In New York and elsewhere, attorney discipline has been imposed rarely, sporadically, and seemingly randomly, after lawyers or their firms have been disqualified in civil or criminal litigation due to a conflict of interest or for other infractions. What factors should trigger a subsequent disciplinary investigation? Does disqualification for a conflict of interest or other rule violation ipso facto require discipline?
Not necessarily. Is it fair to impose discipline when a lawyer, in good faith, contends that a motion to disqualify is unwarranted and has been interposed principally for tactical reasons, as some are?1 Moreover, it is clear from review of the case law that many disqualification motions based on alleged conflicts or other issues may entail close questions of fact, such as whether the allegedly aggrieved movant is a “current” or “former” client, whether two matters are substantially related, or as to the connection between affiliate entities.
Conflicts determinations often involve complex legal concepts as well, such as analysis of issue conflicts,2 the “hot potato” doctrine,3 or the “advocate witness” rule.4 Thus, arguably, the regulation of lawyer conflicts of interest should be left primarily to the litigation “marketplace,” where sufficient disincentives assuredly exist to prevent lawyers from wrongfully engaging in conflicts. In most cases there is simply no need to create an “in terrorem” disciplinary threat to the already risk-laden and expensive collateral litigation that is required every time a lawyer is obliged to defend against a disqualification motion.
Then there is the important right to choice of counsel. If lawyers cannot feel free to challenge disqualification motions, clients may lose their preferred attorneys without valid reason. Additionally, trial level disqualifications, at least in the federal system, are effectively unappealable, which means that a lawyer and her client are stuck with a ruling that might have been reversed but for the lack of meaningful opportunity to litigate the issue.
This column will discuss two New York cases where lawyers and their firms were either referred for discipline or actually disciplined based upon a prior disqualification (one of them does not involve a conflicts disqualification). I then propose a standard by which our disciplinary and grievance committees should, on a consistent basis, determine whether to open an investigation, and, where warranted, prosecute lawyers previously disqualified for a conflict or other alleged ethical lapse.
The fact is, we know very little about how New York’s disciplinary and grievance committees address conflicts cases in particular following the grant of a civil or criminal disqualification motion. This is because there have been no reported cases of public discipline for at least the past 10 years that I have surveyed, and no access is available as to successful disqualification motions that later resulted in the imposition of private discipline (or dismissal).
Accordingly, the following discussion describes two cases, one federal and one state, which, in my view, provide guidance as to the kinds of matters that a disciplinary committee, in its discretion, ought to consider pursuing following disqualification. In Universal City Studios v. Reimerdes,5 the motion picture association sued certain Internet providers for copyright infringement, alleging that they were using DVD technology to download motion picture recordings.
After what the U.S. District Court for the Southern District of New York (Kaplan, J.) deemed unwarranted delay, the plaintiffs moved to disqualify defense counsel based on the theory that his law firm was concurrently representing one of the plaintiffs (Time Warner) in ongoing litigation involving the Harry Potter books, and therefore that counsel and his firm could not, under well-established conflicts principles, be adverse to a current client even in a completely unrelated matter.6
While rejecting defense counsel’s argument that Time Warner was merely an “accommodation” or “non-primary” client-and therefore that disqualification was inappropriate-the court nevertheless denied disqualification for two other reasons, namely, that the motion was interposed for tactical considerations at the 11th hour, but also because, just as importantly, Time Warner “failed to establish any material risk that it would be prejudiced inappropriately by allowing the (defendant’s) firm to continue in this litigation notwithstanding its role” in the other case.7 Accordingly, the court denied disqualification, but then stated: “The proper place for this controversy is in the appropriate professional disciplinary body.”8 Nothing further happened.
By contrast, in Lipin v. Bender,9 the New York Court of Appeals upheld disqualification of counsel and dismissal of the entire case as a remedy for misconduct involving the improper taking and attempted use of defendants’ privileged documents (purloined at a break in a deposition) in which the plaintiff’s lawyer, Arthur Wisehart, tried to exploit the theft. In Matter of Wisehart,10 the Appellate Division, First Department, subsequently suspended Wisehart for two years based upon his complicity in the misappropriation of privileged documents, and his lack of remorse.
