“(d)

A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the concurrent representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.”

a.

Comment 2A to Rule 1.13 states: “There are times when the organization’s interests may differ from those of one or more of its constituents. In such circumstances, the lawyer should advise any constituent whose interest differs from that of the organization: (i) that a conflict or potential conflict of interest exists, (ii) that the lawyer does not represent the constituent in connection with the matter, unless the representation has been approved in accordance with Rule 1.13(d), (iii) that the constituent may wish to obtain independent representation, and (iv) that any attorney-client privilege that applies to discussions between the lawyer and the constituent belongs to the organization and may be waived by the organization. Care must be taken to ensure that the constituent understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent, and that discussions between the lawyer for the organization and the constituent may not be privileged.”

b.

Comment 2B states: “Whether such a warning should be given by the lawyer for the organization to any constituent may turn on the facts of each case.”

c.

Comment 12 states: “Paragraph (d) recognizes that a lawyer for an organization may also represent a principal officer or major shareholder, subject to the provisions of Rule 1.7. If the corporation’s informed consent to such a concurrent representation is needed, the lawyer should advise the principal officer or major shareholder that any consent given on behalf of the corporation by the conflicted officer or shareholder may not be valid, and the lawyer should explain the potential consequences of an invalid consent.”

“(f)

In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

“(g)

A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.”

a.

Comment 10 to Model Rule 1.13 states: “There are times when the organization’s interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent, whose interest the lawyer finds adverse to that of the organization of the conflict or potential conflict of interest, that the lawyer cannot represent such constituent, and that such person may wish to obtain independent representation. Care must be taken to assure that the individual understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent individual, and that discussions between the lawyer for the organization and the individual may not be privileged.”

b.

Comment 11 states: “Whether such a warning should be given by the lawyer for the organization to any constituent individual may turn on the facts of each case.”

c.

Comment 12 states: “Paragraph (g) recognizes that a lawyer for an organization may also represent a principal officer or major shareholder.”

a.

For example, Model Rule 1.6 requires a lawyer to protect the confidentiality of information relating to each of his or her clients, but Model Rule 1.4(b) requires a lawyer to provide information to a client “to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

b.

The Opinion addresses the situation of an insurance company hiring a lawyer to defend both an insured employer and the employee whose conduct is at issue in a lawsuit.

c.

While the Opinion suggests that an advance waiver may avoid this outcome, it indicates a good deal of skepticism: “Whether any agreement made before the lawyer understands the facts giving rise to the conflict may satisfy ‘informed consent’ (which presumes appreciation and ‘adequate information’ about those facts) is highly doubtful.”

i.

One commentator has suggested that this Opinion “probably goes too far,” noting that “lawyers and firms often rely on consents given by employees in situations such as those addressed in the Opinion.” Anthony Davis, “Professional Responsibility: The Perils of Representing Multiple Clients,” NewYork Law Journal, July 7, 2008.

a.

On May 18, 2006, Broadcom’s audit committee retained Irell & Manella to conduct an internal review of Broadcom’s practices in granting stock options. This required collecting documents and records and interviewing past and present Broadcom employees.

b.

On May 25 and 26, 2006, two civil suits were commenced against Broadcom, Ruehle and other Broadcom officers and directors challenging the company’s alleged backdating of stock options.

c.

On June 1, 2006, two Irell lawyers interviewed Ruehle regarding Broadcom’s stock option practices. One of the lawyers had additional conversations with Ruehle in June 2006 regarding the same subject matter.

d.

On June 13, 2006, the SEC commenced an investigation of Broadcom’s stock option practices.

e.

In late June 2006, Irell advised Ruehle to retain independent counsel with respect to the civil lawsuits and investigations. Ruehle retained Wilson Sonsini Goodrich & Rosati to represent him individually.

f.

In August 2006, at Broadcom’s direction, Irell disclosed the information obtained from the internal investigation – including the substance of the June 1 interview with Ruehle – to Broadcom’s outside auditors, Ernst & Young.

g.

In January 2007, on the advice of its outside counsel and auditors, Broadcom restated its earnings to include $2.2 billion in previously undisclosed compensation expenses.

h.

In May and June 2007, with Broadcom’s consent, federal government investigators interviewed two Irell attorneys regarding their June 2006 interview with Ruehle.

i.

On June 4, 2008, Ruehle was indicted on federal charges including conspiracy, securities fraud and wire fraud.

j.

On January 12, 2009, the government moved for a hearing to resolve whether Ruehle’s statements to Irell in the June 2006 interview were privileged communications.

a.

The district court found that when Ruehle met with the Irell lawyers on June 1, 2006, he reasonably believed that Irell was representing him and that any information he provided to Irell would remain confidential. Id. at 1115.

b.

The Court also found that Ruehle reasonably understood the Irell lawyers were gathering facts and information for his defense as well as for the company’s internal investigation. Id. at 1116.

c.

The Court further found that Ruehle intended his statements to be confidential and had no reason to believe his conversations with the Irell lawyers would be disclosed to third parties. Id.

d.

Although the Irell lawyers testified that Ruehle was given an Upjohn warning, the Court was not persuaded that this testimony meant Ruehle’s statements to Irell were not privileged communications. Id. at 1116.

e.

The Court determined that Irell breached its duty of loyalty to Ruehle in violation of the California Rules of Professional Conduct in at least three respects:

a.

The Ninth Circuit’s decision addresses only the issue of whether Ruehle’s statements to Irell should be excluded from evidence based on the attorney-client privilege.

b.

The Ninth Circuit held that the district court erred in relying almost exclusively on California state law, rather than federal common law, to define the scope of the attorney-client relationship and the attorney-client privilege:

“The district court applied a liberal view of the privilege that conflicts with the strict view applied under federal common law, which governs here. [citation omitted.] By approaching the exclusion question with a presumption that the privilege attached, the district court inverted the burden of proof, improperly placing the onus on the government to show what information was not privileged.” Id. at 608-09.

c.

The Ninth Circuit held that Ruehle’s statements to the Irell lawyers were not protected by the attorney-client privilege because they were not “made in confidence.”

d.

The Ninth Circuit also rejected Ruehle’s argument that the District Court’s finding that Irell breached its professional duties warranted suppression of the statements.

a.

According to The American Lawyer, the only defense lawyer present was Sjoblom, who made clear that he was representing the Stanford Group and stated that he was representing Pendergest-Holt “insofar as she is an officer or director of one of the Stanford affiliated companies.” See “Lessons from the Stanford Scandal: Bring Your Own Lawyer,” Am Law Daily, Mar. 4, 2009.

a.

On March 6, 2012, Robert Allen Stanford was convicted of 13 counts of fraud. See Clifford Krauss, “Stanford Convicted by Jury in $7 Billion Ponzi Scheme,” New York Times, Mar. 6, 2012.

b.

On June 21, 2012, Pendergest-Holt pled guilty to obstructing a U.S. Securities and Exchange Commission investigation into Stanford International Bank, the Antiguan offshore bank owned by Stanford.

a.

The corporation is joined as a nominal defendant, and often eventually recast as a plaintiff, because the action is brought to benefit the corporation.

b.

This raises the question whether the corporation’s counsel can represent the corporation and the individual defendants in the action.

c.

In practice, at least at the outset, the interests of the corporation and the director or officer defendants may be aligned. The individuals seek to dismiss the claims against them, and the corporation generally objects to the shareholders’ attempt to control claims that belong to the company.

a.

The plaintiff shareholders alleged that the company’s directors and officers had engaged in fraud and breached their fiduciary duties by permitting the company to engage in willful patent infringement and failing to disclose it in periodic reports.

b.

The company and the individual defendants, represented by a single law firm, moved to dismiss the complaint. The individuals argued that the plaintiffs had failed to state a cause of action and the company argued that demand futility had not been sufficiently alleged.

c.

The plaintiffs argued that the court should not consider the company’s argument for dismissal because it was advanced by conflicted counsel.

d.

The Court dismissed the complaint with leave to amend and addressed plaintiffs’ argument about defense counsel.

e.

The Court concluded that “[a]t this stage of the litigation … any potential conflict which may exist has no bearing on the Court’s conclusion that, as a matter of law, Plaintiffs’ claims must be dismissed.” Id. at *38.

f.

The Court also observed that if the case proceeded beyond the motion to dismiss, the company “would be advised to obtain independent counsel in the future.” Id.

a.

Prosecutors asserted that Eric Waxman, then a Skadden attorney, tried to cover his tracks in dealing with both the company and Mazzo by concealing notes and other evidence that would prove he was working for both simultaneously.

a.

“The Court is not convinced it needs to definitively resolve whom was represented by Skadden and at what point in early 2009.” Slip Op. at 8.

b.

Mazzo has a Sixth Amendment right to choose his defense counsel, even if that counsel is conflicted. “Whether considering conflicts from successive representations or what the government might describe as a misconduct conflict, a criminal defendant’s strong right to proceed with his counsel of choice requires the result here.” Id.

c.

“The Court’s decision is strengthened by Mazzo’s waiver of conflict-free counsel, which is one of the best and most complete waivers the Court has ever seen.” Id.

a.

