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Model Rule 1.10: Imputation of Conflicts and Private Law Firm Screening

By Cassandra Melton

Early this year, the American Bar Association amended Model Rule of Professional Conduct 1.10 to permit screening when a lawyer moves from one private law firm to another. Provided that the lawyer’s new firm follows the screening procedures listed in the new rule, the new firm does not need the former client’s consent for such screening. This article discusses some of the factors leading to the change as well as amended Model Rule 1.10 and what is required to comply with the new screening procedures to avoid imputation of conflicts.


Factors Favoring Change
Many factors helped pave the way for changes to Model Rule 1.10. Some of the more prominent factors include new realities of the private practice of law, experience with screening procedures for former government lawyers who move to private practice, and various state ethics rules that permit screening for lawyers who move between law firms in the private sector.


Market Forces
Modern legal practice has changed from the days when lawyers expected to stay with the same private firm for their entire career. The American Bar Foundation recently conducted a study, which found that over half of young lawyers change practice settings between their second and seventh year of practice. The same study reveals that nearly one-third of young lawyers plan to change practice settings within the next two years.[1]


Even partners at private firms are moving between firms in increasing numbers. According to The American Lawyer, in 2007, nearly 2,500 partners moved to or from one of the 200 largest private firms in the United States. That figure was a 12.5 percent increase from 2006, when 2,153 partners moved to or from the top 200 private firms.[2]


The economic downturn has caused more involuntary lateral moves and fewer new job opportunities. According to the U.S. Department of Labor, more than 3,000 lawyers lost their jobs due to downsizing and layoffs in the first three months of 2009. In 2008, the number of unemployed lawyers rose by 66 percent to a 10-year high of 20,000.[3]


Regardless of whether lawyers move between private firms voluntarily or involuntarily, such lawyers bring potential conflicts into new firms that hire them, which could disqualify entire law firms from representing clients. This increased movement underscores the need for a rule that reflects the realities of modern practice.


Screening for Former Government Lawyers
For more than two decades, Model Rule 1.11 has permitted screening for former government lawyers who move to private practice. Model Rule 1.11 is a way to protect confidential government information obtainable only through the lawyer’s government service, without imposing a rule that is “so restrictive as to inhibit transfer of employment to and from the government.”[4] In the 26 years since the ABA first adopted Model Rule 1.11, there is no apparent evidence that screening for former government lawyers has led to confidentiality breaches or patterns of disciplinary action. That positive experience over an extended period begged the question: If screening works for lateral movement from the public to the private sector, why can’t it work for movement within the private sector?


The States Have Taken Action
Even before the recent changes to Model Rule 1.10, nearly half of the states had enacted ethics rules that permit private lateral screening without client consent. Those rules, however, vary widely in their breadth of coverage and in the screening procedures they prescribe.[5] This development demonstrates the need to present a uniform standard for the remaining states as they resolve the ethical issue of screening in private firms.        


Amended Model Rule 1.10

The Text of the Rule
Amended Model Rule 1.10 reads as follows:

(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless


(2)the prohibition is based upon Rule 1.9(a) or (b) and arises out of the disqualified lawyer’s association with a prior firm, and


(i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom;


(ii) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm’s and of the screened lawyer’s compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures; and


(iii) certifications of compliance with these rules and with the screening procedures are provided to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client’s written request and upon termination of the screening procedures.[6]


Client Consent Is No Longer Required
Under amended Model Rule 1.10, a firm need not obtain the former client’s consent to screen the disqualified lawyer. That said, the firm must follow the procedures detailed in the subsections that follow to ensure that the screen is effective.[7]


Amended Model Rule 1.10 has two threshold requirements: (1) that the disqualified lawyer, or the disqualified lawyer’s former firm, previously represented a client in a matter and the new firm is representing another person in the same or substantially related matter in which that person’s interests are materially adverse to the interests of the former client, and (2) that the lawyer moved from one firm to another.


Some states that permit screening do not allow it if the disqualified lawyer had a “substantial” or “primary” role in the former representation, or if the disqualified lawyer obtained “material” or “significant” information during the former representation. Model Rule 1.10, however, does not have a substantial involvement requirement because such a requirement would be too vague to help lawyers and law firms decide whether or not to associate with each other, especially at a time when they do not have a tribunal available to decide fact-intensive issues that a substantial involvement requirement would raise.[8]


While it is clear that amended Model Rule 1.10 does not consider substantial involvement as a factor that could subject a lawyer to discipline, it is still an open question whether tribunals applying amended Model Rule 1.10 will continue to consider substantial involvement a factor that could subject a lawyer to disqualification. Wise counsel should remember this before imposing a screen without client consent because the cost of incorrectly predicting how the provision will be interpreted could be enormous, including disqualification and potential disgorgement of fees and other unpleasantries.


Timely Screen Disqualified Lawyer
The screen should be set up at the time when the potentially disqualifying event occurs (if not before), either at the time when the lawyer joins the firm or at the time when the firm accepts a case that presents the need for a screen.[9] The comments to Model Rule 1.10(k) identify some effective screening mechanisms.[10] For example,

• The disqualified lawyer should acknowledge the obligation not to communicate with any of the other lawyers in the firm about the matter.
• Lawyers in the firm who are working on the matter should be informed that the screen is in place and that they may not communicate with the disqualified lawyer about the matter.
• Written undertakings should be made by the screened lawyer to avoid any communication with other firm personnel and any contact with any firm files or other materials relating to the matter.
• Written notice and instructions should be provided to all firm personnel, forbidding any communication with the screened lawyer relating to the matter.
• The screened lawyer should be denied access to firm files or other materials relating to the matter.
• The firm should periodically remind the screened lawyer and all other firm personnel of the screen.

