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ALGI ERS AUSTI N DALLAS FORT W ORTH HOUSTON MACA MONTERREY PARI S RI O DE JANEI RO VI TRI A Conflicts of I nterest: Conflicts of I nterest: How They Arise, How to Assert Them, and How to How They Arise, How

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ALGI ERS AUSTI N DALLAS FORT W ORTH HOUSTON MACAÉ MONTERREY PARI S RI O DE JANEI RO VI TÓRI A

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Conflicts of I nterest: Conflicts of I nterest:

How They Arise, How to Assert Them, and How to How They Arise, How to Assert Them, and How to Defend Them Defend Them

Presented by Presented by

Greg Curry Greg Curry

Greg.Curry Greg.Curry@tklaw.Com @tklaw.Com

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Overview Overview

  • I dentifying the Conflict

I dentifying the Conflict

  • Preventing the Conflict

Preventing the Conflict

  • Raising the Conflict

Raising the Conflict

  • Protecting Against the Conflict

Protecting Against the Conflict

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Types of Conflicts Types of Conflicts

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Traditional Conflict Traditional Conflict

  • TDRPC 1.09(a):

TDRPC 1.09(a): “a lawyer who personally has formerly represented a “a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another client in a matter shall not thereafter represent another person in a matter adverse to the former client: person in a matter adverse to the former client: . . . . . . (2) if the representation in reasonable probability will (2) if the representation in reasonable probability will involve a violation of Rule 1.05. involve a violation of Rule 1.05. (3) if it is the same of a substantially related matter. (3) if it is the same of a substantially related matter.

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Traditional Conflict Traditional Conflict

  • What is a “substantially related matter”?

What is a “substantially related matter”?

  • Two elements

Two elements

  • An actual attorney

An actual attorney-

  • client relationship between the moving

client relationship between the moving party and the attorney to be disqualified; and party and the attorney to be disqualified; and

  • A substantial relationship between the subject matter of

A substantial relationship between the subject matter of the former and present representations the former and present representations

See See Abney v. Wal Abney v. Wal-

  • Mart

Mart, 984 F.Supp. 526, 529 (E.D.Tex.1997) , 984 F.Supp. 526, 529 (E.D.Tex.1997)

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ALGI ERS AUSTI N DALLAS FORT W ORTH HOUSTON MACAÉ MONTERREY PARI S RI O DE JANEI RO VI TÓRI A

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Traditional Conflict Traditional Conflict

  • What does “substantial relationship” mean?

What does “substantial relationship” mean?

  • Direct involvement such that the attorney had access to

Direct involvement such that the attorney had access to material information concerning the matter material information concerning the matter

  • Federal:

Federal:

  • Must show common subject matters, issues, and causes

Must show common subject matters, issues, and causes

  • f action that are substantially related between the two
  • f action that are substantially related between the two

matters matters

See I n re American Airlines, I nc. See I n re American Airlines, I nc., 972 F.2d 605, 614 (5th Cir. 1992). , 972 F.2d 605, 614 (5th Cir. 1992).

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  • State:

State:

  • Must show factual matters involved were so related to

Must show factual matters involved were so related to the facts in the pending litigation that it creates a the facts in the pending litigation that it creates a genuine genuine threat threat that confidences will be divulged that confidences will be divulged

  • Must produce evidence of specific similarities capable

Must produce evidence of specific similarities capable

  • f being recited in disqualification order
  • f being recited in disqualification order
  • No bar to representing a current client against a former

No bar to representing a current client against a former client client

See NCNB Texas Nat’l Bank v. Coker See NCNB Texas Nat’l Bank v. Coker, 765 S.W.2d 398, 400 , 765 S.W.2d 398, 400 (Tex.1989). (Tex.1989).

Traditional Conflict Traditional Conflict

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  • Once a “substantial relationship” is found, an irrebuttable

Once a “substantial relationship” is found, an irrebuttable presumption is created presumption is created

  • I rrebuttable presumption is that confidences were

I rrebuttable presumption is that confidences were disclosed during the former representation disclosed during the former representation

  • Must show factual matters involved were so related to

Must show factual matters involved were so related to the facts in the pending litigation that it creates a the facts in the pending litigation that it creates a genuine genuine threat threat that confidences will be divulged that confidences will be divulged

  • Must produce evidence of specific similarities capable

Must produce evidence of specific similarities capable

  • f being recited in disqualification order
  • f being recited in disqualification order

See NCNB Texas Nat’l Bank v. Coker See NCNB Texas Nat’l Bank v. Coker, 765 S.W.2d 398, , 765 S.W.2d 398, 400 (Tex.1989). 400 (Tex.1989).

Traditional Conflict Traditional Conflict

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Traditional Conflict Traditional Conflict

  • Absence of “substantial relationship” does not prevent

Absence of “substantial relationship” does not prevent disqualification disqualification

  • Must identify disclosures made to former attorney

Must identify disclosures made to former attorney

  • Must show substantive conversations between former

Must show substantive conversations between former client and the attorney that contained information client and the attorney that contained information relevant to the present litigation relevant to the present litigation

See Abney See Abney, 984 F.Supp. at 530. , 984 F.Supp. at 530.

