Freivogel on Conflicts
 
 
 

 

Co-Counsel/Common Interest

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A.  Introduction

        The term "co-counsel" as used here means two or more unaffiliated lawyers representing the same party in the same matter.  This could involve "lead counsel" assisted by "local counsel," or it could involve a client's principal law firm bringing in a lawyer with unique expertise from another law firm.  In contrast, "common interest" refers to the situation where different lawyers represent different parties in the same proceeding.  They agree that they have enough  in common to share resources, strategy, and confidential information.  They do not, however, agree to be "co-counsel" for the same party or parties.  The most common type of “common interest” arrangement is the “joint defense” agreement.  The concepts are treated together here because they are occasionally grouped together by courts in analyzing issues before them.  See, for example, the discussion of Essex in Part C following.

B.   Co-Counsel Disqualification Issues

        Lawyer A represents Client X in a lawsuit.  Lawyer A would like to use the expertise of Lawyer AA, who is in a different firm, Firm AA, in the case.  Lawyer AA and Firm AA sign on as co-counsel for X.  While the case is pending, the other side, Y, moves to disqualify Lawyer A because Lawyer A used to represent Y in matters similar to the pending one.  Y claims that in the prior representations Lawyer A would have gained confidential insights about Y that Lawyer A could use to Y's detriment in the pending matter.  Lawyer A and Client X do not wish to contest the motion, so Lawyer A withdraws, leaving Lawyer AA to represent X.  Now, Y moves to disqualify Lawyer AA and Law Firm AA, because of their status as co-counsel to Lawyer A. 

        Virtually all courts that have addressed this issue have held that the relationship of co-counsel does not automatically result in the disqualification of one because of the conflict of the other.  These courts hold that if the disqualified lawyer has not conveyed prejudicial information about the aggrieved party to co-counsel, co-counsel is not disqualified.  Examples are as follows: Smith v. Whatcott, 774 F.2d 1032 (10th Cir. 1985); Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564 (Fed. Cir. 1984); Brennan's Inc. v. Brennan's Restaurants, Inc., 590 F.2d 168 (5th Cir. 1979); Akerly v. Red Barn System, Inc., 551 F.2d 539 (3d Cir. 1977); American Can Co. v. Citrus Feed Co., 436 F.2d 1125 (5th Cir.) reh'g denied, (1971); Emblaze Ltd. v. Microsoft Corp., 2014 U.S. Dist. LEXIS 74992 (N.D. Cal. May 30, 2014); IPVX Patent Holdings, Inc. v. 8X8, Inc., 2013 U.S. Dist. LEXIS 178858 (N.D. Cal. Dec. 19, 2013); Love v. Permanente Med. Grp., 2013 U.S. Dist. LEXIS 133686 (N.D. Cal. Sept. 18, 2013); Canatella v. Krieg, Keller, Sloan, Reilley & Roman LLP, 2012 U.S. Dist. LEXIS 33606 (N.D. Cal. March 13, 2012); Li v. A Perfect Day Franchise, Inc., 2011 U.S. Dist. LEXIS 114761 (N.D. Cal. Oct. 5, 2011); Oracle America, Inc. v. Innovative Tech. Distribs., LLC, 2011 U.S. Dist. LEXIS 78786 (N.D. Cal. July 20, 2011); Gonzalez v. Central Elec. Coop., Inc., 2009 U.S. Dist. LEXIS 98104 (D. Ore. Oct. 15, 2009); United States v. Ligas, 2006 U.S. Dist. LEXIS 31656 (N.D. Ill. May 10, 2006); Wheeler v. Siegelman, 2007 Ala. LEXIS 86 (Ala. May 18, 2007); Baybrook Homes v. Banyan Constr. & Dev., 991 F. Supp. 1440 (M.D. Fla. 1997); In re Airport Car Rental Antitrust Lit., 470 F. Supp. 495 (N.D. Cal. 1979); Realco Services, Inc. v. Holt, 479 F. Supp. 867 (E.D. Pa. 1979); Ex parte Terminix Int'l. Co., L.P., 736 So. 2d 1092 (Ala. 1998); Frazier v. Superior Court, 118 Cal. Rptr. 2d 129 (Cal. App. 2002); Brown v. Eighth Judicial Dist. Court, 14 P.3d 1266 (Nev. 2000); Kelly v. Paulsen, 2016 WL 7469490 (N.Y. App. Div. Dec. 29, 2016); In re American Home Products Corp., 985 S.W.2d 68 (Tex.1998).