But beware! Tribunals may consider additional factors when deciding disqualification requests, even when a firm adopts proper screening mechanisms.[11] Some additional factors include:[12]


Time lapse between the matters in dispute. Screening becomes more effective as time passes, depending on what and how much the disqualified lawyer remembers about the earlier representation.


Firm size. Larger firms may have more formal divisions and physical remoteness, which may help facilitate a successful screen and lower the likelihood of accidental exposure to the matter.


Strong firm policy against breaches. Punishment for breaching or violating a screen should include the prospect of termination or disciplinary proceedings. A mere verbal warning is insufficient.


No Fees for the Disqualified Lawyer
This is a relatively straightforward procedure to follow. Only a handful of states do not have this requirement in their state rules. Comment 8 to amended Model Rule 1.10, which further explains this provision, notes that although a lawyer may not receive compensation directly related to the matter in which the lawyer is disqualified, the screened lawyer may receive a salary or partnership share established by prior independent agreement.[13]


Notify the Former Client in Writing
Promptly notify the former client of the screening. The written notice must include various information, including:


• a description of the screening procedures employed
• a statement of the firm’s and of the screened lawyer’s compliance with the requirements
• a statement that review may be available before a tribunal
• an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures[14]


Comment 9 specifies that the written notice should also:[15]


• describe the screened lawyer’s former representation
• include statements from the screened lawyer and the firm that the client’s material confidential information has not been disclosed or used in violation of the Model Rules.


Certify Actual Compliance to the Former Client
Comment 10 highlights the purpose of certifications: to assure the former client that the former client’s confidential information has not been disclosed or misused, either before or after implementing the screen.[16] Beyond that, however, amended Model Rule 1.10 doesn’t really specify what the certification should contain. Amended Model Rule 1.10 also does not identify any specific procedures for certifying actual compliance. A few state provisions, however, specify serving the former client affidavits attesting actual compliance, while others stipulate that the former client may seek judicial review or court supervision to ensure actual compliance.[17] As with the other unanswered aspects of Model Rule 1.10, careful lawyers seeking to invoke its protection will proceed cautiously, and issue a certification that is full and robust.


Conclusion
It is clear from the above discussion that although amended Model Rule 1.10 permits screening when a lawyer moves from one private law firm to another, it imposes some stringent requirements. Law firms seeking to take advantage of this rule should be sure that they are willing and able to fulfill these requirements and that they can demonstrate their ability to comply with screening should a tribunal require them to do so.


Keywords: Pretrial Practice and Discovery, Amended Model Rule 1.10, private law firm screening, client consent


Cassandra Melton earned her J.D. from Washington University in St. Louis, Missouri, and is a legal volunteer for Article 19.

This article appears in the forthcoming Fall 2009 issue of PP&D, from the Pretrial Practice & Discovery Committee.

 

Endnotes


  1. Seven Years into a Lawyer’s Career, New Results from After the JD, Wave II [PDF], RESEARCHING THE LAW, AN ABF UPDATE, American Bar Foundation, Vol. 20, No. 2, Spring 2009.
  2. Leigh Jones, ABA May Amend Ethics Rules on Conflicts, THE NATIONAL LAW JOURNAL, (Feb. 2, 2009) available at www.law.com/jsp/article.jsp?id=1202427915603.
  3. Jesse J. Jolland, Recession causing lawyer layoffs at big firms, THE SEATTLE TIMES, (Apr. 13, 2009).
  4. MODEL RULES OF PROF’L CONDUCT R. 1.11, cmt 4.
  5. Chart on Lateral Lawyer Screening Status [PDF], (last visited Sept. 15, 2009).
  6. MODEL RULES OF PROF’L CONDUCT R. 1.10(a)(2).
  7. MODEL RULES OF PROF’L CONDUCT R. 1.10, cmt 7.
  8. ABA Standing Comm.on Ethics and Prof’l Responsibility, Report 109 [PDF], p. 14.
  9. Healthnet Inc. v. Health Net, Inc., 249 F. Supp. 2d 755 (S.D. W.Va. 2003).
  10. MODEL RULES OF PROF’L CONDUCT R. 1.0, cmt 9.
  11. MODEL RULES OF PROF’L CONDUCT R. 1.10, cmt 7.
  12. Susan R. Martyn, Screens in the Courts: 2000–2009, INTAPP RISK BULLETIN, July 2009: Ethical Screening Requirements.
  13. MODEL RULES OF PROF’L CONDUCT R. 1.10, cmt 8.
  14. MODEL RULES OF PROF’L CONDUCT R. 1.10(a)(2)(ii).
  15. MODEL RULES OF PROF’L CONDUCT R. 1.10, cmt 9.
  16. MODEL RULES OF PROF’L CONDUCT R. 1.10, cmt 10.
  17. See e.g., MA. RULES OF PROF’L CONDUCT R. 1.10; OR. RULES OF PROF’L CONDUCT R. 1.10(c); WA. RULES OF PROF’L CONDUCT R. 1.10.

 

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