The Pennsylvania Attorney General (“AG”) subpoenaed former Penn State president Graham Spanier, finance officer Gary Schultz, and athletic director Timothy Curley to testify before the grand jury about alleged sexual assaults by Jerry Sandusky.

b.

Penn State’s General Counsel, Cynthia Baldwin, met with the officials before their testimony, accompanied them during a preliminary AG interview, and sat with them during their grand jury testimony.

c.

The court found Baldwin did not provide Upjohn warnings to the officials, explain that she was not representing them in their individual capacities, or advise them of their Fifth Amendment right against self-incrimination. She did inform them that any information they gave her would not be confidential because she might inform Penn State’s Board of Trustees.

d.

When Baldwin and the officials appeared before a judge prior to their grand jury testimony, Baldwin did not inform the court whether she represented the officials in their individual capacities.

e.

After the officials testified before the grand jury, Pennsylvania charged them with perjury and failure to report suspected child abuse.

f.

Pennsylvania called Baldwin to testify before the grand jury. She testified about her communications with the officials. Based on her testimony, prosecutors filed additional charges against the officials for obstruction of justice and conspiracy.

g.

The officials moved to quash those charges on the ground that Baldwin breached their attorney-client privilege by testifying without their authorization to waive the privilege.

h.

The trial court denied the motions, but the appellate court reversed, holding Baldwin and the officials had an attorney-client relationship and their communications fell within the attorney-client privilege.

a.

The California Court of Appeal held a former employee who was represented by in-house counsel at his deposition in a personal injury lawsuit could pursue malpractice claims against that counsel for an alleged failure to disclose a purported conflict of interest created by counsel’s dual representation of the employer and the employee.

b.

A co-worker of Michael Yanez brought a personal injury lawsuit against their employer. Yanez was the only witness to the accident. He provided two statements, one that he did not witness the accident and another that he did.

c.

In-house counsel represented both the employer and Yanez. Yanez asserted that while preparing for his deposition, he “expressed [to in-house counsel] concern about his job because his deposition testimony was likely to be unfavorable to [his employer].” Id. at 184.

d.

The Court found that because Yanez and his employer occupied adverse positions, if counsel did not inform him of these conflicts or obtain his written consent, counsel may have violated the California State Bar Rules of Professional Conduct prohibiting concurrent representation of conflicting interests without each client’s informed consent. Id. at 188.

e.

In addition, because counsel did not give Yanez an opportunity to explain the apparent conflict between his two statements at his deposition, counsel may have been the “but for” cause of his termination.

a.

The government brought a civil fraud action against Wells Fargo and Kurt Lofrano, a mid-level employee, seeking millions of dollars in damages and penalties for alleged misconduct relating to government-issued home mortgage loans.

b.

Lofrano asserted an advice-of-counsel defense that Wells Fargo counsel informed him it was lawful to engage in the conduct the government challenged.

c.

Lofrano did not dispute that the asserted privilege belonged to the bank.

d.

In Wells Fargo I, the Court held (at *3-4) that Lofrano did not impliedly waive Wells Fargo’s privilege merely by invoking an advice-of-counsel defense:

e.

Wells Fargo then moved for a protective order precluding Lofrano from disclosing any of the advice he received from the bank’s counsel.

f.

Lofrano argued that since disclosing the advice of the bank’s counsel was a prerequisite to asserting an advice-of-counsel defense, his constitutional right to defend himself would be violated if he were precluded from doing so.

g.

The Court therefore had to decide whether “Lofrano’s right to present an advice-of-counsel defense . . . override[s]

Wells Fargo’s privilege,” and ruled it does not, Wells Fargo II, at 563:

a.

When the represented party is a corporation or other organization, this prohibition extends to some – but not all – of the organization’s current employees.

b.

Although a company’s outside counsel commonly represents its employees at depositions and otherwise (typically at the company’s expense), New York decisions have questioned the “solicitation” of such representation by outside counsel.

a.

The New York City Bar Association’s Formal Ethics Opinion 2010-2, “Obtaining Evidence From Social Networking Websites,” explains that the term “party” in Rule 4.2(a) “is generally interpreted broadly to include represented witnesses, potential witnesses and others with an interest or right at stake, although they are not nominal parties.”

a.

“A lawyer shall not contact a represented person to seek to review the restricted portion of the person’s social media profile unless an express authorization has been furnished by the person’s counsel.”

a.

Comment 7 states: “In the case of a represented organization, this Rule prohibits communications with a constituent of the organization who supervises, directs or regularly consults with the organization’s lawyer concerning the matter or has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for purposes of civil or criminal liability. Consent of the organization’s lawyer is not required for communication with a former constituent. If a constituent of the organization is represented in the matter by his or her own counsel, the consent by that counsel to a communication will be sufficient for purposes of this Rule. Compare Rule 3.4(f). In communicating with a current or former constituent of an organization, a lawyer must not use methods of obtaining evidence that violate the legal rights of the organization. See Rule 4.4.”

a.

Comment 4 explains: “Paragraph (f) permits a lawyer to advise employees of a client to refrain from giving information to another party, for the employees may identify their interests with those of the client. See also Rule 4.2.”

b.

The New York Rules do not contain a provision corresponding to Model Rule 3.4(f).

a.

In Niesig II, the Court of Appeals held that the attorney for an injured worker suing his employer could conduct ex parte interviews of company employees who were witnesses to the accident.

b.

Plaintiff had moved for permission to have his counsel conduct ex parte interviews of all of defendants’ employees who were on the site at the time of the accident.

c.

Rejecting a blanket prohibition on ex parte communications with any of the employer’s current employees imposed by the Appellate Division, Second Department, the Court of Appeals held that DR 7-104(A)(1) of the former New York Lawyer’s Code of Professional Responsibility applied only to current employees “whose acts or omissions in the matter under inquiry are binding on the corporation (in effect, the corporation’s ‘alter egos’) or imputed to the corporation for

purposes of its liability, or employees implementing the advice of counsel.” 76 N.Y.2d at 374, 559 N.Y.S.2d at 498.²

d.

The Court of Appeals agreed with the Appellate Division’s holding that DR 7-104(A)(1) applies only to current employees and not to former employees. Id. at 369, 559 N.Y.S.2d at 495.

e.

The Court concluded that this approach best balances the competing interests in (a) permitting “informal discovery of information that may serve both the litigants and the entire justice system by uncovering relevant facts, thus promoting the expeditious resolution of disputes,” id. at 372, 559 N.Y.S.2d at 497, (b) protecting the corporation from “[t]he potential unfair advantage of extracting concessions and admissions from those who will bind the corporation” and (c) protecting the attorney-client privilege, id. at 374, 559 N.Y.S.2d at 498.

f.

Niesig II has been criticized on a number of grounds including the following:

a.

In September 2003, Muriel Siebert & Co. (“Siebert”) sued Intuit for breach of contract and breach of fiduciary duty based on Intuit’s alleged failure properly to promote a jointly owned and operated online brokerage service.

b.

Nicholas Dermigny, Executive Vice President and COO of Siebert, was an important participant in the events underlying the lawsuit and in the formation and implementation of Siebert’s litigation strategy for the Intuit lawsuit.

c.

In May 2005, Dermigny took a leave of absence to negotiate the terms of his separation from Siebert.

d.

Dermigny refused to permit Siebert’s counsel to represent him at his scheduled deposition in the Intuit lawsuit, and Intuit subpoenaed him for a rescheduled deposition.

e.

Before the rescheduled deposition Siebert terminated Dermigny’s employment. Intuit’s attorneys then contacted him without Siebert’s knowledge and arranged for an interview.

f.

After learning of the interview, Siebert moved to disqualify Intuit’s attorneys from the case and enjoin them from using any information provided by Dermigny.

g.

The Court of Appeals held that disqualification of Intuit’s attorneys was not warranted: “The policy reasons articulated in Niesig concerning the importance of informal discovery underlie our holding here that, so long as measures are taken to steer clear of privileged or confidential information, adversary counsel may conduct ex parte interviews of an

opposing party’s former employee.” Id. at 511, 836 N.Y.S.2d at 530.

a.

Plaintiff Dream Team, a holding company that invested in the medical marijuana business, sued several defendants for breach of contract. Id. at *3.

b.

Defendants moved to disqualify Dream Team’s counsel, John Armstrong, alleging he engaged in improper ex parte communications with five current employees of defendant Energy Clinics in violation of Arizona Rule of Professional Conduct 4.2.

c.

Arizona Rule 4.2 prohibits attorneys from communicating with employees of an opposing party organization: (1) who have a managerial responsibility on behalf of the organization; (2) whose act or omission in connection with the matter may be imputed to the organization; or (3) whose statements may constitute an admission on the part of the organization. Id. at *5.

d.

Armstrong admitted he engaged in ex parte contacts with the employees, but explained that several employees contacted him about their concerns regarding their employer’s illegal practices and none of them were managerial employees. Id. at *3.

e.

The court nevertheless found that Armstrong violated Arizona Rule 4.2 by communicating with the employees, because their statements would qualify as party admissions. Id. at *9-10.

f.

The court ruled the remedy of disqualifying Armstrong would be too extreme, however, but suppressed the three witness statements Armstrong obtained from the employees. Id. at *10-11.

a.