        Seeming departure from majority rule in case of a mediator. Nevarez v. Foster Farms, 2016 WL 1020758 (Cal. App. Unpub. March 15, 2016). Lawyer became co-counsel with Plaintiffs’ law firm (“Law Firm”) in this class action alleging violation of California employment laws. Defendant had been a party in another case in which Lawyer served as mediator. Defendant moved to disqualify Lawyer and Law Firm in this case. The trial court granted the motion. In this opinion the appellate court affirmed. The opinion contains an extended discussion of whether Lawyer represented Plaintiff in this case and whether this case is substantially related to the earlier mediation. The one remarkable (to us) holding was that Lawyer’s disqualification was imputed to Law Firm, absent a showing that Lawyer passed Defendant’s confidences to Law Firm. We believe the majority rule is otherwise (see cases at this site’s page, “Co-Counsel/Common Interest”).

        In Polish Roman Catholic St. Stanislaus Parish v. Hettenbach, 2010 Mo. App. LEXIS 102 (Mo. App. Feb. 2, 2010), the court held that there is a rebuttable presumption that the lawyers shared confidential information (not clear whether co-counsel or common interest).

        Restatement § 123 cmt. c(iii) illus. 2 takes this majority view.

        The court in Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir. 1977) departed somewhat from the majority view.  The court felt the relationship between co-counsel was so close in that particular case, that just being in a position to receive client confidences meant that co-counsel should be disqualified.  For a similar result see Burnett v. Olson, 2005 U.S. Dist. LEXIS 4849 (E.D. La. March 18, 2005) (court noted majority view and Brennan's Inc., but troubled by seriousness of claims against other party).  Patriot Scientific Corp. v. Moore, 2006 U.S. App. LEXIS 9285 (Fed. Cir. April 12, 2006); Sumpter v. Hungerford, 2013 U.S. Dist. LEXIS 71119 (E.D. La. May 20, 2013); Leathermon v. Grandview Mem'l Gardens, Inc., 2010 U.S. Dist. LEXIS 32173 (S.D. Ind. March 31, 2010);  j2 Commc'ns Inc. v. Captaris Inc., 2012 U.S. Dist. LEXIS 179670 (C.D. Cal. Dec. 19, 2012) and Pound v. Cameron, 36 Cal. Rptr. 3d 922 (Cal. App. 2005), also take the minority view, but for no good reason.

        Party walks away from a common interest arrangement, and does not conflict out opponent's law firm.  Roush v. Seagate Technology, LLC, 58 Cal. Rptr. 3d 275 (Cal. App. 2007).

        The Gerffert Co., Inc. v. Dean, 2011 U.S. Dist. LEXIS 15530 (E.D.N.Y. Feb. 16, 2011).  The court did not make findings that confidences were exchanged but seemed put off by the fact that the disqualified lawyer helped co-counsel behind the scenes for some period of time.

        In Dynamic 3D Geosolutions LLC, v. Schlumberger Ltd., Nos. 2015-1628, 2015-1629 (Fed. Cir. Sept. 12, 2016), the court disqualified a law firm because it had learned too much from a disqualified in-house lawyer.

        In re CMH Homes, Inc., 2013 Tex. App. LEXIS 6827 (Tex. App. June 5, 2013).  Lawyer represented Homes Co. in defending claims by homeowners about Homes Co.'s alleged financing fraud.  Lawyer then was elected County Attorney.  The county board decided to sue Homes Co. over many of the same alleged fraudulent financing activities.  The board directed Lawyer to retain two private lawyers, A and B, to pursue County's case.  Lawyer did so and appeared along with A and B on the County's complaint (this case).  When Homes Co. raised Lawyer's conflict, Lawyer withdrew.  Homes Co. then moved to disqualify A and B, largely based upon the contacts between Lawyer and A and B.   The trial judge denied the motion.  In this 2-1 opinion the appellate court reversed (granted mandamus).  The dissenting judge would have required Defendants to show that Lawyer had shared Homes Co.'s confidences with A and B.  It is not clear from the opinion that Lawyer had shared Home Co.'s confidences with A and B.

