Risk Management Tip: Ethical Walls Can Protect Against Disqualifying Conflicts

By Jennifer A. Becker, Long & Levit

Conflicts of interest might disqualify an entire law firm from representing clients who are adverse to each other in unrelated matters. Proposed amendments to the California Rules of Professional Conduct would allow the use of an ethical wall in certain circumstances to avoid vicarious disqualification and allow representation of clients with conflicting interests in unrelated matters. Meanwhile, case law is the pratitioner’s only guidance on when and how to use an ethical wall to avoid disqualification.

In Kirk v First American Title Ins. Co. (2010) 183 CA4th 776, the Second District reversed a trial court’s order disqualifying a private law firm in a successive representation case because it had timely and effectively instituted an ethical wall. Defendant First American was represented by a three-attorney Bryan Cave team for many years (the Team). The Kirk plaintiffs’ counsel consulted with a potential expert, attorney Gary Cohen, and conveyed confidential information to him. Kirk, 183 CA4th at 786. Later, Cohen joined Sonnenschein Nath & Rosenthal’s San Francisco office. Months following Cohen’s move, the Team joined Sonnenschein’s Los Angeles office. 183 CA4th at 787. On discovering Cohen’s consultations with the Kirk plaintiffs, Sonnenschein’s general counsel established an ethical screen around Cohen, notifying the firm’s attorneys, paralegals, and secretaries that Cohen should be walled off from the Kirk matter. 183 CA4th at 788. The plaintiffs moved to disqualify Sonnenschein from further representation of First American.

Sonnenschein acknowledged that Cohen was barred from working on the First American matter given his prior contact with plaintiffs’ counsel. The question was whether Cohen’s disqualification should be “automatically vicariously” applied to all Sonnenschein attorneys, including the Team who had long-served as First American’s counsel. 183 CA4th at 791. The Kirk court considered prior cases on vicarious disqualification and the use of ethical screens and concluded that the California Supreme Court had never directly addressed the issue on the merits. 183 CA4th at 800. The Kirk court concluded there was no precedent establishing an absolute rule requiring vicarious disqualification.

Kirk held there must be a case-by-case analysis based on the circumstances. The only absolute prohibition is that “vicarious disqualification should be automatic in cases of a tainted attorney possessing actual confidential information from a representation, who switches sides in the same case.” 183 CA4th at 800. The court held that “in the proper circumstances, the presumption [of disqualification of the firm] is a rebuttable one, which can be refuted by evidence that ethical screening will effectively prevent the sharing of confidences in a particular case.” 183 CA4th at 801. The burden rests on the firm to prove that it timely and effectively established an ethical wall. 183 CA4th at 810.

Kirk demonstrates the value of a sophisticated and comprehensive conflict analysis, and prompt action to screen tainted attorneys. This can allow law firms to maintain client relationships even where, absent a screen, there may be a disqualifying conflict.

About the author:

Jennifer Becker is certified by the State Bar of California, Board of Legal Specialization in Legal Malpractice, and is chair of BASF’s Legal Malpractice Section.  She is a partner at Long & Levit, and the Editor-in-Chief of Long & Levit’s Lawyers and Judges Blog, www.longlevit.com/blog/, which is searchable by topic and case name.