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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1989-08
Lawyers Switching Law Firms; Confidences and Secrets; ""Chinese Wall""
In a series of letters sent by you as well as another law firm, issues have been raised concerning the effect of a lawyer moving from one law firm to another when there is litigation pending or to occur between clients of the two law firms. You have requested guidance from this Committee in dealing with this situation under differing factual circumstances.
Based on the various letters which the Committee has received, the following questions arise:
- If Lawyer A leaves Law Firm #1 in order to join Law Firm #2, under what circumstances can Lawyer A and/or other lawyers in Firm #2 continue to represent Firm #2's client in litigation against Firm #1's client?
- If the answer to question number 1 is that neither Lawyer A nor Firm #2 can continue representing Firm #2's client, can this prohibition of representation be cured by creating a ""Chinese wall"" between Lawyer A and other members of Firm #2?
- If Lawyer A and Firm #2 are prohibited from representing Firm #2's client because of Lawyer A's involvement with Firm #1's client, can the prohibition be cured by obtaining through Firm #1 the consent of Firm #1's client?
The answer to the foregoing questions are determined by the application of Rule 1.10 of Maryland's Rules of Professional Conduct, subsection (b) of which provides as follows:
""When a lawyer [A] becomes associated with a firm [Firm #2], the firm [Firm #2] may not knowingly represent a person in the same or a substantially related matter in which that lawyer [A], or a firm [Firm #1] with which the lawyer [A] was associated, and previously represented a client whose interests are materially adverse to that person and about whom the lawyer [A] had acquired information protected by Rule 1.6 and 1.9 (b) that is material to the matter."" The designation in brackets have been added to the foregoing citation in an attempt to clarify how the Rule applies to the hypothetical situations set forth herein.
It is important to note that there are two factual criteria set forth in Rule 1.10 (b), both which must be answered in the affirmative before Lawyer A and Firm #2 are precluded from representing Firm #2's client against Firm #1's client. First, and the easier of the two issues to resolve, is whether Lawyer A or Firm #1 had represented the client whose interest are materially adverse to Firm #2's client. The second issue, and the one more susceptible to factual disputes (which this Committee never undertakes to resolve), is whether Lawyer A had acquired confidential information about Firm #1's client, which information would be protected by Rule 1.6 an 1.9(b). If the answer to either of the two factual issues is in the negative then Firm #2 can continue to represent its client against Firm #1's client. If both factual issues are resolved in the negative, then Lawyer A may participate on behalf of Firm #2 in the litigation. This result is acknowledged in the Comment to Rule 1.10, which states as follows:
""Thus, if a lawyer while with one firm acquired no knowledge or information relating to a particular client of the firm, and that lawyer later joined another firm, neither the lawyer individually nor the second firm is disqualified from representing another client in the same or a related matter even though the interests of the two clients conflict.""
If the two prong test of Rule 1.10(b), in a given factual situation, results in both conditions being answered in the affirmative, then except as hereinafter discussed, neither Lawyer A nor Firm #2 may continue to represent Firm #2's client in the same or substantially related matter against Firm #1's client, about whom Lawyer A had acquired confidential information material to the matter, which information is protected by Rule 1.6 and 1.9(b). There is nothing in the Rules of Professional Conduct which would permit Firm #2, under these circumstances, to continue to represent its client by establishing a ""Chinese wall"" resulting in Lawyer A not having access to any of the files of Firm #2's client, and Firm #2 not discussing the matter with Lawyer A. It makes no difference in this regard whether Firm #2 has merely one office or several branch offices, or whether a branch office other than the one in which Lawyer A is working will be handling the case. The Rules do not treat a law firm with branch offices any differently than a law firm with a single office. See the Terminology section of the Rules as well as the Comment to Rule 1.10.
Although the creation of a ""Chinese wall"" alone will not overcome the problem posed by Rule 1.10(b) when both conditions exist, it is important to note that a disqualification prescribed by Rule 1.10(b) ""may be waived by the affected client under the conditions stated in Rule 1.7."" See Rule 1.10(d). The ""affected client"" is the client of Firm #1. The affected client may, but need not, waive the disqualification after being advised by Firm #1 about the implications and ramifications of the conflict faced by Lawyer A and Firm #2. In this regard, if the affected client elects to permit Firm #2 to represent its client, the Committee believes that Firm #2 should establish a ""Chinese wall"" isolating lawyer A from the matter in order to avoid any situation whereby Lawyer A might inadvertently reveal confidential information about the affected client to other attorneys in Firm #2.
The Committee hopes that the foregoing guidelines will be of assistance to lawyers and law firms impacted by the movement of lawyers from one law firm to another. We hasten to point out that Rule 1.10 does not govern the situation where government lawyers leave to go with private law firms, which situation is governed by Rule 1.11. Finally, we again stress that the key issue concerning movement of lawyers between law firms is the second prong test of Rule 1.10(b), which will involve a factual inquiry concerning whether the moving lawyer had acquired confidential information from the former client, and that this factual inquiry cannot be determined by this Committee.
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