        Roberts v. Corwin, 2013 N.Y. Misc. LEXIS 4454 (N.Y. Sup. Ct. Oct. 4, 2013).  Plaintiff in this legal malpractice case against Law Firm A, had been represented by Law Firm A in an arbitration.  The arbitration panel issued a negative preliminary finding.  Plaintiff then hired Law Firm B to be co-counsel with Law Firm A.  Shortly after the preliminary finding Plaintiff began discussing with a lawyer from Law Firm B a possible malpractice case against Law firm A.  The arbitration panel then issued a final ruling against Plaintiff.  Plaintiff, using Law Firm B, then filed this malpractice case against Law Firm A.  Law Firm A moved to disqualify Law Firm B in this case.  In this opinion the judge denied the motion.  The key reason for the denial was that Law Firm B had not learned anything from Law Firm A that it could not have learned from its then client, Plaintiff.  The court also found that Law Firm B did not engage in the kind of "egregious conduct" in obtaining information from Law Firm A that had justified disqualification in other cases.

        Law Review.  Paul R. Taskier, Alan H. Cosper, Vicarious Disqualification of Co-Counsel Because of "Taint," Geo. J. Legal Ethics 155, 158 (1987).
       
        Treatise.  Hazard, Hodes, & Jarvis § 14.6.

C.  Common Interest Arrangements (Including Joint Defense Agreements)

        X and Y are defendants in a lawsuit.  They each have their own lawyers, A and B, respectively.  They believe their interests are close and enter into an agreement to share resources, strategy, and confidential information.  They meet several times.  At the conclusion of that lawsuit, X decides to sue Y in a matter arising out of the same facts that were involved in the first case.  Lawyer A files the complaint on behalf of X.  Y moves to disqualify Lawyer A because of the earlier joint defense agreement.

        In the following cases the courts held that, absent receipt of the other party's confidences in the joint proceeding, a lawyer in A's position would not be ethically precluded from bringing the action: Wilson P. Abraham Construction Corp. v. Armco Steel Corp., 559 F.2d 250 (5th Cir. 1977); In re Air Cargo Shipping Servs. Antitrust Litig., 2016 WL 727171 (E.D.N.Y. Feb. 23, 2016); Cochran v. Five Pts. Temps., LLC, 2012 U.S. Dist. LEXIS 139134 (N.D. Ala. Sept. 27, 2012); Roosevelt Irrig. Dist. v. Salt River Agricultural Improvement & Power Dist., 2011 U.S. Dist. LEXIS 96162 (D. Ariz. Aug. 26, 2011); Avocent Redmond Corp. v. Rose Electronics, Inc., 2007 U.S. Dist. LEXIS 76085 (W.D. Wash. Oct. 9, 2007) (court also found that there had been no joint defense agreement); Clean Investments, LLC v. DiSanto, 489 F. Supp. 2d 100 (D. Me. 2007); GTE North, Inc. v. Apache Products Co., 914 F. Supp. 1575 (N.D. Ill. 1996); Kaskie v. The Celotex Corp., 618 F. Supp. 696 (N.D. Ill. 1985) (lawyer may even represent a new plaintiff in a new case against non-client member of arrangement); IMC Global, Inc. v. Moffett (In re IMC Global, Inc.), 1998 Del. Ch. LEXIS 224 (Del. Ch. 1998); Associated Wholesale Grocers, Inc. v. Americold Corp., 975 P.2d 231 (Kan. 1999); Peeler v. Baylor Univ., 2009 Tex. App. LEXIS 7283 (Tex. App. Sept. 16, 2009).  In GTE North the court found that the lawyer had, in fact, learned the other party's confidences during the joint proceeding, and disqualified the lawyer and his entire firm.  In United States v. Henke, 222 F.3d 633 (9th Cir. 2000), the issue was not whether a lawyer could sue a member of a joint defense arrangement.  The issue was whether the lawyer could cross examine the member.  Pursuant to the joint defense arrangement, the parties had exchanged confidences.  Because the lawyer could not cross examine the member, his client's conviction was reversed.

