Wednesday, November 10, 2010

New Ethical Screening Decision: Size of Firm Not Important, Only Effectiveness of Screen

Bill Frievogel points out a new and interesting ethical screening decision from the US District Court in New York: SEC v. Ryan, 2010 U.S. Dist. LEXIS 112217 (N.D.N.Y. Oct. 20, 2010) / 2010 WL 4235396 (N.D.N.Y.). In this opinion, the judge responded to an accusation of a "glaring" conflict, stemming from one firm's employment of a paralegal who had previously worked for a firm representing an adverse party:
  • "...Levine's law firm now employs as a paralegal a former employee of its firm. Bosman claims that this paralegal, when employed by it, was privy to Ryan's and Prime Rate's confidences and secrets and there would be 'nothing restraining [the] paralegal ... from sharing this information with her [current] employer, therefore jeopardizing the defendants' attorney-client privilege, client confidences and secrets as well as the 5th amendment rights of the Defendants.'"
However, the judge determined the concern to be baseless, noting effective screening procedures:
  • "Levine's law firm has formed a screening procedure, commonly known as a legal wall, to prevent such a disclosure as Bosman & Associates fears. Such procedures are prudent under these circumstances and should remain in effect."
Importantly, and of interest to those tracking evolving ethical screening standards, the decision notes that even though the firm is small, an ethical wall can still be effective:
  • "There should be no alarm that such a legal wall surrounding this paralegal would be impotent because of the size of the Levine law firm. Even a small law firm can erect appropriate and adequate isolation to protect the sharing of confidential information, as long as the firm exercises special care and vigilance. See Essex Equity Holding USA, LLC, 29 Misc.3d 371, 2010 WL 2331407, at *9-10."

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