Monday, January 9, 2012

Law Firm Disqualification--Some Bad Supreme Court Dicta

It is, of course, the law in Texas that a lawyer may not sue a former client regarding a matter that is substantially related to the former representation.   Texas Disciplinary Rule 1.09.    Moreover, if one lawyer in a firm is disqualified for that reason, his knowledge is imputed to the rest of the lawyers in his firm, and they are disqualified, as well.    Id.   However, suppose that a lawyer in Firm A is disqualified from being adverse to a particular client only because he has purely imputed knowledge from another lawyer in his firm who actually represented the former client.   If that lawyer leaves that firm, is his imputed knowledge then re-imputed to his new partners at Firm B so that they are disqualified just as would be any lawyer at Firm A?

The answer is no; Texas does not allow that second imputation.    That is the thrust of paragraph (c) of Rule 1.09 and is more specifically explained in Comment 7 thereto.

Nonetheless, consider this language (which was dicta) from In re Mitcham, 133 S.W. 3d 274, 276 (Tex. 2006):    "There is an irrebutable presumption that attorneys gain confidential information on every case at the firm where they work (whether they work on them or not) [citation omitted] and an irrebutable presumption that they share that information with the members of a new firm.    Henderson v. Floyd, 891 S.W.2d 252 (Tex. 1995)."

I have no problem with the first part of this quote--up to and including the citation omitted.    But the second part of the quote could be construed to mean that the second firm would have to impute even imputed knowledge from a lawyer from the first firm so as to disqualify its lawyers in the same manner as the lawyers at the first firm.    As noted, that is not the law in Texas. 

If the word "they" in the second half of that quote refers only to lawyers who actually worked on the prior representation, the quote would be accurate.    But the "they" could be construed to also include lawyers with only imputed knowledge, and that is where the language strays.

The citation at the end of the dicta is to Henderson v. Floyd, 891 S.W.3d 252 (Tex. 1995).    That case did not involve a lawyer with purely imputed knowledge moving to a second firm and then imputing his imputed knowledge to his new partners (thereby disqualifying it).   Rather, it involved a lawyer moving to a new firm who had actual knowledge of a case on which his new firm was working, thereby disqualifying it.    So, that citation does not support the second and broader interpretation of the latter part of the citation in In re Mitcham, supra

Thus, Texas law--and, for that matter, the law of all the other states--has never supported what I would call a "double imputation"--that is, the imputing of purely imputed knowledge to disqualify law firms.   The reason is obvious when you think about it.    The imputation has to stop somewhere.    If you allow a second imputation, why not a third, or a fourth?    Such a policy would lead to complete gridlock where most firms were disqualified from most cases, and for no good reason.

Let's hope the Supreme Court clarifies that language in its next disqualification case.

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