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                                         113 N.J.L.J. 365
                                        April 5, 1984


Appointed by the New Jersey Supreme Court


Participation in Asbestos
Litigation by Associate Attorneys
and its Relation to Employment

    This inquiry originates from two recently admitted attorneys who were formerly employed by a law firm specializing in the defense of toxic-asbestos litigation. Each is presently associated with other law firms which do not participate in asbestos litigation. They assert that they found it impossible to obtain employment with any firm engaged in toxic-asbestos litigation after they left their former employment because of the ethical proscriptions against conflicts of interest.
    In Reardon v. Marlayne, Inc., 83 N.J. 460 (1980), the Supreme Court of New Jersey held that plaintiffs' attorney, and his firm, were compelled to withdraw from representing plaintiffs in a products liability suit against an automobile manufacturer because the attorney, while previously employed by a defense firm, represented the same manufacturer. Even though plaintiffs' lawsuit was not instituted until two years after the attorney had left the defense firm, and was "new litigation", the Court held that the subsequent representation was barred as a conflict of interest. Id. at 471.

    That Court adopted the "substantial relationship" test articulated as follows:
    In general, a substantial relationship between matters will exist where the 'adversity between the interests of the attorney's former and present clients ... has created a climate for disclosure of relevant confidential information.' ... Disqualification is mandated where the issues between the former and present suits are practically the same or where there is a 'patently clear' relationship between them... However, the lack of identity between the cases will not pose a barrier to disqualification when grounds sufficient to show an appearance of impropriety are present. Reardon, supra at 472.

    In applying that test, the status of attorneys, whether partner, associate, or junior associate, is not controlling, for status does not necessarily indicate whether one has or has not been exposed to confidences. Id. at 474. Further, the Court recognized the problem of young lawyers' mobility and the job market, but commented that those concerns are not solved by loosening ethical standards. Id. at 475.
    Summarizing its holding, the Court said that an attorney is disqualified where 1) a prior attorney-client relationship existed; 2) a substantial relationship or a publicly perceived one between the subject matter of pending litigation and prior litigation (although not identical) existed; or 3) there had been access to relevant confidences of the former client. Reardon, supra at 474.
The Court made clear that these ethical considerations were not to
be applied in an inflexible manner:
    When dealing with ethical problems and applying such prophylactic rules, it is apparent that we cannot paint with broad strokes. The conclusion in a particular case can be reached only after 'a painstaking analysis of the facts and precise application of precedent.' Reardon, supra at 469.

