Thursday, April 2, 2015

Risk News: Conflicts & Confidentiality

Firm Is Ousted as Counsel Against Nonclient Whose Secrets It Learned Via Related Case
  • "A law firm may not represent an expert suing a company for consulting fees where the firm learned significant amounts of sensitive information about the company when it represented a law firm against the company in a fee dispute arising out of the same underlying litigation, the California Court of Appeal, Fourth District, decided Feb. 27."
  • "While the firm never represented the company and did not acquire its secrets by wrongful means, the firm's 'wide-ranging access to privileged information in the first representation and the substantial relationship between the two matters' require its disqualification, Justice Raymond J. Ikola said in his opinion for the court."
  • "In ordering disqualification, the court pointed out that AlvaradoSmith had received substantial amounts of confidential and privileged information from Shared Memory Graphics when it represented the company's prior counsel, Floyd & Buss, in a fee arbitration proceeding arising from that same patent litigation."
  • "The trial court pointed out that the circumstances did not involve improper acquisition of confidences and that AlvaradoSmith was not accused of violating protective orders requiring the return of all confidential information at the end of the fee arbitration proceeding."

  • In the mass tort litigation context, where one plaintiff typically brings similar claims against numerous defendants within a particular industry, the coordination of defense efforts among codefendants can be a very prudent course of action."
  • "Additionally, in the absence of establishing preemptive safeguards prior to formulating a joint defense — namely a carefully tailored joint defense agreement — attorneys may run into a host of conflict of interest and waiver issues, unwittingly create an attorney-client relationship with other codefendants, and ultimately expose themselves to malpractice liability."
  • "Participation in a joint defense amplifies the risk that attorneys will encounter a conflict of interest. By way of example, if an attorney shares privileged communications with the joint defense group and is later determined to have a conflict of interest, that could result in potentially disastrous results for the entire group, up to and including disqualification of all attorneys involved in the joint defense agreement."

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