Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.

Recent Development in the Law of Conflicts: Concurrent Conflict Generally Requires Disqualification

On December 30, 2015, the Court of Appeal of California, Sixth Appellate District filed its opinion inM'Guinness v. Johnson (2015) 243 Cal.App.4th 602. The court held that if a party moving to disqualify an attorney establishes concurrent representation by opposing counsel, the court is required, "in all but a few instances," to automatically disqualify the attorney without regard to whether the subject matter of the representation of a client in a matter relates to the subject matter of a lawsuit in which the client is an adverse party. That ruling is important to all California attorneys not only because of its holding but also because of the court's discussion of "concurrent representation" that provides important reminders to attorneys in administering their law practices.

In brief, the facts were as follows. M'Guinness brought suit in 2013 against Johnson — his fellow shareholder in TLC, Inc. — and TLC seeking to dissolve TLC and an appointment of a receiver. Johnson retained the law firm of Casas, Riley & Simonian and cross-complained against TLC. TLC moved to disqualify the law firm on the basis that TLC had retained the law firm as its general counsel in 2006 and that representation had not been terminated. Johnson opposed the motion, contending in relevant part (1) the law firm no longer represents TLC, and (2) there is no substantial relationship between the firm's prior representation of TLC and the current litigation. The trial court denied the motion, concluding that disqualification is a drastic remedy which should be sparingly granted and in this instance disqualification was not appropriate.

The Court of Appeal reversed. In its discussion of motions to disqualify counsel, it noted the inherent power of the trial court "to control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto." The motion to disqualify implicates the important interests of "a client’s right to chosen counsel, an attorney’s interest in representing a client, the financial burden on a client to replace disqualified counsel, and the possibility that tactical abuse underlies the disqualification motion." Weighing against those interests is "the need to maintain ethical standards of professional responsibility. The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process."

Having set the stage, the Court of Appeal then distinguishes between successive and concurrent conflicts. The former implicates the need to maintain client confidentiality, and the latter concerns the preservation of the value of loyalty of counsel to its client. Where there is a successive conflict, disqualification is not required unless there is a substantial relationship between the subject matters of the representations. A concurrent representation, however, raises "a conflict involving an attorney's duty of loyalty (which) is ‘(t)he most egregious’ kind of conflict, [and] a more stringent test is applied." (Citation omitted.) Although there may be no risk of disclosure of confidences because there is no relationship between the matters, disqualification is a per se or automatic remedy if a concurrent conflict exists.

The law firm argued mightily that there was no concurrent representation. The Court of Appeal rejected such argument for several reasons.

First and foremost, the court concluded concurrent representation existed based upon the engagement agreement entered into in 2006 which provided for "advice and representation concerning TLC … and other general legal work directed by you from time to time." Thus, the engagement agreement was not limited to a specific task or series of tasks but rather was open ended. The Court of Appeal noted the recommendation of one author “that client agreements be drafted in a way that any limitation on the work to be performed … be stated explicitly and completely." Important as well, was the fact that there was no documentation reflecting a termination of the attorney-client relationship between the law firm and TLC. The law firm contended that it had ceased work before the litigation commenced, but the court took note of the fact there was no documentation reflecting that the representation had ended.  Rather, the evidence presented, which included the fact the firm still had money in its trust account which had been originally deposited by TLC, supported the opposite conclusion. 

The law firm also argued disqualification was not appropriate because it had billed only a modest number of hours to TLC over the period of years at issue before the litigation. The Court of Appeal rejected this argument, responding that "even the briefest conversation between a lawyer and a client can result in the disclosure of confidences."

The messages contained in this opinion are several. First, the courts will as a rule disqualify a firm which has an adverse relationship to an existing client. Second, counsel should craft engagement agreements to express exactly what the nature of the expected relationship with the client is. Third, counsel should provide termination letters when a relationship ends. And, finally, don’t sue existing clients.

-- Charles Berwanger

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**