In response to plaintiff’s interrogatory requesting defendants to identify witnesses, Morgan Lewis identified two former employees and two current employees and requested that all contact by plaintiff proceed through Morgan Lewis.

b.

At LMC’s request, Morgan Lewis contacted all four witnesses and offered to represent them in the matter at LMC’s request and all four agreed to be represented by Morgan Lewis.

c.

Plaintiff contended that (a) Morgan Lewis’s representation of the LMC and these witnesses created a conflict of interest in violation of DR 5-105, and (b) Morgan Lewis solicited these witnesses as clients in violation of DR 2-103(a)(1) of the former New York Lawyer’s Code of Professional Responsibility in order to prevent plaintiff from informally interviewing them as permitted under Niesig II.

d.

The Court found that plaintiff did not provide any evidence of a conflict of interest.

e.

However, the court held that Morgan Lewis “actively solicited the non-party witnesses in clear violation of DR 2-103(A)(1) of the Code which states: ‘(a) A lawyer shall not engage in solicitation: (1) by in-person or telephone contact, or by real time or interactive computer-accessed communication unless the recipient is a close friend, relative, former client or existing client . . . .’” 22 Misc. 3d at 185, 866 N.Y.S.2d at 525-26.³

f.

The Court further found that Morgan Lewis’s solicitation of the witnesses was based on an improper motive: “These witnesses are not parties to the litigation in any sense and there is no chance that they will be subject to any liability. They were clearly solicited by Morgan Lewis on behalf of LMC to gain a tactical advantage in this litigation by insulating them from any informal contact with plaintiff’s counsel. This is particularly egregious since Morgan Lewis, by violating the Code in soliciting these witnesses as clients, effectively did an end run around the laudable policy consideration of Niesig in promoting the importance of informal discovery practices in litigation, in particular, private interviews of fact witnesses. This impropriety clearly affects the public view of the judicial system and the integrity of the court.” Id. at 185-86, 866 N.Y.S.2d at 526.

g.

Relying on (a) what it characterized as Morgan Lewis’s “history in this litigation of improperly thwarting plaintiff’s attempts to obtain discovery,” 22 Misc. 2d at 186, 866 N.Y.S.2d at 526, and (b) United States v. Occidental Chem.Corp., 606 F. Supp. 1470 (W.D.N.Y. 1985), in which the court enjoined Occidental and its attorneys from sending letters to former employees of Occidental offering to represent the employees free of charge in the event the former employees were asked to appear for depositions, but refused to enjoin the attorneys from actually representing the former employees, the Rivera court held that “Morgan Lewis must

be disqualified from representing [the four witnesses] due to their misconduct.” 22 Misc. 2d at 187, 866 N.Y.S.2d at 527.

h.

In May 2010, the Appellate Division, Second Department, affirmed in a brief opinion that stated in relevant part:

“Contrary to the contention of the nonparty-appellant, the record supports the Supreme Court’s determination that it engaged in acts of solicitation of professional employment, in violation of former Code of Professional Responsibility DR 2-103(A)(1) (22 NYCRR 1200.8[a][1]), now Rules of Professional Conduct (22 NYCRR 1200.0) Rule 7.3. Accordingly, the Supreme Court properly granted that branch of the plaintiff’s motion which was to disqualify the nonparty-appellant from representing certain witnesses in this action.” Rivera v. Lutheran Med. Ctr., 73 A.D.3d 891, 891, 899 N.Y.S.2d 859, 859 (2d Dep’t 2010).

i.

Rivera has been sharply criticized. As Evan Stewart put it:

“Many observers (including this author) waited anxiously for Rivera to be reversed. Why? Well, for starters: (i) the ‘non-solicitation’ rule clearly has nothing to do with this type of situation; (ii) even if the rule were somehow applicable, the trial court had not even considered the issue of ‘pecuniary gain’ (presumably, because there was none to the law firm); and (iii) query how the Niesig policy in favor of ‘informal discovery’ had any relevance to this situation.” C. Evan Stewart, “Just When Lawyers Thought It Was Safe to Go Back into the Water,” New York Business Law Journal, Winter 2011, Vol. 5, No. 2, at 24.

j.

On June 9, 2014, the New York County Lawyers’ Association’s Professional Ethics Committee (the “NYCLA Committee”) issued its Formal Opinion 747, in an apparent effort to narrow the scope of Rivera.

a.

Plaintiff sued ECWA and certain of its executives and employees alleging employment discrimination. Id. at *1.

b.

Plaintiff sought to disqualify defendants’ counsel based on allegations that defendants’ counsel interfered with and obstructed plaintiff’s efforts to communicate with non-party ECWA employees. Id.

c.

After briefly discussing Occidental and Rivera, the magistrate judge held that disqualification of defendants’ counsel was not warranted. Id. at *3.

d.

However, the Court imposed significant limitations on defendants’ counsel’s dealings with ECWA employees:

i.	“While the plaintiff has not presented a basis warranting disqualification of defendants’ counsel, defendants’ counsel may not advise ECWA non-party, non-policymaking employees that they cannot meet with or talk to plaintiff’s counsel.” Id.
ii.	“Defendants’ counsel shall not solicit to represent any non-party non-policymaking ECWA employee at a deposition or meeting with plaintiff’s counsel. If the witness approaches the defendants’ counsel for representation, such representation would not present an inherent conflict of interest. Occidental, 606 F. Supp. at 1474, 1477.” Id.

e.

The Court also set forth the parameters under which plaintiff’s counsel could communicate with non-party ECWA employees:

a.

Plaintiff noticed the depositions of former employees of the corporate defendant. Counsel for defendant then contacted the former employees and offered to represent them without charge in the litigation. Id. at *1.

b.

Plaintiff moved to disqualify defendant’s counsel from representing the former employees. Id.

c.

The Court rejected plaintiff’s arguments.

a.

Defendants’ counsel listed four non-party appraisers as fact witnesses for the trial. After the Court granted plaintiff FHFA’s request to depose the appraisers, defendants’ counsel

notified FHFA’s counsel that it represented the appraisers in connection with their depositions and testimony. Id. at *2-3.

b.

FHFA requested the Court to order defendants’ counsel to establish that their representation of the appraisers “is a ‘bona fide’ representation made for the purposes of rendering legal advice, and to disclose all communications between them and the Appraiser Witnesses, including any drafts of the affidavits submitted by the Appraiser Witnesses as direct testimony in this Action.” FHFA v. Nomura Holdings, No. 11 Civ. 6201, Doc. 1342, at 1 (S.D.N.Y. Mar. 3, 2015).

c.

FHFA argued that defendants’ “counsel’s representation of these allegedly independent Appraiser Witnesses is not a proper attorney-client relationship, but rather a strategic relationship solely designed to allow Defendants to coach the witnesses for their deposition and trial testimony, even as they offer those witnesses to the Court for their supposed objectivity and lack of bias.” Id.

d.

Defendants’ counsel denied they had taken on the representation of the Appraiser Witnesses to engage in witness coaching, and said the appraisers were not parties to the suit and its representation of them was “uncontroversial.” Counsel argued the request that it explain the representation has “no basis in Second Circuit case law” and FHFA’s attorneys “cannot come close to meeting the high standard of proof necessary to disqualify.” FHFA v. Nomura Holdings, No. 11 Civ. 6201, Doc. 1357, at 1 (S.D.N.Y. Mar. 4, 2015).

e.

The Court rejected FHFA’s arguments and denied its motion. It stated FHFA did not move to disqualify defendants’ counsel from representing the appraisers, and “cites no controlling authority, and none has been found, in support of its request for an order directing an adverse party’s counsel to provide information sufficient to determine if its representation of a

third-party trial witness is a bona fide attorney-client representation.” 2015 U.S. Dist. LEXIS 26811, at *3.

a.

The plaintiff, Montvale Surgical Center, an outpatient clinic with one operating room that performs procedures on an out-of-network basis, sued Cigna on behalf of 41 insured patients, alleging it failed to pay more than $1.3 million in benefits. Plaintiff sued as an assignee of those patients for breach of contract, violation of the Employee Retirement Income Security Act of 1974, and breach of fiduciary duty under ERISA.

b.

Plaintiff subpoenaed the health plans in which the 41 patients participated for information on plan limitations. Gibbons appeared as counsel for the plans.

c.

Plaintiff moved to disqualify Gibbons on the ground that it had a conflict in representing both Cigna and the plan administrators because plaintiff’s complaint alleged Cigna had adjudicated the 41 patients’ claims in violation of the plan benefits.

d.

Gibbons argued there was no conflict because Cigna and the plans were co-fiduciaries of the same entities and Gibbons’ representation of the plans was limited to responding to subpoenas.

e.

On February 22, 2016, the Magistrate Judge denied the motion to disqualify, Montvale Surgical Center LLC v. Connecticut General Life Insurance Co., No. 2:12-cv-05257, Doc. 99 (D.N.J. Feb. 22, 2016). On April 8, 2016, the District Court agreed. Montvale, 2016 U.S. Dist. LEXIS 51250 (D.N.J. Apr. 12, 2016). The District Court explained:

a.

Audio MPEG argued that Winston & Strawn partner Steven Anzalone had represented Audio MPEG in patent infringement lawsuits when he worked for another law firm, including in a lawsuit that was nearly identical to the current case. Audio MPEG, Inc. v. Dell, Inc., No. 2:15-cv-000738, Doc. 234 (E.D. Va. Aug. 22, 2016) (memo of law in support of motion to disqualify).

b.

