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                                         132 N.J.L.J. 522
                                        November 2, 1992

                                        1 N.J.L. 1704
                                        November 2, 1992


Appointed by the New Jersey Supreme Court


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).


    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).


    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).

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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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