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Court Disqualifies Firm Offering Services Free to Witnesses

By Brian A. Zemil, Litigation News Associate Editor – January 7, 2008

A New York state court recently disqualified counsel from representing former and current employees of a corporate client the law firm was defending in an employment discrimination claim because it found that the firm’s contact and offer of free services to the potential witnesses constituted an improper attempt to thwart discovery. Rivera v. Lutheran Medical Center.

The court opined that defense counsel violated New York Disciplinary Rule 2-103 [PDF] by contacting the nonparty witnesses for the purpose of soliciting representation. In addition, the court found the solicitation was done “to gain a tactical advantage in this litigation by insulating [the witnesses] from any informal contact with plaintiff’s counsel.”

“The opinion raises a novel question about how the solicitation rules apply to the normal practice of extending representation to company employees,” says David S. Coale, Dallas, TX, cochair of the Section of Litigation’s Commercial and Business Litigation Committee.

“The company’s legal interest associated with representation of employees concerns its right to protect trade secrets and privileged or confidential information,” says Coale.

“Tactically, both plaintiff and defense counsel recognize the value of getting to the witness first in order to nurture a rapport that could well make the difference in the outcome of the case,” says Lamont Jefferson, San Antonio, TX, cochair of the Section’s Commercial and Business Litigation Committee.

“Ethically, before a plaintiff’s lawyer obtains substantive statements from a company employee, or the corporation lawyer provides legal advice to him or her, the attorneys should determine whether the individual comes within the controlling legal definition of a client representative. That analysis will determine whether the attorney-client privilege applies to the employee’s communication,” advises Jefferson.

“If counsel avoids wholesale solicitation and does not use the joint representation improperly to thwart the opposing party’s fact gathering, they should not have much trouble representing the multiple parties, assuming conflicts of interest do not exist.” says Henry Chalmers, Atlanta, GA, cochair of the Section’s Ethics and Professionalism Committee.

The underlying action involves a claim for damages by plaintiff Felix Rivera on grounds that he was unlawfully terminated in retaliation for an earlier lawsuit his deaf sister-in-law had brought against his employer.

Rivera has alleged that he was employed by Lutheran Medical Center from 1993 until 2003. When the plaintiff’s deaf sister-in-law was admitted to the hospital for treatment in 1999, and the hospital failed to provide her with a translator, Rivera’s sister-in-law brought a civil rights lawsuit. That action was subsequently settled in 2001.

In January 2003, the plaintiff was fired for allegedly showing a sexually suggestive picture to another employee. However, Rivera filed suit alleging that the reason given for his termination was a pretext and that he was actually fired in retaliation for his support of his sister-in-law’s prior action.

During discovery, the hospital’s defense counsel contacted all of its potential witnesses and offered to represent them at the hospital’s expense. Each of the witnesses orally agreed to the representation and, thereafter, signed retainer agreements. The court concluded that three of the witnesses were corporate parties under the ethics rules, but that the remaining four individuals were nonparty witnesses.

In making its ruling, the New York Supreme Court looked to DR 7-104, the equivalent to ABA Model Rule 4.2 that governs ex parte contact with corporate employees, and Niesig v. Team I , a leading case interpreting that rule. The court found that, absent representation, the four nonparty, fact witnesses could be interviewed.

However, the court determined that defense counsel’s offer of free services to those nonparty witnesses was an improper solicitation in violation of DR 2-103 (equivalent to ABA Model Rule 7.3) and an attempted “end run” around permissible fact witness interviews.

The court stated that the witnesses “were clearly solicited . . . to gain a tactical advantage in this litigation by insulating them from any informal contact with plaintiff’s counsel.”

“The decision helps to ensure that plaintiff counsel will have access to these types of witnesses without defense counsel’s ability to unlawfully and unethically insulate the witnesses from any contact,” says Diane Seltzer, Washington, DC, cochair of the Section’s Employment and Labor Relations Law Committee.

Attorneys reviewing the ruling have mixed takes on it. Jefferson says “the court did not explain how the lawyers’ actions violated the solicitation rule, which seeks to prevent a lawyer from targeting prospective clients primarily for pecuniary gain.” Seltzer disagrees, stating that the violation occurred “because the firm’s offer to provide free representation, which would actually be paid by the hospital, highly increased the likelihood that the witnesses would accept representation.”

In rendering its opinion, the New York court said it had “no choice” but to order the relief because the firm violated the solicitation rule and had a history in the case of thwarting plaintiff’s attempts to obtain discovery. The court also said it was guided by United States v. Occidental Chemical Corp., in which defense counsel was barred from sending letters that offered representation to former employees because the court was unwilling to provide unnecessary encouragement for a method of obtaining legal work, which results in one side gaining even a minor tactical advantage.

“A consideration going forward is whether an employer should use its employee manual to treat potential litigation matters in the same way as public relations matters, asking an employee to contact in-house corporate counsel when asked about a legal matter,” says Coale.

“A company could possibly add similar language to severance agreements with employees leaving the company,” he says.

Keywords: New York state court, discovery, solicitation rules, New York Disciplinary Rules, ABA Model Rules of Professional Conduct, employment discrimination


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