        In Polish Roman Catholic St. Stanislaus Parish v. Hettenbach, 2010 Mo. App. LEXIS 102 (Mo. App. Feb. 2, 2010), the court held that there is a rebuttable presumption that the lawyers shared confidential information (not clear whether co-counsel or common interest).

        In In re Sharplin, Jr., 2006 Tex. App. LEXIS 6834 (Tex. App. Aug. 3, 2006), the court was dealing with a lawyer who had changed firms.  He was party to a joint defense agreement in an earlier case, which was substantially related to this case.  He joined the law firm, which was adverse to one of the parties to the joint agreement in the earlier case.  The court, citing  Nat. Med. Enterprises, Inc. v. Godbey, 924 S.W.2d 123 (Tex. 1996), said there was an irrebuttable presumption that he shared information from the earlier case with his new partners and disqualified the firm.

        The following case reflects the majority.  A manufacturer brought a declaratory judgment action against six insurance companies that have denied the manufacturer coverage for a loss.  Each insurance company hired its own law firm.  They entered into a joint defense agreement.  The plaintiff moved to disqualify all the law firms, because one of them formerly represented the plaintiff and thereby knew all about the plaintiff.  That law firm withdrew.  Did the joint defense agreement mean that all the law firms must be disqualified?  That was what the magistrate held in  Essex Chem. Corp. v. Hartford Accid. & Indem. Co., 975 F. Supp. 650 (D.N.J. 1997).  The district judge reversed the magistrate, Essex Chem. Corp. v. Hartford Accid. & Indem. Co., 993 F. Supp. 241 (D.N.J. 1998).  The district judge held that being part of a joint defense arrangement does not alone cause a lawyer to be disqualified.  Only lawyers who became privy to the aggrieved party's confidences should be disqualified.  The judge remanded to the matter to the magistrate to make findings on whether that had occurred.

        In the second Essex opinion the court relied on the co-counsel cases, many of which appear at Part B above.  Surely, if a lawyer is to be permitted to bring an action against one of the parties to an earlier joint defense arrangement, that lawyer lacks sufficient confidential information to cause disqualification in an Essex-like situation.

        Cites Essex.  In re Gabapentin Patent Lit., 407 F. Supp. 607 (D.N.J. 2005).  This is a multi-district patent infringement case.  Law Firm P represented one of the plaintiffs.  There are five defendants, D1, D2, D3, D4, and D5.  Law Firm D represents D1.  Lawyers X and Y were with Firm D and had principal responsibility for the representation of D1 in this case.  D1 had a joint defense agreement with D2, D3, D4 and D5.  While with Firm D, and pursuant to the joint defense agreement, X and Y became privy to many confidences of the other defendants.  X and Y left Firm D to join Firm P.  Firm P obtained D1’s consent to bring in X and Y, provided a screen be created.  That happened, but then D2, D3, D4, and D5, parties to the joint defense agreement, but not parties to D1’s consent, moved to disqualify Firm P.  The court granted the motion.  The essential holding was that because X and Y had actually become privy to the defendants’ confidences pursuant to the joint defense agreement, Firm P should be disqualified, notwithstanding the screen and D1’s consent.  This is consistent with the majority rule in the joint defense cases.

        ABA Op. 95-395 (1995) ("Obligations of a Lawyer Who Formerly Represented a Client in Connection With a Joint Defense Consortium") takes the approach of the above cases.  The ABA Committee said that if the lawyer had received other parties' confidences while acting jointly, the lawyer would be disqualified in being adverse to the other party.  The Committee said that the lawyer owed no duty to the other party under the legal ethics rules.  It said that as a matter of agency law, if the lawyer's client had a fiduciary obligation to maintain the other parties' confidences, the lawyer, as the client's agent, was likewise precluded from using or disclosing the information.  That could, of course, result in the lawyer having to refuse the representation.

