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132 N.J.L.J. 522
November 2, 1992
1 N.J.L. 1704
November 2, 1992
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
OPINION 667
Imputed Disqualification: Employment
of Partner in Adverse Firm
A large law firm, which represents a number of persons who
suffer from a disease allegedly caused by a toxic substance informs
this Committee that it is considering extending an offer of
partnership to an attorney who is a partner in another law firm
that represents a company in litigation instituted by the inquiring
law firm.
According to the inquirer, the attorney in question
concentrates in corporate, commercial and insolvency law at his
present firm and would do so at the inquiring firm as well. He has
done no work for and billed no time to the company represented by
his firm. As a partner in the firm, he does, however, share in the
profits of the firm, which include income from the toxic substance
defense cases. Before the firm was first engaged by the company,
the attorney attended firm meetings at which members of the firm
discussed a potential "alternate causation" defense by other
clients of the firm, the viability of such defense and the
propriety of representing the company in light of that defense.
After the firm undertook the representation of the company, he
participated in and/or was present during conversations with the
partner in his firm with primary responsibility for the defense of
the matters concerning various aspects of those and other toxic
substance cases. These conversations related, among other things,
to (1) certain of the activities of plaintiff's counsel (the
inquiring firm) in one of the cases and the contentions of the
plaintiff; (2) the identity of a company witness who was expected
to testify to disprove one of the plaintiffs' contentions; (3) the
commitment by the company of substantial financial resources to the
defense of the case; and (4) the staging of a mock trial prior to
the actual trial of a matter which has been remanded for a new
trial. In addition, as a result of discussions with the
administrator of the firm, the attorney is aware of the existence
of an industry-wide computer network.
In light of the foregoing assumed facts, the inquirer asks the
following questions:
(1) Would the Rules of Professional Conduct require it to
cease representing the plaintiffs suing the company
represented by the attorney's firm if and when the
attorney joins the inquiring firm? and
(2) Would the inquirer be required under the Rules of
Professional Conduct to cease representing the plaintiffs
suing the companies not representing by the attorney's
firm if and when the attorney joins the firm?
We conclude that the inquirer's continued representation of the two
plaintiffs would not be permitted if the attorney joins the firm,
unless the consent of the plaintiffs and the company is obtained.
See RPC 1.10(b) and Dewey v. R.J. Reynolds Tobacco Co., 109 N.J.
201, 221 (1988).
I.
In communications with the Committee, the inquiring firm
suggests that "[b]ecause 'the appearance of impropriety' standard
is employed if and only if an actual conflict does not exist and is
therefore necessarily based upon the limited perceptions of an
'ordinary knowledgeable citizen acquainted with the facts,' each
case dealing with an appearance of impropriety as opposed to an
actual conflict, is sui generis." Thus, the inquirer virtually
insists that the Committee determine whether on the facts
presented, an actual conflict would exist. Because we are not a
fact-finding or adjudicatory body, we decline to make such a
determination. We note, however, that determining the existence or
non-existence of an actual conflict would be only the first step in
the analysis of the issue raised by the question. Ultimately, a
determination of the appearance of impropriety would be required,
even if no actual conflict exists.
In Dewey the R.J. Reynolds Tobacco Co., supra, 109 N.J. at
220, the Court expressly recognized the continuing viability of the
"appearance of impropriety" doctrine in situations covered by RPC
1.7 (conflict of interest) and in those situations covered by other
rules that incorporate RPC 1.7, such as RPC 1.9 and RPC 1.10:See footnote 1
1
Thus it is apparent that the "appearance of impropriety"
doctrine is relevant to the determination of whether an
attorney has "represented" a client and is therefore
prohibited from subsequently representing a different client
with interests that are adverse to those of the first. [109
N.J. at 214].
The Court also commented that it could not conceive of any
situation in which the side-switching attorney or his new firm
would be permitted to continue representation if, unlike the
situation before it in Dewey, the attorney had in fact actually
represented the former client or had acquired confidential
information concerning the client's affairs. Id. at 220.
Obviously, the decision in Dewey did not turn on a finding that an
actual conflict existed.
Rather, the Court determined that the attorney should be
disqualified, and the firm ordinarily would have been disqualified,
because the record amply demonstrated that a reasonable basis
existed for an ordinary knowledgeable citizen acquainted with the
facts to conclude that the attorney had represented the client of
his former firm and that his representation of the adverse party in
the same law suit would pose a substantial risk of disservice
either to the public interest or the interest of one of the
clients. Id. at 216. In Dewey, the Court considered an order of
withdrawal on the eve of trial more erosive of public confidence
than the continued participation of the otherwise disqualified
firm. But such participation was permitted solely on the condition
that the firm would receive no compensation for its involvement
after the date the Court's opinion was issued.
