Consider Retaining Outside Counsel to Defend Against Motions to Disqualify
ALM Media
Updated
As lateral movement and law firm mergers have become the new normal, there has also been a corresponding rise in motions to disqualify. While there are certainly circumstances where disqualification is warranted under the conflict rules, sometimes the impetus for a motion to disqualify is to gain a tactical advantage in litigation or to settle some scores relating to an attorney s acrimonious departure from her or his prior firm.
There are a number of steps that law firms can take to limit potential motions to disqualify and to help defend against such motions when they are filed. In a perfect world, firms will provide full disclosure and obtain consent with respect to potential conflicts of interest at the inception of the client relationship.
However, no matter how many precautions are taken, most law firms inevitably face a motion to disqualify at some point, particularly with regard to lateral hires while a case is ongoing. Even if the motion is completely meritless, law firms should take every motion to disqualify seriously given the potential risks to the law firm. Indeed, for the reasons discussed below, law firms may find that retaining outside counsel is preferable to going it alone when defending a motion to disqualify.
Outside Counsel
If a law firm is not careful when defending itself, it may find that it has a fool for a client. Indeed, when a motion to disqualify is filed, the targeted law firm could be perceived as having two clients in the litigation. The law firm of course represents its client in the litigation, but it also is essentially representing its own interests in attempting to continue the representation of the client. It is possible that, to an outsider, the interests of the client and the interests of the law firm do not appear perfectly aligned.
Thus, a motion to disqualify may create a potential conflict between the law firm and its client, although any conflict generally could be waivable by the impacted clients. See, e.g., Rule 3-310 of the California Rules of Professional Conduct (authorizing an attorney to represent a client despite a potential conflict if the client provides informed written consent ). Many firms facing the issue of a potential motion to disqualify will advise the client of any potential differing interests between the client and the firm, including the advantages and disadvantages of hiring a new firm to contest the motion to disqualify. Because the law firm has a financial (and potentially other) interest in the outcome, most firms will need to carefully consider whether and to what extent to weigh in on the client s decision on how to proceed.
Importantly, the potential for conflict does not end with the decision to contest the motion to disqualify. Instead, as the evidence, briefing, and argument proceed, there remains the possibility that unexpected conflicts or risks will arise.
These risks could include members of the law firm being called as witnesses, the incurring of unexpected fees and costs, or unknown restrictions imposed as a condition of the firm s continued participation. On the other hand, the use of disqualification motions as litigation tactics by opposing counsel cannot be ignored.
Strategic Concerns
Another consideration when a law firm defends itself from a motion to disqualify is the optics to the court. Where a law firm is both the advocate against and the target of allegations of improper conduct, the firm and the client may be at a disadvantage.
When deciding a motion to disqualify, judges may take into account a law firm s own interests in the proceedings. As a result, courts may be less persuaded by an attorney attempting to retain a representation as compared to arguments made by independent counsel with no long-term financial interest in the outcome of the motion to disqualify.
Cost Concerns
Law firms defending themselves may also want to consider whether it is appropriate for the client to bear the costs of a motion that might be predicated on the law firm s conduct. This is especially true where the conflict went undetected or where the law firm may have been able to resolve the conflict at the outset of the representation had it implemented appropriate protocols.
If the law firm is accused of failing to seek appropriate consent or failing to detect a conflict, the firm may decide not to bill the client for the legal fees and costs associated with a subsequent motion to disqualify, even where no misconduct occurred. Again, separate counsel, whose fees and costs can be divided or paid by the law firm, can help avoid any issues related to the cost of the motion to disqualify.
Consider the Implications
While the impulse for most law firms is to simply oppose the motion to disqualify, that decision may not always be in the best interests of the client. In some instances, even successfully defeating a motion to disqualify can result in a loss in the ability to advocate effectively on behalf of the client during the balance of the litigation.
Indeed, although a court may reject disqualification, it could nonetheless impose limitations on testimony and evidence that might come from the law firm. Firms can thus advise the client as to the trade-off between the advantages of continuing the representation and the effect of the potential preclusion of certain witnesses on the remainder of the litigation. The firm should always consider its duty of loyalty to its client and can consider what outcome is truly best for the client s interests.
Attorney-Client Privilege
Finally, there is a risk that a law firm representing itself may be deprived of its own attorney-client privilege, adversely impacting the law firm s ability to effectively get advice to protect its own interests. When the same attorneys are advising both the client and firm, such communications may not be protected in subsequent litigation, whether based on a bar grievance or a legal malpractice claim.
Because of these risks, in many cases law firms facing potential disqualification will seek independent legal advice regarding their own ethical, legal, and professional obligations. Based on that advice, the law firm can determine whether the best approach is to engage separate counsel specializing in lawyers law to protect both the law firm s and the client s interests.
Although many law firms may balk at spending time and money on outside counsel, the potential negative consequences of disqualification make it well worth the investment.