Winston & Strawn argued that Mr. Anzalone was not involved in the current case, and Audio MPEG could not show that Mr. Anzalone had shared information about Audio MPEG with his colleagues representing Dell. Audio MPEG, Inc. v. Dell, Inc., No. 2:15-cv-000738, Doc. 256 (E.D. Va. Aug. 31, 2016) (opposition to motion to disqualify).

c.

The Judge called Mr. Anzalone as a witness, questioned him, and then granted the motion to disqualify. Audio MPEG, Inc. v. Dell, Inc., No. 2:15-cv-00073, Doc. 268 (E.D. Va. Sept. 7, 2016) (minutes of proceedings).

a.

A Crowell & Moring attorney had represented j2 Global while he was a junior associate at another law firm. He had billed more than 200 hours over fifteen months on three patent-related matters that concerned three of the four patents at issue in j2 Global’s current lawsuit against Open Text. Id. at *5-7.

b.

However, even though Crowell & Moring was aware of the attorney’s prior representation of j2 when that attorney joined Crowell & Moring, the firm assigned him to work as in-house counsel for its client Open Text, which was known to be adverse to j2. Id. at *10-11.

c.

j2 moved to disqualify Perkins on the grounds that the Crowell attorney who had previously represented j2 had “contact with Perkins.” Id. at *5.

d.

The Court applied an irrebuttable “Vicarious Presumption Rule,” under which Perkins’ possession of confidential information should be presumed, id. at *8, and therefore its disqualification was mandatory. Id. at *11.

e.

The Court also faulted Crowell & Moring’s conflict of interest disclosure to j2, because it did not include a request to j2 to sign a conflict letter allowing the Crowell attorney to work for Open Text. Id. at *11. In addition, the Court found that Crowell’s disclosure to Open Text was deficient because it did not state that the attorney had previously worked for j2. Id.

a.

Cascades sued a number of companies, including Best Buy, alleging that they infringed a patent for a smartphone store

locator application. Id. at *1-2. Best Buy hired Robins Kaplan for the defense. Id. at *2-3.

b.

Cascades moved to disqualify Robins Kaplan on the ground that the firm learned confidential information about Cascades’ patents and litigation strategy in 2010, when the Cascades CEO approached Ronald Schutz, the head of Robins Kaplan’s IP litigation group, for advice on litigation over a patent portfolio that Cascades acquired from Russian inventor Boris Babaian. Id. at *3.

c.

Robins Kaplan argued that (a) it never agreed to advise Cascades concerning the Boris Babian portfolio, and (b) its communications with the Cascades CEO concerned a different set of patents than those at issue in Cascades’ lawsuit against Best Buy. Id. at *3-4.

d.

The Court rejected that argument, while explaining that “it does not intend to impugn Schutz, . . . It is simply a fact of life that knowledge, once gained, cannot be completely flushed out of someone’s head. . . . It would not be fair to either Cascades Ventures or Best Buy to ask [Schutz] to operate without use of that knowledge.” Id. at *25.

a.

The Court ruled that Feinberg, Day had a conflict of interest because six of the seven Feinberg, Day attorneys previously represented Toshiba when they worked at DLA Piper. Id. at *2, *5-10.

b.

Those attorneys had represented Toshiba in seven unrelated patent litigations against a different entity involving different patents. Id. at *12-18. But all of the litigations related to Toshiba’s flash memory products, which were at issue in the current litigation. Id.

a.

The three AHT partners had previously worked at Weil, Gotshal & Manges, where two of them represented Dell in patent litigation. Id. at *4.

b.

But the Court denied Dell’s motion because it found that the connection between the Secure Axcess suit and the AHT lawyers’ prior representation of Dell was too tenuous to warrant disqualification. Id. at *11-18.

c.

The Court rejected Dell’s threshold argument that the firm must be disqualified if its past representation bore “more than a superficial relationship” to the present case. He ruled that disqualification requires a “substantial relationship” between the cases. Id. at *9-10.

d.

Although Dell argued that the cases were substantially related because all three were patent infringement suits and involved computers communicating over a network, and that counsel had learned of Dell’s confidential strategies for such litigation, the Court found that Dell had not proven that there was more than a superficial relationship between the former cases and the current suit. Id. at *11-12.

e.

The Court explained, “Dell has failed to prove that the instant litigation is substantially related to either [former suit] because it only recites generalities that would be applicable to a large array of potential cases. Cases are not substantially related just because they involve the same general subject matter and area of the law.” Id. at *11.

a.

In October 2014, plaintiff Sonos brought an action against defendant D&M for alleged infringement of patents for wireless audio technology. Id. at 1.

b.

Sonos was represented by Lee Sullivan, Shea & Smith (“Lee Sullivan”). Three of the partners of that firm had previously worked on patent matters for D&M while at their prior firm, one from 2002 to 2009, another from 2003 to 2007, and the

third in 2005 and 2006. Id. at *2. Citing those prior representations, D&M moved to disqualify Lee Sullivan from representing Sonos.

c.

The court denied the motion, finding the attorneys’ prior representation of defendants on patent matters was not substantially related to the current action. Id. at 12-13.

a.

The plaintiffs brought claims that defendant Perla misappropriated investments plaintiffs made in a real estate development in the Dominican Republic.

b.

The Appellate Division reversed the lower court’s disqualification of Saul Feder and his firm, Regosin, Edwards, Stone & Feder, which was counsel to the lead plaintiff.

c.

While Feder had represented Perla in a prior matter, the Appellate Division found “the present and prior matters are not substantially related, and [Feder] did not obtain confidential information from the defendants during the prior matter.” 125 A.D.2d at 575.

d.

The Court explained that “In order to show that the matters are ‘substantially related,’ defendants must show that the issues in the matters are identical or essentially the same,” and ruled that defendants failed to make that showing. Id.

a.

Radware sued F5 Networks and A10 for infringing two patents.

i.	Irell had previously represented Radware twice in disputes relating to other patents.
ii.	Radware moved to disqualify Irell as A10’s counsel on the ground that Irell had obtained confidential information about Radware’s products, financing and decision-making when it represented the company in the two patent matters.
iii.	Irell argued it had no conflict because its work for Radware involved different patents.

b.

The Court, applying a “substantial relationship” test under California Rule of Professional Conduct 3-310(E), rejected Irell’s argument and granted Radware’s motion to disqualify Irell from representing A10. Id. at *10.

a.

Samsung had moved to disqualify Powers, Cherensky and the Tensegrity Law Group because Powers and Cherensky had represented Samsung in several patent infringement lawsuits over the course of 10 years when they worked at Weil, Gotshal & Manges, including in litigation between Samsung and Vertical Computer Systems, Inc. involving

patents relating to software on Samsung’s Galaxy smartphones and tablets.

b.

The Court applied the “substantial relationship” test to determine whether there was a conflict of interest that required disqualification due to a former representation: a “party seeking to disqualify opposing counsel . . . must establish two elements: (1) an actual attorney-client relationship between the moving party and the attorney he seeks to disqualify and (2) a substantial relationship between the subject matter of the former and present representations.” Slip Op. at 4.

a.

Before Powers and Cherensky left Weil, Gotshal in 2011 to form Tensegrity Law Group, they had represented Micron (and a company Micron acquired in 2006) in several patent cases and a trade secret case, one of which led to a 7-week public trial.

b.

In the Innovative Memory action, Tensegrity represented plaintiffs who were suing Micron for patent infringement in connection with its NAND flash products.

c.

Micron moved to disqualify the firm, and the Court posed the following questions to determine whether the prior representations and the current one were “substantially related”:

d.

The Court explained that the required inquiry involves “a painstaking analysis of the facts.” Id. at *6. Most of the facts were submitted by the parties under seal. But the Court noted that while at Weil, the attorneys now adverse to Micron had previously billed Micron (and a company Micron had acquired) for approximately 4,000 hours devoted to litigating cases involving NAND technology. Id. at *7.

e.

The Court held that the factual overlap between the prior representations and Micron’s invalidity defenses in Innovative’s patent action raised “a common-sense inference” that what the attorneys learned from their former client could be used against it, and “[t]he fact that there was a lengthy public trial does not mean that all confidences became public.” Id. at *12.

f.

The Court was also concerned about the appearance of “switching sides” because the two attorneys “might be required to depose and cross examine the very same witnesses they previously represented.” Id. at *13.

a.

In December 2013, the Southern District of New York, in denying a motion to disqualify in In re Credit Default Swaps

Antitrust Litig., No. 13 MD 2476 (S.D.N.Y. Dec. 5, 2013), explicitly rejected the “playbook” theory.

b.

More recently, in Sonos, Inc. v. D&M Holdings, No. 14-1330-RGA, 2015 U.S. Dist. LEXIS 119718 (D. Del. Sept. 9, 2015), the Court, in denying a motion to disqualify plaintiff’s counsel in a patent litigation, implicitly rejected the playbook theory. After finding that counsel’s prior work for defendants was not substantially related to the pending action, the court rejected the idea that any disclosure by defendants of their general strategy warranted disqualification: “At most, Defendants disclosed their general strategy for handling patent litigation, which is not enough to warrant disqualification.” Id. at 12.

a.

