In California Self-Insurers’ Security Fund v. Superior Court, (2018) 19 Cal.App.5th 1065, the Court of Appeal held that disqualification of an entire firm was not mandatory where an attorney from one firm “switched sides” and joined another firm during litigation, but left the new firm before the motion for disqualification was heard. The Court held that automatic disqualification of the entire firm was not required. Instead, a rebuttable presumption standard applied.
The Court explained that “individual assessment of the facts, rather than automatic disqualification, is a modern rule that better reflects the current realities of law firm life of the 21st century.” It cited a previous opinion recognizing that large law firms open offices nationwide or internationally, and merge with other large law firms. Individual attorneys may work at a firm without knowing or having any contact with other members of the firm. Thus, “the rationale behind the rule for automatic disqualification is diminished when the attorney in question no longer works at the firm sought to be disqualified.”
This ruling, while helpful to large law firms growing through lateral hires, is based on an anomalous and unique set of facts. The attorney left the large law firm representing the defendants to join the Los Angeles office of another large law firm representing the plaintiff. The attorney remained with the new law firm for only five weeks, leaving before the trial court decided the motion to disqualify. The attorneys handling the matter at the new firm were in the San Francisco office, not Los Angeles. The new firm isolated the transferred attorney from the case, and no confidential information was shared. Finally, the Court recognized that the plaintiff would be substantially prejudiced if it had to hire new counsel over three years into the litigation.
Law firms should not rely on these unique facts to be less than vigilant about avoiding representing conflicts of interest. The court could have easily exercised its discretion to decide the other way in light of the attorney essentially “switching sides” on the same case. Conflicts of interest continue to be a common alleged legal error causing legal malpractice actions.
Firms should employ conflict systems for new matters and lateral hires, and ensure that every attorney, not just those in the risk management department, understand how the conflict-check system works. Attorneys should be aware of conflict rules involving concurrent clients and successive client representations. In-house continuing legal education presentations and written memos should be utilized.
Although it may occasionally result in having to turn down work, avoiding conflicts of interest is good business. It can prevent a firm from having to pay money to settle claims, avoid harm to the firm’s reputation, result in better pricing for malpractice insurance, and allow attorneys to spend time attracting new clients or serving existing clients rather than handling claims against the firm.
John Sullivan is the Vice Chair of BASF’s Legal Malpractice Section. He is a partner at Long & Levit, and a contributor to Long & Levit’s Lawyers and Judge’s Blog, www.longlevit.com/blog/, which is searchable by topic and case name.