The term "represented" is not defined in RPC 1.9 (or RPC
1.10). One must look to the "larger legal context" in one's effort
to define representation. Dewey v. R.J. Reynolds Tobacco Co.,
supra, 109 N.J. at 214. It is suggested that the attorney in this
inquiry would not be perceived to have represented the company
because, unlike the attorney in Dewey, this attorney has done no
work and billed no time to the company. That suggestion reads
Dewey too narrowly.
The amount of work performed by the attorney in Dewey was but
one of numerous factors taken into account by the Supreme Court to
determine that the side-switching attorney might reasonably be
perceived to have "represented" the tobacco company at his former
firm. Another factor considered was the financial interest of the
attorney as a partner. Id. at 216; See also State v. Bellucci, 81
N.J. 531, 541 (1980). Other factors considered were the
pervasiveness of the representation signaled by the number of
attorneys in the firm billing time to the client, the types of
conversations with the lead attorney in the case, the attorney's
knowledge of particular witnesses and information concerning the
computer system to be used, among other things, to access the
tobacco company defense communication and information network. A
general listing of relevant factors also appears in Opinion 525,
113 N.J.L.J. 365 (1984).
Although the side-switching attorney in this inquiry may not
have worked on the two matters in litigation, he has been privy to
conversations in which one might reasonably believe confidences and
secrets of the company may have been disclosed. When access to
secrets and confidential information exists, it will be presumed
that the attorney learned such secrets and confidences. Reardon v.
Marlayne, Inc., 84 N.J. 460, 473 (1980); Gray v. Commercial Union
Ins. Co., 191 N.J. Super. 590, 598 (App. Div. 1983). Here, the
attorney's knowledge concerning the commitment of substantial
financial resources to the trial of these matters, the utilization
of mock trials as a part of the company's preparation for trial and
the existence of the computer network gives rise to an inference
that he may have had access to privileged and confidential
information. In addition, although the disclosures made by the
lead trial attorney in lunchroom discussions and in direct
discussions with the attorney in question have not been detailed,
it would not be unreasonable for an informed citizen to infer that
the views and impressions imparted during those conversations might
well have been more guarded and less candid if the speaker had
known that one of the partners he was addressing might soon join
the firm representing his adversary in the matter. In sum, while
Dewey eschews a per se rule of disqualification, it is clear that
the appearance of impropriety doctrine is relevant to the
determination of whether an attorney has "represented" a client and
is therefore prohibited from subsequently representing a different
client with interests that are adverse to those of the first. See,
e.g., Opinion 654, 129 N.J.L.J. 514 (1991) (recognizing that a case
by case evaluation is required to determine whether an associate of
an in-house counsel firm would be disqualified from future cases if
hired by a firm with suits pending against insureds of the
carrier). Cf. Opinion 665, 131 N.J.L.J. 1074, 1 N.J.L. 1281 (1992)
(modifying the per se prohibition as to paralegals announced in
Opinion 546). In this case we conclude that such an appearance of
impropriety exists that the inquiring firm would be disqualified
from continued representation of its clients if the attorney joins
the firm. Unlike the situation in Dewey, where it was too late to
seek the consent of the clients involved, consent appears to be a
viable alternative. In the event the consent of the parties is not
forthcoming, consideration must be given to the continued deferral
of the shift, as suggested in Dewey, supra, 109 N.J. at 221. Our
review of the expedient of a "Chinese Wall" before the question of
consent is resolved would be premature. Cf. Ross v. Canino, 93
N.J. 402 (1983).
II.
We interpret the second question posited by the inquirer to
ask whether it would be disqualified from acting in any case
against companies not represented by the incoming attorney's firm
in the future, not whether disqualification is mandated in the two
pending matters. We have insufficient facts in our possession
concerning the amount of cooperation among the companies in this
industry in defending the cases or access of attorneys to
information of other companies via the computer network to opine
whether such a disqualification would be required; however, Opinion
654, supra, 129 N.J.L.J. 514, may offer guidance in that regard.
To the extent the second question may be interpreted to suggest
that in the matters already at issue, the claims would not be
pursued against the company represented by the firm from which the
attorney would come but would be pursued against other companies in
the industry, we believe that would be improper. See Reardon v.
Marlayne, Inc., supra, 83 N.J. at 468-9, n.1 (1980).
* * *
Footnote: 1 1For the purposes of this opinion, the term "appearance of
impropriety" is that which may reasonably exist in the state of
mind of the former client.
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