In January 2014, Celgard sued LG in the Western District of North Carolina alleging infringement of a patent for lithium battery technology.

b.

The Court granted Celgard a preliminary injunction barring LG from supplying companies, including Apple, with batteries using the technology, but stayed the injunction pending an appeal by LG.

i.	After the injunction was issued, Celgard retained Jones Day to represent Celgard in the litigation. Celgard agreed that Jones Day would not represent Celgard if it sought relief from Apple or other Jones Day clients.

c.

Non-party Apple then moved in the appellate court to intervene and disqualify Jones Day. Apple argued that the law firm should not be permitted to represent Celgard in a case adverse to Apple’s interests because it represented Apple in other cases. Apple said it repeatedly asked Jones Day to withdraw from representing Celgard but was rebuffed.

d.

The Federal Circuit granted Apple’s motion. The court ruled that Jones Day’s representation of Celgard conflicted with its representation of Apple in the other cases.

e.

The Court explained “it is the total context, and not whether a party is named in a lawsuit, that controls whether the adversity is sufficient to warrant disqualification.” Id. at 672.

a.

In SanDisk Corp. v. SK Hynix Inc., No. 14-CV-04940-LHK (N.D. Cal), SanDisk sued Hynix, alleging it stole information about SanDisk flash drives from a former SanDisk engineer.

b.

Paul Hastings appeared for Hynix in that action.

c.

Toshiba moved to intervene in the action for the purpose of obtaining an injunction disqualifying the law firm for breach of its duties of loyalty and confidentiality.

d.

Paul Hastings argued Toshiba raised only a hypothetical conflict concerning vague interests in unidentified trade secrets.

e.

On September 5, 2014, Judge Peter Kirwan of the Superior Court of Santa Clara County granted Toshiba’s motion to disqualify Paul Hastings. Toshiba Corp. v. Paul Hastings LLP, No. 1-14-cv-267609 (Cal. Super. Ct. Santa Clara Co. Sept. 5, 2014). The judge explained:

f.

On September 30, 2014, in a one-sentence order, the California state appeals court denied Paul Hastings’ petition for a writ of mandate, prohibition or other appropriate relief, and its request for a stay of the judge’s order. Paul Hastings LLP v. the Superior Court of Santa Clara County, No. H041456 (Cal. App. 6th App. Dist. Sept. 30, 2014).

a.

The Government alleged that funds stolen from the Russian treasury passed through several shell companies into Prevezon

Holdings. John Moscow of Baker & Hostetler appeared on behalf of Prevezon and other defendants.

b.

Non-party Hermitage Capital Management Ltd. moved to disqualify Mr. Moscow and his law firm due to his prior representation of Hermitage’s co-founder, William Browder.

c.

On December 18, 2015, Judge Griesa granted the motion. Judge Griesa explained it was clear that “one of BakerHostetler’s primary defense strategies in the present case involves asserting that Hermitage had substantial responsibility for what is well known as the Russian Treasury Fraud.” United States v. Prevezon Holdings, No. 13-cv-06326, Doc. 495, Slip Op. at 1 (S.D.N.Y. Dec. 18, 2015).

d.

A few weeks later, after further briefing, Judge Griesa reversed his ruling and reinstated the law firm and partner as counsel to the defendants. United States v. Prevezon Holdings, No. 13-cv-06326, 2016 U.S. Dist. LEXIS 2921 (S.D.N.Y. Jan. 8, 2016).

e.

On October 17, 2016 the Second Circuit granted Hermitage a writ of mandamus, found that the district court abused its discretion, and ordered the district court to disqualify BakerHostetler. United States v. Prevezon Holdings, No. 16-132-cv 2016 U.S. App. LEXIS 18614 at *1 (2d Cir. Oct. 17, 2016).

a.

Hunton & Williams had previously represented Utica in an insurance coverage litigation brought by its insured, and negotiated the settlement of that litigation. Wausau and National Casualty were reinsurers of Utica and covered the insurance dispute.

b.

After Hunton & Williams settled the insurance coverage litigation, Utica engaged the firm to commence an arbitration against the reinsurers, seeking reimbursement of the insurance settlement.

c.

Utica brought an action asking the court to appoint an arbitrator, and the reinsurers brought a counterclaim seeking to disqualify Hunton & Williams from representing Utica against them in the arbitration because of its prior representation in the underlying insurance dispute.

d.

The reinsurers argued the firm represented their interests as well as those of Utica in the coverage litigation and thus could not represent Utica in its arbitration against them.

e.

The Court denied Utica’s motion to dismiss the counterclaim, rejecting Utica’s argument that Hunton & Williams did not represent the reinsurers in the underlying coverage dispute.

f.

The Court explained that a formal attorney-client relationship in the traditional sense is not required for disqualification based on the successive representation of adverse interests if the attorney previously represented the moving party, there is a substantial relationship between the issues in the two cases, and the attorney had access to relevant information in the prior representation.

g.

According to the Court, the party seeking disqualification must show only that the law firm represented the interests of the party with “sufficient aspects of an attorney-client relationship.” Id. at *13. The Court found those aspects existed because Hunton & Williams represented all of the insurers’ common interests in the underlying litigation and Utica shared information with the reinsurers in the underlying litigation only as part of a joint defense privilege involving Hunton & Williams.

h.

The Court rejected Utica’s argument that the reinsurers must identify the specific relevant privileged information that the attorneys saw. It found the reinsurers need only show that the attorneys “had access to or were likely to have had access to” relevant privileged information. Id. at *12.

a.

In 2013, DiPizio brought two actions in state court against Erie Canal Harbor Development Corp. (“ECHDC”) concerning

ECHDC’s plans to terminate its contract with DiPizio, which was insured by a $19.7 million bond from Travelers.

b.

Travelers then sued DiPizio and others in federal court, alleging they had caused more than $1.6 million in losses on performance bonds related to public improvement contracts with the New York Department of Transportation and Erie County, New York. Travelers later amended its complaint to assert an additional $20 million claim against DiPizio for losses arising from the ECHDC project.

c.

In August, Travelers intervened in DiPizio’s state actions against ECHDC, alleging that DiPizio was improperly terminated from the ECHDC contract. The judge in that case assigned DiPizio’s claims to Travelers, finding Traveler’s was the real party in interest and dismissed DiPizio as a plaintiff.

d.

DiPizio then moved to disqualify Travelers’ counsel in the federal court action. DiPizio argued that the firm was engaging in concurrent adverse representations because it was representing Travelers in federal litigation while also representing DiPizio’s claims in state litigation and that it therefore had a conflict of interest and improper access to privileged information.

e.

However, the court denied the motion because “[t]he assignment of DiPizio’s claims against ECHDC to Travelers does not create an attorney-client relationship between DiPizio and Travelers’ counsel.” 2015 U.S. Dist. LEXIS 87165, at *9-10.

f.

The court noted that “DiPizio has proffered no facts to suggest that Travelers’ counsel currently represents or previously represented DiPizio. Absent an attorney-client relationship, DiPizio cannot claim breach of privilege with respect to any information provided to Travelers.” Id. at *9.

a.

The Government said Chadbourne & Parke, LLP (“C&P”), counsel for Aaron Davidson, a defendant in the FIFA bribery proceeding, also represented an unnamed soccer-focused cable television network that might have claims against a soccer conference because the network failed to secure the rights to a conference tournament due to the alleged conduct of some of the defendants. Id. at 2.

b.

The Government said it expected Davidson to waive the conflict but asked the judge to inform him of the potential conflict and of his opportunity to consult with his other, non-conflicted, counsel concerning the potential conflict. Id. at 5.

c.

The Government explained its view of the law governing conflicts of interest of attorneys representing criminal defendants.

d.

The Davidson court held a Curcio hearing and found “defendant fully understands the nature of the potential conflict(s) and has made a voluntary decision to continue to have C&P represent him.” United States v. Davidson, Case 1:15-cr-00252-PKC-RML (E.D.N.Y. Oct. 20, 2016).

a.

The report recommended that “[i]n cases involving multiple defendants, the defendants should authorize one or more counsel to act as the discovery coordinator(s) or seek the

appointment of a Coordinating Discovery Attorney and authorize that person to accept, on behalf of all defense counsel, the ESI discovery produced by the government.”

a.

The Court noted that since 2012, an “increasing number” of courts have appointed CDAs, but none have discussed the potential ethical and legal implications of those appointments, nor has any one set of appropriate responsibilities been identified. Id. at *5.

b.

The Court then undertook to examine the implications of appointing a CDA and denied the motion.

c.

The Court first identified several “[f]undamental legal principles critical to adequate defense of a criminal charge,” including that “each defendant is entitled to the undivided loyalty of his attorney.” Id. at *6.

d.

The Court next discussed the importance of discovery in revealing the details of each defendant’s story and noted that not all defendants in a case “necessarily share the same legal interests.” Id. at *8.

e.

Turning to appointing a CDA, the Court acknowledged that “central management” of voluminous discovery would “seem” to make sense, but questioned how an attorney’s duty of undivided loyalty could be “squar[ed]” with the duty to manage discovery of multiple defendants. Id. at *10.

f.

