One of the starkest bases for disqualification arises when the interests of one current client conflict with the interests of another current client.[1] Unsurprisingly, when a lawyer sues a current client or otherwise acts adversely to the client, disqualification motions are quickly filed. In the past, disqualification was all but automatic when lawyers sued their current clients—even if different lawyers within the firm were representing the adverse clients and even if the two matters were wholly unrelated.[2] In the present, however, the law firm might be able to avoid disqualification if the two matters are unrelated and if screens are employed, although this remains a minority position.[3] This development serves as an interesting reminder of the difference between the ethical prohibition against suing a current client and disqualification. The representation clearly violates the ethical rules,[4] but the disqualification remedy might not follow because it depends on the balance of equities in the case.[5]

[1]    See generally Richard E. Flamm, Lawyer Disqualification: Conflicts of Interest and Other Bases § 3 (2003) (discussing conflicts between current clients and conflicts between lawyer and client).

[2]     See, e.g., CenTra, Inc. v. Estrin, 538 F.3d 402, 417–19 (6th Cir. 2008) (“A client’s knowledge that his law firm has, on previous occasions, represented parties that opposed the client in different matters does not provide an adequate foundation for informed consent with respect to a current simultaneous representation of two adverse clients with opposing interests in a specific dispute. . . .”); State Farm Mut. Auto. Ins. v. Fed. Ins. Co., 72 Cal. App. 4th 1422, 1432–33, 86 Cal. Rptr. 2d 20, 27 (Cal. Ct. App. 1999) (granting motion to disqualify even though the case creating the conflict settled before the disqualification hearing); id. at 1431, 86 Cal. Rptr. at 26 (“[S]o inviolate is the duty of loyalty to an existing client that the attorney cannot evade it by withdrawing from the relationship[, thereby converting the current client to a former client].”). Typically, courts also preclude the lawyer or firm from dropping (i.e., firing) a current client like a “hot potato” in order to sue that client. See, e.g., Restatement (Third) of Law Governing Lawyers § 132 cmt. c & Reporter’s Note to cmt. c. (2000). When the contemplated actions are less adverse than suing the current client, the law generally becomes more forgiving. See, e.g., Charles W. Wolfram, Competitor and Other “Finite-Pie” Conflicts, 36 Hofstra L. Rev. 539, 550–55 (2007) (discussing cases involving lawyers who represented economic competitors).

[3]     See, e.g., Commonwealth Ins. Co. v. Stone Container Corp., 178 F. Supp. 2d 938, 943, 947 (N.D. Ill. 2001) (finding that “a law firm that is currently representing a client [is not precluded] from accepting a concurrent engagement to act as a testifying expert for a third party who is an adversary of the client in unrelated litigation, when there is no evidence that any confidential communications could or would be shared”); SWS Fin. Fund A. v. Salomon Bros., Inc., 790 F. Supp. 1392, 1399 (N.D. Ill. 1992); Flamm, supra note 4, at §23.4 (“In recent years, courts have denied motions to disqualify even when counsel acted adversely to the interests of a current client.”).

[4]     See, e.g., Model Rules of Prof’l Conduct R. 1.7(a) (2009) [hereinafter Model Rules] (“[A] lawyer shall not represent a client if the representation involves a concurrent conflict of interest.”). “A concurrent conflict of interest exists if . . . (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client. . . .” Model Rules R. 1.7(a). Although this subsection focuses on concurrent client conflicts of interest, the lawyer’s representation might be “materially limited” by a variety of other sources, such as personal interests or former clients (which are specifically addressed in later subsections).

[5]     See generally El Camino Res., Ltd. v. Huntington Nat. Bank, 623 F. Supp. 2d 863, 883-88 (W.D. Mich. 2007); Gould, Inc. v. Mitsui Mining & Smelting Co., 738 F. Supp. 1121 (N.D. Ohio 1990)) (“Those few federal courts that have followed the ‘flexible approach’ have done so only when the conflict of interest arises from an unforeseen merger that impacts a long-pending case, and have made it clear that the approach involves only remedy and not the question whether the firm has a conflict of interest. . . .”); Nathan M. Crystal, Disqualification of Counsel for Unrelated Matter Conflicts of Interest, 4 Geo. J. Legal Ethics 273 (1990) (analyzing courts’ treatment of such conflicts and proposing remedies); Andrew Perlman, The Parallel Law of Lawyering in Civil Litigation, 79 Fordham L. Rev. 1965 (2011) (observing and analyzing this phenomenon, namely, that a court might not disqualify a firm even when it has violated an ethical rule, or a court might disqualify a firm even when it has not violated an ethical rule).

[Source: Keith Swisher, The Practice and Theory of Lawyer Disqualification, 27 Geo. J. Legal Ethics 71 (2014)]