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Multiple Representation Multiple Representation

  • TDRPC 1.06(a):

TDRPC 1.06(a): A lawyer may not represent opposing parties in the A lawyer may not represent opposing parties in the same litigation, whether or not the parties consent to same litigation, whether or not the parties consent to the representation the representation

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Multiple Representation Multiple Representation

  • What are “opposing parties”?

What are “opposing parties”?

  • A judgment favorable to one will have a direct and

A judgment favorable to one will have a direct and unfavorable impact on the other unfavorable impact on the other

  • Parties on opposite sides of a single transaction

Parties on opposite sides of a single transaction

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Multiple Representation Multiple Representation

  • What are “opposing parties”?

What are “opposing parties”?

  • A judgment favorable to one will have a direct and

A judgment favorable to one will have a direct and unfavorable impact on the other unfavorable impact on the other

  • Parties on opposite sides of a single transaction

Parties on opposite sides of a single transaction

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Disputes Arising Out of Prior Matters Disputes Arising Out of Prior Matters

  • TDRPC 1.06(d):

TDRPC 1.06(d): I f a lawyer in the firm has represented multiple parties I f a lawyer in the firm has represented multiple parties in a matter or transactions, the lawyer will not in a matter or transactions, the lawyer will not represent any of the parties in a dispute among the represent any of the parties in a dispute among the parties subsequently arising out of the matter parties subsequently arising out of the matter Exception: prior written consent obtained from all Exception: prior written consent obtained from all parties parties

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I mputed Disqualifications I mputed Disqualifications

  • TDRPC 1.09(b):

TDRPC 1.09(b): I f an attorney at a law firm has a conflict of interest and is I f an attorney at a law firm has a conflict of interest and is disqualified, the whole firm shares the conflict disqualified, the whole firm shares the conflict

  • An attorney that acquired confidential information while working

An attorney that acquired confidential information while working with a former employer will disqualify his new firm with a former employer will disqualify his new firm

  • Creates an irrebuttable presumption

Creates an irrebuttable presumption

  • “Chinese Wall” does not rebut presumption

“Chinese Wall” does not rebut presumption

See Petroleum Wholesale, I nc. v. Marshall See Petroleum Wholesale, I nc. v. Marshall, 751 S.W.2d 295, 299 , 751 S.W.2d 295, 299-

  • 300 (Tex.App.

300 (Tex.App.— —Dallas 1988, Dallas 1988,

  • rig. proceeding).
  • rig. proceeding).
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  • Applies to non

Applies to non-

  • attorney staff

attorney staff

  • Rebuttable presumption created

Rebuttable presumption created

  • Can defeat presumption by showing effective screening

Can defeat presumption by showing effective screening including a “Chinese Wall” including a “Chinese Wall”

See Phoenix Founders, I nc. v. Marshall See Phoenix Founders, I nc. v. Marshall, 887 S.W.2d 831 (Tex.1994). , 887 S.W.2d 831 (Tex.1994).

I mputed Disqualifications I mputed Disqualifications

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Other conflicts Other conflicts

  • Lawyers as witnesses

Lawyers as witnesses

  • Exceptions:

Exceptions:

  • Uncontested issues;

Uncontested issues;

  • Matter of formality; no substantial evidence will be

Matter of formality; no substantial evidence will be

  • ffered in opposition;
  • ffered in opposition;
  • Testimony relates to nature and value of legal services;

Testimony relates to nature and value of legal services;

  • Firm is a party to the action and is appearing pro se;

Firm is a party to the action and is appearing pro se;

  • Testifying attorney promptly notifies other side and

Testifying attorney promptly notifies other side and disqualification will be substantial hardship to client disqualification will be substantial hardship to client

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Other conflicts Other conflicts

  • Lawyers as witnesses

Lawyers as witnesses

  • Can still perform out

Can still perform out-

  • of
  • f-
  • court functions

court functions

  • Another lawyer with firm can represent client with client’s

Another lawyer with firm can represent client with client’s permission permission

See I n re Sanders See I n re Sanders, 153 S.W.3d 54 (Tex.2004). , 153 S.W.3d 54 (Tex.2004).

  • I nsurance clients

I nsurance clients

  • Attorney must immediately tell insured if conflict arises betwee

Attorney must immediately tell insured if conflict arises between n insurer and insured insurer and insured

  • Duty of loyalty lies with the insured

Duty of loyalty lies with the insured

  • American Home Assurance Co.

American Home Assurance Co. – – to whom do insurers’ staff to whom do insurers’ staff attorneys representing insureds have a duty? attorneys representing insureds have a duty?