The two cases, Reimerdes and Wisehart, while very different in context, nonetheless demonstrate a consistent approach to discipline following a finding of an ethical breach in a prior civil matter, and in that respect serve as good guide posts.
In Reimerdes, the disciplinary authorities could well have concluded, notwithstanding Judge Kaplan’s referral, that enough is enough. The question whether Time Warner was an “accommodation” or “non-primary” client was a close one; no one could fairly argue that defense counsel obtained or was planning to use confidential information to the detriment of Time Warner in the Reimerdes litigation; and, the court explicitly noted that the motion to disqualify had been interposed very late and for “tactical” reasons. Nor could the plaintiff’s counsel have appealed from Kaplan’s ruling had disqualification been ordered because it would have been a non-final order. Those circumstances should have been enough to convince the relevant disciplinary authorities to back off-because there was simply no good policy reason to open a disciplinary investigation notwithstanding the finding of a conflict.
By contrast, it should be obvious from the facts that Wisehart’s conduct in aiding and abetting a theft was quite egregious, which he then compounded by an utter lack of remorse. Attorneys who continue to think that stealing privileged documents is acceptable behavior pose an unreasonable threat to the public and the bar, which deserve protection from them.
Returning then to the questions posed at the outset of this column, and given scant case law examples, what should be the standard for seeking discipline of an attorney who has been disqualified because of a conflict (or for any other reason)? Probably the best (and only) answer is the classic one: where necessary to protect the public and the bar from unscrupulous or incompetent lawyers who simply will not, or out of ignorance cannot, avoid obvious conflicts or other rules violations:
In these cases, disciplinary proceedings offer the only institutional opportunity to act “as a catharsis for the profession and a prophylactic for the public.”11
On the other hand, a lawyer who proceeds in good faith to challenge a disqualification motion but is nonetheless disqualified on account of a conflict or other technical breach, where no pattern of flouting the ethics rules exists, or where close questions of law or fact are presented, or where the lawyer has no effective appellate remedy, should not then be exposed to discipline.
Bad publicity, expense, disgorgement of fees and loss of business are in themselves sufficient disincentives. To add the potential for discipline is bad policy and simply amounts to “overkill” in my view. In short, a disciplinary investigation should be pursued following disqualification only if an attorney’s conduct involved bad faith, venality, or wilful disregard for, or the repetitive violation of, ethics rules threatening harm to the bar and the public.
Reprinted with permission from the April 4, 2014 edition of the New York Law Journal ©2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 – email@example.com or visit www.almreprints.com.
- See, e.g., Universal City Studios v. Reimerdes, supra, p. 2.
- “Issue” conflicts arise if advocating a legal position on behalf of one client creates precedent adverse to the interests of another client in a different case. See, N.Y. R.P.C. 1.7, comment 24. See, e.g., United States v. Binday, 2013 WL 1104258 (S.D.N.Y. March 14, 2013).
- The “hot potato” doctrine provides that a lawyer may not drop an existing client like a hot potato in order to take on a new matter adverse to the interests of the existing client absent informed consent. See, e.g., Stratagem Development Corp. v. Heron Int’l N.V., 756 F.Supp. 789 (S.D.N.Y. 1991).
- The “advocate-witness” rule, N.Y. R.P.C. 3.7, concerns combining the roles of advocate and witness wherein the trier of fact may be confused or misled by the lawyer’s serving in both capacities. See, e.g., Skiff-Murray v. Murray, 3 A.D.3d 610 (3d Dept. 2004).
- 98 F.Supp.2d 449 (S.D.N.Y. 2000).
- Id. at 451; see Cinema 5 Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976).
- Id. at 455.
- Id. at 456.
- 84 N.Y.2d 562 (1994).
- 281 A.D.2d 23 (1st Dept. 2001).
- Harvard Law Review, Developments in the Law: “Conflicts of Interest in the Legal Profession,” Vol. 94, No. 6, p. 1501 (April 1981), citing Maryland State Bar Ass’n v. Agnew, 271 Md. 543, 549, 318 A.2d 811, 814 (1974) (other citations omitted).