. Cinerama Inc., 528 F.2d 1384 (2nd Cir. 1976); In re Corrugated Container Antitrust Litigation, 659 F.2d 1341 (5th Cir. 1981); Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir. 1978). The presumption, however, is rebuttable. Novo Terapeutisk Laboratorium A/S v. Baxter Travenol Laboratories, Inc., 607 F.2d 186 (7th Cir. 1979). Courts have refused to apply a per se disqualification or irrebuttable presumption because doing so would limit access to "technically trained attorneys in specialized areas" and restrict mobility of lawyers associated with large law firms. Laskey Bros. of W. Va., Inc. v. Warner Bros. Pictures, Inc. 224 F.2d 824, 827 (2nd Cir. 1955), cert. denied, 350 U.S. 932, 100 L.Ed. 814, 76 S.Ct. 300 (1956).
The burden is on the law firm to show that none of the remaining attorneys of the firm are privy to confidential information of the former attorney's client. For example, in Solow v. W.R. Grace & Co., 83 N.Y.2d 303, 632 N.E.2d 437 (3/24/94), the court rejected the use of an irrebuttable presumption of shared confidences as being against the preferred policy of client choice, as well as restricting an attorney's ability to practice. In this case, the firm was able to prove through affidavits and circumstances that the lawyers involved did not disclose confidential client information with the rest of the firm.
Based on the foregoing, Law Firm 2 should no longer be disqualified from representing Corporate Client if it can show that the confidential information known to Attorney A was not disclosed to any attorney presently associated with Law Firm 2. The facts presented by Law Firm 2 indicate that no files were brought to Law Firm 2 by Attorney A. In addition, Attorney A appears able to sign affidavits to the effect that no confidential information was disseminated. Therefore, there no longer appears to be any imputed disqualification of Law Firm 2.
Formal Opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceedings. ã State Bar of Arizona 1995