The Court acknowledged that “[t]here may be” a role for a CDA “with safeguards and an appropriate hearing.” The Court concluded, however, that:

a.

Gap argued the verein cannot hold itself out to the world as one firm and then act as multiple firms for conflict purposes.

b.

According to Gap, all of the members of the verein owe it a duty of undivided loyalty, and Dentons US is ethically barred from handling a matter adverse to Gap.

c.

Gap noted that Dentons US itself identified Gap as an “existing conflict” in its retainer agreement with the complainant in the Trade Commission matter.

a.

The staff argued that Dentons US’s continued representation of RevoLaze would create a serious risk of taint to the Commission’s investigation.

a.

•	The verein members do not have access to each other’s files;
•	They do not share confidential information unless they are acting as co-counsel;
•	They do not share profits and losses; and
•	They are financially and operationally separate.

Dentons US said there is effectively an ethical screen between itself and the other members of the verein.

b.

Dentons US also maintained it intended its reference to Gap as an “existing conflict” in its retainer agreement to mean a “potential business conflict” and not an ethical conflict.

a.

The Judge explained that the American Bar Association’s Model Rules of Professional Conduct “reflect a national consensus” and are instructive. 2015 ITC LEXIS 359, at *10.

b.

The Model Rules define a “law firm” to include, among other things, an “other association authorized to practice law.” Id.

c.

The Judge reasoned that definition is broad enough to include a Swiss verein. Id. at *17.

d.

Accordingly, the Model Rules regarding conflicts with a current client and imputed conflicts among members of a law firm apply. Id. at *18-19.

e.

The representation of Gap by other members of the verein is therefore imputed to Dentons US. Id.

f.

Accordingly, the Judge found that Dentons US committed an ethical violation by bringing the Trade Commission complaint against Gap. Id. at 19.

a.

The Judge reasoned that Dentons US owed Gap a duty of loyalty, but stood to benefit in terms of legal fees and a share in proceeds by seeking to bar Gap’s imports into the U.S. Id. at *19.

b.

Although the law firm “apparently realized that there was a conflict, it did not attempt to obtain Gap’s informed consent. This inaction shows disregard for the rules of professional conduct.” Id. at *20.

c.

The Judge acknowledged that weighing against disqualification was the law firm’s representation that its lawyers had not accessed any confidential information of Gap and that disqualification would harm RevoLaze in the Trade Commission matter. Id. at *21-22.

d.

But the Judge found “the public’s perception of the profession is also significant. [The verein] holds itself out to the public as a unified global law firm in order to attract business. The [law firm’s] continued representation in the face of a direct conflict would both contradict this public image and impact negatively on the profession as a whole.” Id. at *22.

e.

The Judge concluded he “cannot condone the continued violation of an ethical rule and therefore disqualification is necessary.” Id. at *23.

a.

The parties then settled and the Trade Commission terminated its investigation. In re Certain Laser Abraded DenimGarments, Inc., No. 337-TA-930, 80 Fed. Reg. 73209, 73210 (ITC Nov. 24, 2015).

b.

The Commission determined that it should therefore vacate the disqualification as moot. In re Certain Laser Abraded Denim Garments, Inc., No. 337-TA-930, 81 Fed. Reg. 22632 (ITC April 12, 2016). The Commission explained that the disqualification question turned on whether Dentons US and Dentons Canada, as members of the Dentons verein, should be treated as a single law firm under the Model Rules, and that answering that question would require further proceedings and possibly additional fact-finding.

a.

RevoLaze alleges in its complaint that Dentons US breached the standard of care and its fiduciary duties to RevoLaze by simultaneously representing one of its litigation opponents and that Dentons US deliberately decided as a business strategy to disregard the conflict of interest.

b.

The complaint also alleges that Dentons US deviated from its duty of care in other ways in the ITC matter, such as by failing to conduct adequate discovery or engage necessary experts.

c.

RevoLaze alleges these breaches forced it to renegotiate a funding deal on unfavorable terms and settle its patent claims for a fraction of their true value.

d.

The complaint seeks more than $52 million in damages on the claim for legal malpractice and $6.5 million on the claim for breach of fiduciary duty.

a.

The wife was represented by two lawyers at Cohen Clair Lans Greifer & Thorpe LLP (“Cohen Clair”).

b.

The husband’s lawyer, a sole practitioner, was co-counsel with another attorney at Cohen Clair on an unrelated pending matter.

c.

The husband had executed a conflict waiver, but the wife had not.

d.

The wife moved to disqualify the husband’s attorney. The lower court granted the motion, but the First Department reversed.

a.

In February 2014 plaintiff Dynamic 3D Geosolutions LLC (“Dynamic 3D”), a subsidiary of Acacia, sued Schlumberger, alleging that its “Petrel” software infringed a patent held by Dynamic 3D. Id. at *3-4.

b.

A Senior Vice President and Associate General Counsel at Acacia, Charlotte Rutherford, had worked for Schlumberger as an assistant general counsel for intellectual property from 2006 through 2013, when she left to join Acacia. Id. at *4*5.

c.

Schlumberger moved to disqualify Rutherford, who it alleged had represented Schlumberger on substantially related matters; all of Acacia’s in-house counsel on the ground that Rutherford’s alleged conflict should be imputed to her in-house colleagues; and Dynamic 3D’s outside counsel because it communicated with Rutherford and other Acacia in-house counsel. Id. at *4.

d.

Schlumberger argued that Rutherford (i) participated in plaintiff’s decision to acquire the software patent it was seeking to enforce in its lawsuit against Schlumberger, (ii) had direct knowledge from her previous employment at Schlumberger of its software that plaintiff claimed infringed the patent and its legal risks, and (iii) personally approved plaintiff’s decision to sue Schlumberger. Id. at *5-6.

e.

Dynamic 3D argued that Rutherford had limited involvement with the Petrel software while at Schlumberger and did not disclose any Schlumberger matters to Dynamic 3D’s outside counsel.

f.

The Court granted the motion to disqualify. The Court found that Rutherford had to be disqualified because her role at Schlumberger gave her a “substantial relationship” to its software in question and created an irrebuttable presumption that she acquired Schlumberger confidential information:

g.

The Court also disqualified all in-house counsel for plaintiff because it found that Rutherford acknowledged attending two Dynamic 3D meetings where its patent and Schlum-berger’s software were discussed, and participated in the decision to hire outside counsel to bring the lawsuit, and Dynamic 3D did not rebut the “presumption that [in-house counsel] shared the confidential information she acquired from Schlumberger with [Dynamic 3D’s] legal team.” Id. at *17.

h.

Finally, the Court disqualified outside counsel and dismissed the lawsuit without prejudice.

i.

On September 12, 2016, the Federal Circuit affirmed, finding Rutherford’s work for Schlumberger had a substantial relationship to her work for Dynamic 3D, including on a project evaluating the “Petrel” system that was the subject of Dynamic 3D’s lawsuit against Schlumberger, and her discussion of the risks of bringing the lawsuit, required her disqualification under the rules of Texas and the American Bar Association. Dynamic 3D Geosolutions LLC v. Schlumberger Ltd. (Schlumberger N.V.), Nos. 2015-1628, 2015-1629, 2016 U.S. App. LEXIS 16645 (Fed. Cir. Sep. 12, 2016).

(1)

The Federal Court also ruled that other counsel for Dynamic 3D who interacted with Rutherford on the matter had to be disqualified: “[a]ll aspects of the case were contaminated by Rutherford’s actions, from the purchase of the ‘319 patent, to preparation for suit against Schlumberger, to the actual filing of the suit.” Id. at *27.

a.

An attorney was in-house counsel for Boston Scientific, where she worked on an internal investigation relating to whistleblower complaints. Id. at *2.

b.

The in-house attorney then left Boston Scientific to work for another company. Later, that company’s outside counsel hired her and “seconded” her back to that company. Id. at *2-3.

c.

The outside counsel that hired the attorney was also representing the plaintiffs in a qui tam lawsuit against Boston Scientific. The claims involved matters the attorney investigated when she was working at Boston Scientific. However, since the attorney had been seconded from the law firm, she did not have access to confidential information at the firm. Id. at *3.

d.

The Magistrate Judge granted a motion to disqualify the former in-house counsel, but denied the motion to disqualify the law firm.

e.

The District Judge reversed and disqualified the law firm as well.

f.

In a later decision, the District Judge held Boston Scientific was not entitled to attorneys fees on its successful motion to disqualify:

a.

Flatworld contended that Apple products infringed Flatworld’s patents for touch screen technology.

b.

The Court found that the husband “acted as an attorney for Flatworld contrary to his legal and professional duty” to Apple by assisting his wife and her company in planning their lawsuit against Apple. Id. at *3.

c.

But the Court denied the motion to disqualify Hagens Berman. The court concluded that Hagens Berman was not tainted by the husband’s conflict because there was no evidence that the husband received material confidential information about Apple while working at Morgan Lewis ― let alone transmitted any such information to Hagens Berman ― except for the e-mail in which a Morgan Lewis attorney conveyed Apple’s concerns about assertions of privilege concerning communications involving the husband.

d.

The court cited the husband’s minimal involvement in the case against Apple as a further reason not to disqualify Hagens Berman.

