Academic journal article Southern Journal of Business and Ethics

Avoiding Imputed Disqualification

Academic journal article Southern Journal of Business and Ethics

Avoiding Imputed Disqualification

Article excerpt

I. Introduction

Imputed disqualification arises when an entire law firm is disqualified from representation because one of its attorneys has a conflict of interest. To avoid this potential conflict, ethical screening (commonly referred to as a "Chinese Wall") is often used. Ethical screening is a procedure in which an otherwise disqualified attorney is screened from other attorneys within a firm to prevent the entire firm from being disqualified. A conflict of interest takes multiple forms. The following article focuses on a conflict of interest from an attorneys' representation of a prior client and examines the law on ethical screening in Texas, other jurisdictions and the American Bar Association ("ABA") Model Rules' approach to ethical screening, and why Texas should adopt a similar rule.

II. The Current Law in Texas

A. Imputed Disqualification

Under the Texas Disciplinary Rules of Professional Conduct, an entire law firm is disqualified if one of its attorneys has a conflict of interest unless the former client provides written consent.2Specifically, Rule 1.09 - "Conflict of Interest: Former Client" - states the following:

(a) Without prior consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client:

(1) in which such other person questions the validity of the lawyer's services or work product for the former client;

(2) if the representation in reasonable probability will involve a violation of Rule 1.05 ["Confidentiality of Information"]; or

(3) if it is the same or a substantially related matter.

(b) Except to the extent authorized by Rule 1.10 [relating to former government attorneys], when lawyers are or have become members of or associated with a firm, none of them shall knowingly represent a client if any one of them practicing alone would be prohibited from doing so by paragraph (a).3

Texas Courts have consistently looked to the Texas Disciplinary Rules when determining whether a law firm should be disqualified4In doing so, the Courts have routinely held that a law firm is disqualified on the basis of imputed disqualification.5The Court's rationale for imputed disqualification is to protect confidential information from being revealed and there is a presumption that confidential information is shared among all attorneys within a firm.6 Texas has made clear that this presumption cannot be rebutted by an ethical screening wall.7

Moreover, despite the fact that the plain language of Rule 1.09 concerns "former clients," the Texas Supreme Court has gone as far as holding that an entire firm was disqualified when it was undisputed that none of the firm's attorneys had previously represented the adverse party.8In National Medical Enterprises, Inc. v. Godbey, National Medical Enterprises, Inc., Psychiatric Institutes of America, Inc., and other related entities (hereinafter "NME") were accused of mistreating its patients and committing fraud by charging forunnecessary medical treatments.9 This led to criminal charges and civil lawsuits against NME and its employees.10 NME retained Ed Tomko to represent two of NME's employees.11Mr. Tomko represented these employees while he was with Doke & Riley and later with Baker & Botts. 12It was undisputed that Mr. Tomko never represented NME.13 But, he did receive some of NME's confidential information that was subject to a joint defense agreement. 14Several months after Mr. Tomko withdrew as the attorney for NME's employees, Baker & Botts (and attorneys who had no involvement in representing NME's former employees) filed suit against NME on behalf of a large number of NME's former patients.15

The issue on appeal was whether Mr. Tomko and his firm were disqualified when none of its attorneys, including Mr. Tomko, previously represented NME. The Court looked to other jurisdictions for guidance and in doing so, the Court noted that "[i]n each of these cases disqualification was based, not on the attorney's former representation of an opposing party, but on the attorney's duty to the party to preserve its confidences" and ultimately held that Mr. …

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