Whether a small law firm should be disqualified from representing a defendant and third-party plaintiff in an action after it hired an attorney who had formerly worked on the same case as an associate for the law firm representing the plaintiff in the suit.
Disposition
Yes. Where an attorney acquires significant client confidences and then engages in "side-switching" to the opposing counsel's firm, that firm must be disqualified, regardless of any precautionary measures taken by the current firm to distance the attorney from the case.
The plaintiffs in this case retained the law firm of Weg & Myers to represent them against defendants, who were represented by the 26 attorney firm, Thurm & Heller. This appeal concerns whether Thurm & Heller should be disqualified as counsel in this litigation after the firm hired Charles Arnold, a former associate at Weg & Myers.
Arnold had worked on the Kassis litigation while employed at Weg & Myers. When he began work at Thurm & Heller, the firm set up a "Chinese Wall", a precautionary agreement signed by Arnold setting up safeguards against Thurm & Heller's disqualification as counsel in this case.
Soon after Arnold was hired, plaintiffs moved to disqualify Thurm & Heller from further participation in the litigation. The motion was denied by the Supreme Court. The Appellate Division affirmed, holding that plaintiff would be unduly advantaged by the disqualification of Thurm & Heller as counsel for defendants, especially in light of the "Chinese Wall" measures taken by the firm to distance Arnold from the litigation. The Court of Appeals here reversed.
While the Court noted that there is no mandatory disqualification rule imputing one attorney's conflicts of interest to his or her entire firm, a rebuttable presumption of firm disqualification does arise when it is shown that one of its attorneys acquired material confidential client information before "side-switching" to his or her current firm. When this presumption arises, to avoid firm disqualification, the attorney must show that he or she did not acquire knowledge of any material that is likely to be "significant" to the litigation. The determination of whether such a presumption is rebutted, according to the Court, is made on a case-by-case basis by the relative likelihood that the disqualified attorney acquired material confidential information.
When the presumption has been rebutted, a "Chinese Wall" like that imposed by Thurm & Heller on Arnold must still be imposed, and would then be sufficient to prevent firm disqualification.
In the instant case, the Court disqualified Thurm and Heller from representation of the Teacher's Insurance and Annuity Association on the basis that Arnold's involvement in the case was not merely negligible. At Weg and Myers, Arnold had regular contact with the client, had appeared as sole counsel in the case on two occasions, and was "steeped in the files of this case." The Court held that, as a matter of law, the presumption that the firm should be disqualified was not rebutted, thus compelling firm disqualification.