Such lawyers are “restricted from using or revealing information learned in the consultation to the same extent that a lawyer would be restricted with regard to information of a former client.” Opinion at 3.

Such lawyers “may not represent a client with materially adverse interests in the same or a substantially related matter if the information received from the prospective client could be significantly harmful to the prospective client in that matter.” Id.

Such lawyers are bound to maintain the confidentiality of information received from a prospective

client and should be disqualified from taking on the representation of a client that is adverse to the prospective client if it provided the lawyers with “significantly harmful” information.

a.

In September 2016, Martoma’s lawyers asked the court to disqualify Quinn Emanuel because “Mr. Martoma had multiple calls, email exchanges, and at least one in-person meeting (on September 16, 2014) with a Quinn partner, Christine Chung, to discuss retaining Quinn as his appellate counsel in the related criminal proceedings.” Kaplan v. SAC Capital Advisors LP, No. 1:12-cv-09350, Doc. 303, at 1 (S.D.N.Y. Sept. 12, 2016).

b.

Martoma’s lawyers alleged that “[i]n the course of his discussions with Quinn, Mr. Martoma shared attorney-client information, including thoughts on his criminal trial, strategy as to his appeal, and a privileged draft motion for bail pending appeal.” Id.

c.

Quinn Emanuel’s response denied that Martoma provided any nonpublic information to the Quinn Emanuel partner he met with, and said she had never been in contact with the Kaplan plaintiffs or co-counsel. Kaplan. v. SAC CapitalAdvisors LP, No. 1:12-cv-09350, Doc. 328, at 1 (S.D.N.Y. Sept. 19, 2016).

d.

Nonetheless, after consulting with the plaintiffs and its co-counsel, Quinn Emanuel asked to withdraw as class counsel to avoid “undue distraction and potential delay in the litigation.” Id. at 2.

a.

The Court explained that New York Rule of Professional Conduct 1.18 gives “prospective clients” who never become actual clients certain rights, including the right to seek disqualification where confidential information was exchanged in the initial consultation which could be “significantly harmful” in the matter.

b.

But the Court found that while Mr. Mayers provided confidential information to Quinn Emanuel, that information could not be “significantly harmful” to him.

a.

A creditor suing the architect had made the call to a “very junior” bankruptcy attorney “about the possibility of legal representation with respect to this bankruptcy case.” The junior attorney later joined the firm representing the debtor. Slip Op. at 2.

b.

The court found “no confidential information was conveyed during the telephone call.” Id.

c.

The court also sanctioned the creditor’s attorney for continuing to pursue the motion: “The continued pursuit of the Motion to Disqualify through trial was an exercise in hubristic pique by Halmos and PAH in a deliberate attempt by them to disrupt the bankruptcy proceeding and to inflict as much expense, delay and emotional pain on the Debtor and his lawyers as possible.” Id. at 5.

a.

Kenneth Kaufman was engaged in litigation against his brother Allen Kaufman concerning their parents’ estate.

Kenneth consulted two Farrell Fritz attorneys about the dispute but did not retain the firm.

b.

16 months later, Allen Kaufman hired a different Farrell Fritz attorney who was not aware of Kenneth’s prior consultation with his colleagues.

c.

Kenneth moved to disqualify Farrell Fritz and the court granted the motion.

a.

The associate accepted the job on March 11, 2015, but failed for six weeks to disclose the accepted offer to the attorney supervising him. Even after informing his current firm of his impending departure, the associate continued to sign and file pleadings on behalf of the debtor for almost three months after accepting the job offer from the creditor’s firm. Id.

b.

During this three month period, the debtor and creditors reached a settlement dividing the debtor’s assets and stipulated to the dismissal of the bankruptcy case. Id.

c.

On June 5, the associate moved to withdraw as the debtor’s counsel without disclosing the conflict. Finally, on June 15, the associate’s supervisor disclosed to the court that the associate had accepted an offer of employment with the law firm that represented the creditor. Id.

d.

The U.S. trustee moved to disqualify the firm from representing the debtor and to deny it any compensation. Id. at 951.

e.

The court concluded that “accepting a position at a law firm representing one of the largest creditors in a case where one represents the debtor must be disclosed, [and] … the connections between the firms and the parties at a minimum created the appearance of impropriety.” Id. at 953. It found that the firm representing the debtor had to disgorge its fees from the date the associate accepted the job offer — even though the firm hadn’t known about the situation for the first month. Id. at 960.

f.

However, the court also ruled that the firm should not be disqualified as counsel for the debtor because: (1) the lawyer who created the conflict had left the firm representing the debtor; (2) the case was nearly concluded, and the cost and delay for the debtor to retain new lawyers at that point would be “of no benefit,” particularly since there was insufficient money to satisfy all claims; (3) the settlement agreement itself was not tainted because the evidence established it was reached among four different parties at arms-length;

and (4) the lawyer had been screened from participation in the case after he arrived at his new firm (the Court ordered the new firm to continue to screen the attorney from the case). Id. at 960.

a.

In October 2014, Urban Compass hired Kirkland & Ellis to defend it in the action. In January 2015, one of the Kirkland & Ellis attorneys who did work for Urban Compass, including spending about 50 hours on the defense of the Dorfman action, moved to Quinn Emanuel. The attorney had worked on Urban’s motion to dismiss and interviewed its executives to develop strategies.

b.

In April 2015, Dorfman hired Quinn Emanuel to work on the case, but defendants moved to disqualify Quinn Emanuel from representing Dorfman. Quinn Emanuel responded that it had set up a “really, really tough” ethical screen.

c.

Nevertheless, the court granted the motion to disqualify. Dorfman v. Reffkin, No 652269/2014, Doc. 172, at 21 (Sup. Ct. N.Y. Co. Sept. 10, 2015) (transcript). The court explained that even if the attorney worked for Urban for only a few dozen hours, it was impossible for the court or the litigants to know exactly what “Aha!” moments the attorney had about the case before moving to Quinn. Id. at 43. The judge was also concerned that the defense would be disadvantaged by the belief that plaintiff Dorfman and his legal team had a “slam dunk” in the lateral Quinn attorney. Id. at 41. Finally, the court observed that Quinn’s offer to provide monthly affidavits to the court attesting that client confidences were being maintained would be “a lot of work.” Id. at 46.

a.

National Public Finance Guarantee Corp. and CalPERS were both litigating for a share of San Bernardino’s assets.

b.

CalPERS moved to disqualify the law firm, but the firm argued that it could set up an effective confidentiality screen between Parrish and the lawyers representing National Public Finance Guarantee Corp.

c.

The court disagreed, and found the firm could not overcome the attorneys’ potential breach of duty to CalPERS under California Rules of Professional Conduct.

d.

Under California law, a lateral partner’s knowledge is presumptively imputed to his or her new firm, but the firm can rebut that presumption by showing that it walled off the confidential information. See Kirk v. First American TitleIns. Co., 183 Cal. App. 4th 776 (2d Dist. 2010).

e.

However, the court ruled that when a lawyer switches from one side to another while a case is under way, that “direct conflict” means the new firm is automatically disqualified regardless of any ethical walls or other protections it has created.

a.

Plaintiffs sued defendant Cowen for copyright infringement.

b.

After the lawsuit was filed, Cowen retained two Reed Smith lawyers to advise Cowen on its copyright policies and practices. Id. at *2-3. Following the conclusion of that representation, one of the two Reed Smith lawyers joined Powley & Gibson (“P&G”), a 14-lawyer firm that was representing the plaintiffs in the copyright infringement litigation against Cowen. Id. at *6.

c.

P&G immediately created an ethical wall to screen the former Reed Smith lawyer from the copyright infringement lawsuit against Cowen by:

i.	sending a memo to the entire firm on the day the former Reed Smith attorney started work at the firm, instructing that no one should discuss the copyright infringement case with him;
ii.	instructing the former Reed Smith attorney not to discuss any work Reed Smith had performed for Cowen;
iii.	physically segregating the case files and putting a label on them that they were subject to an ethical screen; and
iv.	configuring the firm’s computer system to prevent the former Reed Smith attorney from accessing the Cowen electronic case files. Id. at *7.

d.

P&G also notified Cowen’s litigation counsel that the former Reed Smith attorney had joined the law firm. Id. at *6-7.

e.

Cowen moved to disqualify the law firm and the court granted the motion.

a.

Plaintiffs sold their company, Phoenix, to Parker-Hannifin, but later sued Parker-Hannifin for breach of their employment and non-compete agreements. Id. at *1-3.

b.

Pavelko, an attorney at the Novak Druce law firm, had represented plaintiffs and their companies for years. After they sold their company to Parker-Hannifin, he and his colleagues handled some patent and other IP legal work for Parker-Hannifin. Id. at *4.

c.

Another Novak Druce attorney, Towns, then represented plaintiffs in their lawsuit against Parker-Hannifin. Towns and several Novak Druce attorneys, including Pavelko, subsequently moved to a new law firm, Polsinelli PC. Id. at *4-5.

d.

Parker-Hannifin moved to disqualify Polsinelli, and the court granted the motion.

a.

The law firm that brought Victorinox’s lawsuit against B&F merged with Locke Lord LLP in January 2015 and joined its New York office. But a Locke Lord lawyer in Texas already represented B&F on various intellectual property matters that were unrelated to the Swiss Army Knife lawsuit.

b.

