Construction Project: Authorizing Ethical Walls in California
LACBA Update, April 2000
By Ellen A. Pansky of Pansky & Markle. Pansky is a member of LACBA’s Professional Responsibility and Ethics Committee. The views expressed are her own.
As law firm mergers, acquisitions and dissolutions proceed apace, and as lawyers laterally transfer from firm to firm, instances of imputed disqualification of law firms and lawyers have increased exponentially. Threats by opponents to seek disqualification of firms from representation of a current (perhaps even longstanding) client, as well as the specter of professional discipline for having represented conflicting interests, seem to be utilized as tactical weapons more and more frequently. One solution that has been applied in other jurisdictions and seems to be working exceedingly well is the construction of ethical walls whereby the "tainted" attorney is screened from the rest of the law firm.
Numerous jurisdictions are embracing screening mechanisms. As Robert A. Cramer reported in his article "Screening Plays in Peoria," published in the Professional Lawyer Magazine, Illinois, Massachusetts, Michigan, Oregon, Pennsylvania, Washington, New York, and trial and appellate courts in the Second, Third, Sixth, Seventh, and Eleventh federal circuits have recognized screening in appropriate cases. Cramer, the Vice-President and Associate Loss Prevention Counsel of Attorneys Liability Assurance Society, Inc., reports "there has not been a single malpractice or breach of fiduciary duty complaint filed in which a breach of a screen has been alleged."
In California, the courts have been resistant to accepting the concept of screening in "side switching" cases. (See, for example, Henriksen v. Great American Savings and Loan (1992) 11 Cal.App.4th 109, 14 Cal.Rptr.2d 184). However, other cases have suggested that screening would be permissible if undertaken as soon as the disqualified attorney joins the firm or the case which would otherwise result in disqualification is initially accepted by the firm. (See, e.g, Employers Ins. of Wasau v. Seeno 692 F. Supp. 1150, 1164 n. 17 (N.D. Cal. 1988) and In Re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 593, 283 Cal.Rptr. 732, which approved screening of a paralegal who had worked for the opposing party on cases involving identical issues and parties.)
Most recently, in its decision People Ex. Rel Dept. of Corp. v. SpeeDee Oil Change Systems (1999) 20 Cal.4th 1135, 86 Cal.Rptr.2d 816, the California Supreme Court deemed an "of counsel" attorney to have the same type of close, personal, regular and continuous relationship with a law firm as an associate or partner, so that the firm and the individual attorney were disqualified when each unintentionally undertook to represent opposing parties in the same matter, and the "of counsel" attorney had learned confidential information material to the matter. The Supreme Court noted that none of the attorney declarations submitted in opposition to the motion for disqualification "suggested that [the law firm] instituted any formal ethical screen to prevent even inadvertent disclosures after the problem became known." The decision also expressly noted that "[t]he record provides no basis for considering whether an ethical screen...could serve the same prophylactic purpose as disqualification." The discussion of screening in the context of the SpeeDee Oil case suggests that the Supreme Court might have ruled differently if the law firm and the "of counsel" attorney had adopted a preventative conflict checking program and had instituted a formal screening mechanism to prevent the disclosure of confidential information.
California has long accepted screening procedures in the context of former government attorneys who enter private practice. (Chambers v. Superior Court (1981) 121 Cal.App.3d 893, 903; Castro v. L.A. Board of Supervisors (1991) 232 Cal.App.3d 1432, 1441-1443; Howitt v. Superior Court (1992) 3 Cal.App.4th 1575, 1586.) On close analysis, it may be difficult to justify permitting former government attorneys to engage in screening to avoid conflicts once in the private sector, and to deny the same screening mechanisms to attorneys who started their careers in private practice. Presumably, the client’s interest in conflict-free representation is the same in both situations.
Screening may be endorsed in the soon-to-be- published Restatement of the Law Governing Lawyers. It is not clear whether the proposed revised ABA Model Rules of Professional Conduct will authorize screening under some circumstances. Perhaps the lesson to be learned from the successful screening of government employees is that, as has been demonstrated in those jurisdictions authorizing screening in a private context, where formal screening mechanisms are actually implemented, there is no demonstrable harm to clients. California should follow the models established in other states and numerous federal jurisdictions, and lead the way toward adoption of standards for the construction of ethical walls in private practice.