        This is also the approach of the Restatement.  See § 132, cmt. g(ii).

        D.C. Op. 349 (September 2009).  This is a wide-ranging consideration of the conflicts implications of joint defense agreements.  It purports to relate only to the D.C. Rules, which are a little different from the Model Rules.  We haven't yet had the time to determine whether the D.C. Committee would reach different results under the Model Rules.  One thing is clear: D.C. lawyers, and lawyers handling matters in D.C., who are, or have been, parties to joint defense agreements, need to read this opinion.

        What about "common counsel"?  In City of Kalamazoo v. Michigan Disposal Serv. Corp., 125 F. Supp. 2d 219 (W.D. Mich. 2000), a law firm had been characterized as "common counsel" for several parties in an environmental suit.  When the firm later attempted to be adverse to one of those parties in a related environmental action, the court held that the firm had a conflict.

        Joint defense with insurance carrier.  In re Skiles, 102 S.W.3d 323 (Tex. App. 2003).  Skiles sold property to Bridecam.  Bridecam has now sued Skiles for fraud.  Bean is Bridecam’s lawyer in this case.  After this case began, Bean joined the Chambers firm.  For that reason, Skiles has moved to disqualify the Chambers firm.  This is because the Chambers firm has previously represented Skiles’ insurance carrier in a coverage dispute arising out of this case.  The trial court denied the motion.  The Appellate Court reversed because Skiles’ lawyer had communicated with the Chambers firm pursuant to the joint defense privilege.  Skiles claims this included Skiles’ confidential information, which Bridecam did not deny.

        Distinction between cooperation clause and joint defense agreement.   Great American Ins. Co. v. Christopher, 2003 U.S. Dist. LEXIS 10076 (N.D. Tex. June 13, 2003).  Court held that where communications took place pursuant to the cooperation clause in a D&O policy, the lawyer for the insurance company can be adverse to the insured in an action to rescind the policy.  The court refused to adopt the joint defense analogy.

       No fiduciary duty among co-counsel, but indemnification for malpractice damages is allowedBeck v. Wecht, 48 P.3d 417 (Cal. 2002).  Michael and Ronald Stephens hired Daniel Beck to represent them in a product liability suit against General Motors.  Beck brought in Ronald Wecht as local counsel.  They both were on a contingent fee agreement.  During trial GM offered $6 million to settle the case.  Nevertheless, the case went to the jury, which found for GM.  Beck sued Wecht for not conveying the settlement offer, thereby depriving Beck of his contingent fee.  Reconciling a conflict between two California appellate courts, the California Supreme Court disallowed the claim, holding that co-counsel do not have fiduciary duties to one another.  However, on the same day, in Musser v. Provencher, 48 P.3d 408 (Cal. June 27, 2002), the court held that the policies that prohibit co-counsel from suing each other for breach of fiduciary duty do not apply where one seeks indemnification from the other in a malpractice damages context.

        In re XL Specialty Ins. Co., 2012 Tex. LEXIS 568 (Tex. June 29, 2012).  Wagner was injured on the job and brought a workers' compensation proceeding.  He received an award.  He then brought a bad faith case against the workers' compensation carrier.  In that case Wagner sought communications that had occurred between the carrier's outside lawyer ("Lawyer") and Wagner's employer.  The trial court rejected the carrier's claim that the communications were privileged.  In this opinion the Texas Supreme Court affirmed.  The court based its ruling on an aspect of Texas workers' compensation scheme, which is that the carrier, and not the employer, is the party, and the defense lawyer represents only the carrier.  The opinion contains an unusually thorough discussion of the difference between the co-client rule and the common interest rule, saying that neither applies here.

        Law Review. Howard M. Erichson, Informal Aggregation: Procedural and Ethical Implications of Coordination among Counsel in Related Lawsuits, 50 Duke L. J. 381 (2000).

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