B&F moved to disqualify Locke Lord, and the Court denied the motion.

c.

B&F has appealed and Locke Lord has intervened in the appeal. Victorinox AG v. The B&F Sys., Inc., No. 15-4032, Doc. 173-2 (2d Cir. Aug. 2, 2016); Y. Peter Kang, “2^nd Cir. Lets Locke Lord Weigh In On Swiss Knife DQ Fight,” Law360.com, Oct. 20, 2016.

a.

A lawyer associated with counsel for the defendant, signed the verifications of the defendant’s answer and bill of particulars, and prepared discovery demands in defense of a personal injury action.

b.

The lawyer then went to work for counsel for the plaintiff.

c.

The defendant moved to disqualify the plaintiffs’ law firm.

d.

The Court denied the motion, explaining “[w]hile generally, a party seeking to disqualify an opponent’s attorney ‘must prove: (1) the existence of a prior attorney-client relationship between the moving party and opposing counsel,

(2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse’ (Tekni-Plex, Inc. v. Meyner & Landis, 89 NY2d 123, 131 [1996]), ‘no presumption of disqualification will arise if either the moving party fails to make any showing of a risk that the attorney changing firms acquired any client confidences in [his or her] prior employment (see, Jamaica Pub. Serv. Co. v AIU Ins. Co., 92 NY2d 631, 638[1998]) or the nonmoving party disproves that the attorney had any opportunity to acquire confidential information in the former employment (Kassis v Teacher’s Ins. & Annuity Assn., 93 NY2d 611, 617 [1999]).” 119 A.D.3d at 765, 989 N.Y.S.2d at 143.

e.

The Court found the defendant failed to make any showing that the lateral lawyer acquired any client confidences during his prior employment.

a.

Getty’s counsel, Jenner & Block, had previously performed pro bono work for Ms. Highsmith.

b.

In a conference with the court, Jenner & Block informed the court that it had erected an ethical screen between the Getty defense and anyone who had performed pro bono work for

Ms. Highsmith, none of her confidences were accessed by law firm personnel working on the Getty lawsuit, and there had been no communication between the two sets of firm attorneys before the wall was established. William Gorta, “Jenner & Block Says There’s No Conflict In Getty Photos Suit,” Law360.com, Aug. 24, 2016.

c.

Based on this assurance, Highsmith’s counsel declined to seek the disqualification of Jenner & Block. Id.

a.

The plaintiff, Pension Trust, moved to disqualify Proskauer from representing the defendant on the ground that Proskauer had for many years represented and currently represents more than a dozen multiemployer pension plans, including in their efforts to collect withdrawal liability. Id. at *12.

b.

Pension Trust argued Proskauer was asserting arguments in defense of the case that, if successful, would create precedents likely to seriously weaken the ability of Proskauer’s pension plan clients to litigate their own claims. Id.

c.

The Magistrate Judge rejected Proskauer’s argument that Pension Trust lacked standing to bring the motion to disqualify.

d.

The Magistrate Judge nevertheless denied the motion to disqualify.

e.

The Court found Pension Trust had not met its burden of identifying a lawsuit Proskauer was currently handling in which its clients’ interests would be adversely affected if Proskauer prevailed on the argument it was making in this case, and therefore had not shown there was a serious risk that Proskauer’s actions in this case would materially limit its effectiveness in representing another client in a different case such that the attorney-client relationship in this case should be severed. Id. at *19.

a.

Fluor and its successor, Doe Run, owned a lead smelter. Zurich insured the business. Id. at *2.

b.

Fluor sued Doe Run in state court concerning claims against the smelter business. Latham represented Fluor, issued a non-party subpoena to Zurich, and obtained its confidential documents, which were subject to a protective order. Id. at *3-4.

c.

Zurich then brought a federal action against Fluor, and Fluor filed a counterclaim.

d.

Zurich moved to disqualify Latham in the federal action on the ground that the law firm relied on facts it learned from the documents it subpoenaed from Zurich in the state court action to assert the counterclaim against Zurich. Zurich alleged that use of the subpoenaed documents violated the state court protective order which directed that the documents subpoenaed from Zurich were to be used only in the state court action. Id. at *5.

e.

However, the federal court reviewed the documents in question and the counterclaim and concluded “[t]here is no evidence presented before this Court to suggest Fluor violated the terms of the protective order or acted improperly before the Court to warrant disqualification or sanctions.” Id. at *7. “Zurich has failed to show Fluor’s knowledge of the protected discovery has tainted this litigation when it is clear Fluor has taken steps to ensure the information it learned was not used in the counterclaim.” Id.

a.

GT had provided Hasbro with legal advice on general sales promotion since 2008, and had performed patent prosecution

work for Hasbro since 2011, with bills not exceeding $25,000 annually for that work. Id. at *5-6.

b.

GT’s retainer agreement said Hasbro would not unreasonably withhold a waiver of a conflict of interest if (i) the potentially adverse representation is substantially unrelated to GT’s work for the toy company, (ii) an ethical wall is created, and (iii) GT does not disclose to the adverse persons and entities any confidential information it obtains from the toy company. Id. at *5.

c.

Markham sued Hasbro for breach of contract for failure to pay royalties due on sales of the Game of Life, and for a determination that Hasbro does not control the intellectual property for that game and does not have the right to commission derivative works based on the game. Id. at *4.

d.

Shortly before bringing in the laterals, GT met with Hasbro to try to expand their relationship. Id. at *6.

e.

After GT announced that the laterals were joining the firm, it asked Hasbro to waive the conflict so they could continue to handle the litigation adverse to Hasbro. But Hasbro declined. Id.

f.

Four days later, GT informed Hasbro it was withdrawing as their counsel in any open matters. Id. at *6-7.

g.

Hasbro moved to disqualify GT from handling the litigation adverse to Hasbro. Id. at *7.

h.

On July 22, 2016, the Court granted Hasbro’s motion to disqualify GT.

a.

Kirkland’s representation of its Mylan clients included work on many drug products, for which total revenue was approximately $4 billion, as well as commercial and contract work.

b.

The Mylan clients provided Kirkland with sensitive, confidential, proprietary information, and Kirkland billed substantial fees for its work.

c.

Kirkland set up an ethical wall between its Teva team and its Mylan team.

a.

Mylan sought an injunction barring Kirkland from continuing to represent Teva in the tender offer.

a.

As of October 2009, both Air Products and Airgas had been long-time clients of Cravath.

b.

In October 2009, Air Products contacted Airgas regarding its interest in pursuing a friendly acquisition of Airgas by Air Products.

c.

On October 28, 2009, Cravath informed Airgas that it would not undertake new representations from Airgas due to the risk of a conflict developing with a different client.

d.

On February 4, 2010, after Air Products’ approaches to Airgas proved unfruitful, Air Products publicly announced that it intended to offer to purchase all outstanding Airgas stock for $60 per share. On that same day, Air Products, represented by Cravath, commenced an action in the Delaware Court of Chancery against Airgas and its board seeking declaratory and injunctive relief for an alleged breach of fiduciary duty by the Airgas board. Id. at *3.

e.

On February 5, Airgas commenced an action against Cravath in the Court of Common Pleas of Pennsylvania, where Airgas is headquartered, alleging that Cravath breached its fiduciary duty and should be enjoined from representing Air Products in connection with the proposed Airgas transaction. Id.

f.

The Pennsylvania Court of Common Pleas denied Airgas’s application for a TRO, and Cravath successfully removed the action to the federal court in the Eastern District of Pennsylvania. Id.

g.

Air Products moved in the Delaware Court of Chancery for a declaration that Cravath could continue to serve as Air Products’ counsel in the action it had brought there; the Eastern District of Pennsylvania then stayed Airgas’s action until the Court of Chancery could decide that motion. Id.

h.

On March 5, 2010, Chancellor William Chandler issued an oral decision granting Air Products’ motion.

i.

However, Chancellor Chandler’s ruling was not the end of the story on the conflict of interest issue. In Airgas’s breach of fiduciary duty lawsuit against Cravath in the Eastern District of Pennsylvania, the district court, in August 2010, denied the law firm’s motion for judgment on the pleadings. Airgas, Inc. v. Cravath, Swaine & Moore LLP, Civ. Action No. 10-612, 2010 U.S. Dist. LEXIS 78162 (E.D. Pa. Aug. 3, 2010). The Court rejected Cravath’s argument that Airgas’s complaint failed to establish that it suffered any legally cognizable injury as a result of the law firm’s conduct, and held that Airgas stated a claim that it was harmed by Cravath’s conduct in four respects:

j.

Airgas announced on June 17, 2011, that it had settled the action. See Sophia Pearson, “Airgas Settles Suit Against Cravath Swaine Over Air Products,” Bloomberg.com, June 17, 2011.

a.

Covington & Burling had represented the Minnesota-based 3M in the 1990s and early 2000s concerning flourochemicals in food packaging, including in connection with regulatory matters before the Food and Drug Administration.

b.

The firm had also handled an employee benefits matter for 3M that ended in September 2010.

c.

Soon afterward in 2010, Covington filed a lawsuit against 3M on behalf of the state of Minnesota in Minnesota state court alleging that 3M had polluted the water with flourochemicals.