Tuesday, April 21, 2015

Take the Disqualification, Leave the Cannoli

North Carolina Lawyers Weekly (subscription required) reports: "Blurred lines between corporate client and its CEO gets law firm disqualified" --
  • "In The Godfather, Michael Corleone assures his brother that 'It’s not personal, Sonny. It’s strictly business.' Law firms should take similar care to draw bright lines between work done for a business client and work done for the company’s officers in their personal capacities. A Greensboro law firm appears to have done a bit of both, and as a result was recently disqualified by the North Carolina Business Court from representing a longtime corporate client that’s currently suing its former CEO."
  • "Since 1987, Tuggle Duggins has served as corporate counsel for Kingsdown Incorporated, a mattress manufacturer based in Mebane that is suing its former CEO, Eric Hinshaw… In the decades that Hinshaw was CEO, Tuggle Duggins also advised him on several personal matters, including some now at issue in Kingsdown’s lawsuit. When Kingsdown brought its suit, Hinshaw moved to disqualify Tuggle Duggins as its counsel, arguing that he had a prior attorney-client relationship with the firm."
  • "But I must say no to you [ed: please give the NCLW headline writer a raise]… Bledsoe found this evidence lacking, however, since the firm conceded that Tuggle provided advice to Hinshaw but the firm never asked him for payment. 'Given the Firm’s provision of legal services to both Kingsdown and the Hinshaws without maintaining separate records to distinguish between the two, it comes as no particular surprise that the Firm's billing records do not reflect the Firm’s representation of the Hinshaws in connection with the transactions in dispute,' Bledsoe."
Complete decision here, for those with additional questions, just this once. (Such is the life we have chosen…)

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