Law firms have aggressively pursued advance waivers to represent concurrent clients whose interests conflict in unrelated matters. For example, Law Firm represents Client A in an action against Client B. Normally, this representation would preclude Law Firm from representing Client B in any matter. However, Client A signed an advance waiver, permitting Law Firm to represent Client B in unrelated matters, as long as Law Firm does not share any of Client A’s confidences with Client B. Client B also signed an advanced waiver. What could possibly go wrong?
In FMS Investment Corp. v. United States, U.S. Ct. Fed. Claims No. 18-204C and consolidated actions, Pillsbury Winthrop Shaw Pittman represented Client A in its challenge to a U.S. Department of Education bid procedure. Client B, a Pillsbury client in an unrelated matter, was also challenging the bid procedure. When the dust settled, the Department awarded the contract to Client B. The Pillsbury attorney representing Client A disparaged Client B to a reporter, and his remarks were published in a prominent newspaper.
Client B brought a motion to disqualify Pillsbury, citing its breach of the duty of loyalty for publicly criticizing it in the bid dispute. The Federal Claims court judge agreed. Pillsbury should have been able to foresee that its two clients, initially aligned in protesting the manner the Department conducted the bid, could end up on opposite sides, and planned accordingly.
Pillsbury argued an ethical wall, which protected each client’s confidences, made disqualification unnecessary. Disqualification would be a harsh burden on Client A, Pillsbury claimed, given Pillsbury’s experience with the dispute. When the lawyer spoke to the reporter, he was unaware of the conflict. Pillsbury’s conflict check did not reveal the issue, because Client B had undergone a name change after it became a Pillsbury client.
The court was not persuaded the lawyer’s personal lack of knowledge affected his duty of loyalty. Although conflict check systems have their faults, Pillsbury advised Client B on the name change, and could have easily updated its conflict check database.
The moral of the story is that advance waivers do not mean a client waives all attorney obligations. Law firms that want to expand their ability to represent clients who are concurrently adverse to each other in unrelated matters need to double down on conflict checks; educate attorneys working on matters for adverse clients about the limits of their advocacy, inform clients of these limits; and ensure that systems are in place to avoid appearing openly adverse to existing clients.
About the author:
Jennifer Becker is certified by the State Bar of California, Board of Legal Specialization in Legal Malpractice, and is Chair of BASF’s Legal Malpractice Section. She is a partner at Long & Levit, and the Editor-in-Chief of Long & Levit’s Lawyers and Judges Blog, www.longlevit.com/blog, which is searchable by topic and case name.