New Conn. Rule Will Ease Conflict-of-Interest Concerns When Lawyers Switch Firms

Jay Stapleton

The Connecticut Law Tribune

07-26-2012

It's no secret that lawyers looking for greener pastures often move to rival firms.

Especially in a relatively small legal market such as Connecticut, that frequently creates situations where an attorney leaves a firm hired by one party in a case and joins another firm that's representing the opposing party.

In those instances, the jilted firm often moves to have the job-changing lawyer's new firm removed from the case on conflict-of-interest grounds. Though lawyers say that judges seldom grant the request, the possibility of creating an array of conflicts can influence a firm's hiring decisions.

But, as of January 1, 2013, that's all about to change.

Connecticut's Practice Book is being amended to create a procedure that will allow the job-changing attorney to promise to stay away from a case without his whole new firm risking disqualification. Following a similar move implemented a few years ago by the American Bar Association, the amendment was recently approved by the Judges of the Superior Court, the Judicial Branch's rule-making body.

Legal industry observers say it's likely to bring an added degree of comfort to large firms when making hiring decisions. That, in turn, could help employment mobility for lawyers in a tight job market. "It's going to give some guidance, especially to some of these bigger firms that have been taking on lateral hires," said Patricia King, chief disciplinary counsel for the Judicial Branch.

Although there has always been lateral movement among partners, the trend escalated in 2007, when 2,423 partners moved in or out of one of the 200 highest-revenue firms as calculated by The American Lawyer, an affiliate of the Connecticut Law Tribune. That was an increase of 12.5 percent from a year earlier. While the economic downturn slowed hiring, it hardly stopped top lawyers from changing jobs. For example, two big firms with Connecticut offices, Littler Mendelson and Bracewell & Giuliani, have added 14 and 13 laterals, respectively, this year on a nationwide basis.

Under the existing rule, a lawyer cannot be involved in a case or other matter involving a client of his or her former firm. But there is no formal mechanism for bowing out. And so if a lateral hire even seems to create such a conflict, opposing counsel often make motions to disqualify the partner's new firm. The standard argument is there is no assurance that sensitive client information gleaned by an attorney at one firm won't be shared with colleagues at a new firm.

Typically, Superior Court judges have handled the motions by ordering the lawyer in question to be "screened" from the case, rather than disqualifying the entire firm. Screening simply means that the disqualified lawyer acknowledges an obligation not to communicate with any colleagues about the case.

The new Connecticut rule will codify that practice and theoretically avoid taking up court time with disqualification motions. As of January 1, the lawyer changing firms will provide written notice to a former client when the potential for conflict arises. In the notice, the client will be informed that the attorney has been screened from the matter and be assured that no information is being shared with or gained from that attorney.

'CLEAR GUIDANCE'

Marcy Tench Stovall, a Pullman & Comley attorney who served on the Connecticut Bar Association's Committee on Professional Ethics, which studied and recommended the rule change, said the amendment is significant for two reasons. First, she said, "the rule change addresses, in a practical way, the reality of increased lateral movement of attorneys between firms."

Additionally, she said, it reflects what judges have already been doing. Stovall said there have been no reported decisions in which a motion to disqualify a firm for conflict of interest was granted as long as the firm made assurances that a new lawyer would have no involvement in a particular case. "The rule change codifies those rulings and gives clear guidance to attorneys and law firms," Stovall said.

Keith Braddoc Gallant, the outgoing CBA president and a Day Pitney partner, endorsed the rule change. He said that it protects the "confidences and information of former clients" while also "providing a lawyer with the freedom to move from one firm to another without encumbering his new firm with imputed conflicts of interest."

King, the chief disciplinary counsel, said she does not expect to receive many complaints that a lateral partner is taking part in a case involving his or her old law firm, or that the attorney has not provided written notice promising to stay away from a case. "Obviously, if we got a complaint, we'd look at the rule and we'd look at the complaint and we'd go from there," she said.

BALANCING ACT

When the issue of changing the rule was first broached by the ABA a few years ago, competing recommendations were debated, as bar leaders tried to balance the need to protect client information with a desire to remove restrictions to attorney mobility. In the end, a compromise was reached, but not everyone was happy with the results.

Among them is Monroe Freedman, an ethics scholar and professor at Hofstra University School of Law, who is credited with writing the first attorney ethics treatise in 1975. He opposes any relaxation of the rules governing conflict-of-interest situations generated by lateral moves. He believes despite assurances of law firms that job-changing lawyers will be screened away from a case that the possibility of improper sharing of client information still exists.

The new rule passed, Freedman said, not because it's a great idea, but because it benefits big law firms who hire the bulk of lateral partners. "There are so many lawyers with big firms who are highly influential and well-represented in the ABA House of Delegates," Freedman said.

He's not the only one who sees potential problems.

George O'Brien Jr., who is head of Littler Mendelson's New Haven office, isn't concerned about conflicts of interest being created when he hires lateral partners. His employment firm represents management exclusively and most of his hires come from similar firms. That greatly limits chances that a new attorney would have worked at a firm involved in the case on the opposite side as Littler Mendelson.

On one level, O'Brien welcomed the Connecticut rule makers' recognition "that ethical screens can be an effective way to protect the interests of the clients of both the firm that a lawyer is leaving and the firm he or she is joining."

However, O'Brien is somewhat concerned over language in the amendment that states that a client has the right to "ascertain" whether a former lawyer has complied with conflict-of-interest rules. O'Brien pondered whether a client might interpret that phrase to mean something that the rule makers didn't intend.

"I trust that these [written notices offered by the lateral partner] will suffice to enable the former client to 'ascertain compliance,'" O'Brien said. "And that the rule will not be interpreted to allow the former client to root around in the firm's internal affairs, since that could be a source of mischief."