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Preventing Conflicts Preventing Conflicts

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  • The Engagement Letter

The Engagement Letter

  • Define and document the nature and extent of attorney

Define and document the nature and extent of attorney-

  • client relationship

client relationship

  • I nformed consent

I nformed consent

  • Obtain written consent when representing dual/ multiple

Obtain written consent when representing dual/ multiple clients clients

Preventing Conflicts Preventing Conflicts

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Addressing Conflicts Addressing Conflicts

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Addressing Conflicts Addressing Conflicts

  • Withdrawal

Withdrawal

  • Required if representation will result in a violation of

Required if representation will result in a violation of ethical rules ethical rules

  • Optional withdrawal possible if no material adverse effect

Optional withdrawal possible if no material adverse effect

  • n client
  • n client
  • Disqualification of counsel

Disqualification of counsel

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Disqualification Motions Disqualification Motions

  • Basis for motion

Basis for motion

  • Actual conflict or concerns that confidentiality will be

Actual conflict or concerns that confidentiality will be compromised compromised

  • Burden is on movant

Burden is on movant

  • Must establish with specificity the conduct that gives rise

Must establish with specificity the conduct that gives rise to conflict to conflict

  • Mere allegations not enough

Mere allegations not enough

  • Conduct alleged need not violate disciplinary rule

Conduct alleged need not violate disciplinary rule

  • Must establish by a “preponderance of the facts”

Must establish by a “preponderance of the facts”

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Disqualification Motions Disqualification Motions

  • I rrebuttable presumption

I rrebuttable presumption

  • I f movant shows attorney’s former and current

I f movant shows attorney’s former and current representations are substantially related, movant entitled representations are substantially related, movant entitled to conclusive and irrebuttable presumption to conclusive and irrebuttable presumption

  • Burden shifts to opponent only in context of non

Burden shifts to opponent only in context of non-

  • lawyer

lawyer employees employees

  • Review is by mandamus

Review is by mandamus

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Disqualification Motions Disqualification Motions

  • Elements of motion:

Elements of motion:

  • Existence of past and current attorney

Existence of past and current attorney-

  • client relationships;

client relationships;

  • Description of the nature of the representations;

Description of the nature of the representations;

  • Specific facts to show matters are “substantially related”;

Specific facts to show matters are “substantially related”;

  • An explanation of how attorney’s current role is adverse to

An explanation of how attorney’s current role is adverse to interests of movant; interests of movant;

  • A statement that the movant has not given informed consent nor

A statement that the movant has not given informed consent nor waived the right to disqualify waived the right to disqualify

For an example, For an example, see see O’Connor’s Texas Civil Forms (2004 O’Connor’s Texas Civil Forms (2004-

  • 05), at 49 (Form 1H:10).

05), at 49 (Form 1H:10).

  • Evidence:

Evidence:

  • I f evidence to support not in the record, try to get sworn

I f evidence to support not in the record, try to get sworn testimony, deposition transcripts, or live testimony testimony, deposition transcripts, or live testimony

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Response to Motion to Disqualify Response to Motion to Disqualify

  • Possible arguments:

Possible arguments:

  • “Substantial relationship” test not met

“Substantial relationship” test not met

  • No “genuine threat” that confidences will be revealed

No “genuine threat” that confidences will be revealed

  • Specific facts to negate “substantial relationship”

Specific facts to negate “substantial relationship”

  • Existence of proper screening procedure for non

Existence of proper screening procedure for non-

  • lawyer or

lawyer or ex ex-

  • government employees

government employees

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Response to Motion to Disqualify Response to Motion to Disqualify

  • Waiver

Waiver

  • Express waiver

Express waiver

  • Written waiver preferred

Written waiver preferred

  • Effective if it discloses attorney’s past and intended roles

Effective if it discloses attorney’s past and intended roles concerning representation of each client concerning representation of each client

  • Notify client of subject matter of prior work, the time

Notify client of subject matter of prior work, the time period of when work was performed, the attorney(s) period of when work was performed, the attorney(s) involved, and how the prior work concluded. involved, and how the prior work concluded. See I n re Cerebrus Capital Management See I n re Cerebrus Capital Management, 48 Tex. Sup. Ct. , 48 Tex. Sup. Ct.

  • J. 646, 648 (Tex.2005).
  • J. 646, 648 (Tex.2005).
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Response to Motion to Disqualify Response to Motion to Disqualify

  • Waiver

Waiver

  • I mplied waiver

I mplied waiver

  • Failure to timely file a motion to disqualify

Failure to timely file a motion to disqualify

  • Timeliness determined by the point at which “the

Timeliness determined by the point at which “the information available . . . establish[ed] that . . . counsel information available . . . establish[ed] that . . . counsel should be disqualified. . .” should be disqualified. . .”

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Conflicts of I nterest: Conflicts of I nterest:

How They Arise, How to Assert Them, and How to How They Arise, How to Assert Them, and How to Defend Them Defend Them

Presented by Presented by

Greg Curry Greg Curry

Greg.Curry Greg.Curry@tklaw.Com @tklaw.Com