    Thus, each situation must be tested by the circumstances presented. See, e.g., In re Advisory Opinion No. 361, 77 N.J. 199 (1978).
    Commentators on the subject have discussed cases involving former affiliates differently from those concerning present affiliates. "Developments in the Law - Conflicts of Interest in the Legal Profession" 94 Harv. L. Rev. 1244, 1352-1370 (1981). The first involves imputing knowledge to a former affiliate, regardless of the extent of his participating in a matter for a client; that is, to a lawyer who has terminated his relationship with a lawyer or firm involved in the representation. The latter involves imputing knowledge brought by a newcomer to an attorney or other members of the firm with which he becomes affiliated. Id. at 1352 - 54.
    It is widely acknowledged that, in the former class of cases, a more liberal approach is used to permit the refutation of the "irrebuttable presumption" of a transmittal of knowledge to a former affiliate. Id. at 1357 and cases at note 367. The reason is that such an inflexible rule is unrealistic and unnecessarily poses a potentially serious impediment to a young attorney's mobility and aspirations. Id. at 1357.
    The consideration regarding present affiliates is distinguished because of the threat, actual or perceived, of prospective sharing of information, intentionally or otherwise. Thus, traditionally, knowledge is imputed to the present colleagues of the affiliated attorney. See, Reardon, supra. However, it must be recognized that the same considerations as they relate to mobility of young lawyers apply equally here as they do in the situation involving former affiliates.
    The Supreme Court of this state, based upon the public policy of fostering government recruitment of competent attorneys, has permitted lawyers, formerly associated in government, to be isolated by constructing a screen around them.See footnote 1 1 Ross v. Canino, 93 N.J. 402 (1983); In re Advisory Opinion No. 361, 77 N.J. 199 (1978); Kesselhaut v. United States, 555 F.2d 791 (U.S. Ct. of Claims 1977). Under the circumstances presented, the Court in In re Opinion No. 361, held that the "Chinese wall" erected there created a rebuttal to the presumption of shared knowledge, and was sufficient to dispel the appearance of impropriety which, "... must be more than a fanciful possibility." Supra at 325.
    The issue presented to the Committee here relates to the problems facing present affiliates and how their prior activities in the practice of law may affect a new firm which they have joined or propose to join. A blanket, inflexible, irrebuttable determination of conflict by reason simply of the fact that their prior firm was involved in defense of a toxic tort case having a substantial relationship to a case being handled by the new firm leads unfairly to the creation of "Professional Pariahs" or "Typhoid Marys". 94 Harv. L. Rev., at 1364, 1366.
    It is argued that, because of the ruling in Beshada v. Johns-Manville, 90 N.J. 191 (1982), adversarial relationships between co-defendants have been eliminated, and therefore, ethics rules concerning conflicts of interest do not apply since the only issue between co-defendants is an issue of law, i.e., of contribution. Issues of law as they affect different parties to an action do not alone determine whether or not a conflict exists. For example, confidences relating to the "... strength or weaknesses of a corporate client's decision-makers or their attitudes toward settlement" must be maintained. See Reardon, supra at 476.
    A more persuasive argument, however, is made. The contention is that the toxic tort type of industry wide litigation should be treated differently from others by reason of various distinctions. It involves numerous manufacturers, distributors and suppliers. Some issues in the cases are common to many parties in a specific case, but not to others. Most of the defense law firms and many of the plaintiffs' law firms in the state are involved, and will be involved in this kind of litigation for years. Cases come in clusters involving numerous workers at one site, and an associate may be involved only in the facts relating to that site. Other associates may have limited contact in other ways, e.g., research or taking depositions of claimants.
    Because of the extent and the nature of toxic-asbestos litigation, public policy considerations dictate different rules here which will not serve to dilute the application of the Code of Professional responsibility. See, In re Advisory Opinion No. 361, supra. Young lawyers should not unreasonably and unnecessarily have their careers severely stunted if ethics considerations remain intact and the public perception does not suffer. Clients or prospective clients should not be unreasonably impeded in their choice of law firms.
    Fashioning criteria which may provide answers in most cases is necessary so that young lawyers who seek to make a career shift as well as prospective employees may make judgments prior to entering into their professional relationships. In pursuing this endeavor it is apparent that all factual situations may not fall within the guidelines so fashioned.
    Clearly a lawyer and the firm he joins will be disqualified from handling a case in which the prior firm was or is engaged. The reason is obvious: even if no confidences were obtained or there is no actual conflict, the presumption otherwise is irrebuttable. Further, the appearance of impropriety is pervasive.
    With regard to other situations, various factors bear on the making of a determination. Among those that should be considered are the following:
    1.    The size of the prior and succeeding law firm;

    2.    The extent of the relationship between the cases involved;

    3.    The degree of responsibility held by the present affiliate with a former law firm;

    4.    The length of time spent with the former firm;

    5.    The kind of work done; whether toxic tort or other law work;

    6.    If engaged in toxic tort work, the degree of involvement - whether extensive, peripheral or incidental only or whether in greater depth;

    7.    The law work with which the affiliate will be involved or is involved;

    8.    The passage of time involved; i.e., the time elapsed between when the affiliate last had an involvement with a case substantially related to the one at issue;

    9.    The substantiality or insubstantiality of the relationship between the cases and the issues therein;

10.    Other circumstances having a reasonable bearing on actual conflict or perceived impropriety.

    In the practice of law impropriety and, any appearance of impropriety are to be avoided. It is, therefore, the opinion of the Committee that as in In re Advisory Opinion No. 361, supra, the new affiliate should delay for six month participation in any proceeding involving a matter which may be substantially related to one handled by the firm which previously employed that affiliate. This prohibition will serve to ameliorate any possible public appearance of impropriety. The statement of the Supreme Court in In re Advisory Opinion No. 361, supra, at 207 is pertinent at this point:

    These standards by their very nature must be general and, in a given situation, may be difficult of application. Like all disciplinary rules, though, our ruling herein is dependent on the integrity of the bar and its willingness to cooperate in conforming with these guidelines.

* * *

Footnote: 1 1It has become accepted to refer to this screening as the erection of a "Chinese Wall”. See, Ross v. Canino, 93 N.J. 402, 410 (1983), and see discussion of "the Chinese Wall" in 94 Harv. L. Rev., at 1367.

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