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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

United States of America, 

Plaintiff, 

v. 

Michael Lacey, et al., 

Defendants. 

No. CR-18-00422-001-PHX-SPL 

ORDER 

 On April 25, 2018, the Government filed a motion (the “Motion”) to disqualify the 

law firm of Henze Cook Murphy (“HCM”) from representing Defendant Michael Lacey 

(“Lacey”) and the law firm of Davis Wright Tremaine (“DWT”) from representing Lacey 

and Defendant James Larkin (“Larkin”). (Doc. 118) The Motion was fully briefed on July 

2, 2018, and the Court heard oral argument at a hearing on October 5, 2018. As set forth 

below, the Court finds that Carl Ferrer (“Ferrer”) expressly waived his right to seek 

disqualification of HCM and DWT in previous joint representation and joint defense 

agreements; accordingly, the Motion is denied. 

I. Procedural Background 

 On March 28, 2018, a federal grand jury returned a ninety-three count indictment 

against several Defendants, including Lacey and Larkin, alleging that the Defendants 

engaged in various crimes related to the operation of the website Backpage.com, including 

conspiracy, facilitating prostitution, and money laundering. (Doc. 3) The indictment also 

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includes forfeiture allegations.1 Id. Lacey and Larkin were arrested on April 6, 2018. The 

docket reflects that attorneys from DWT entered appearances on behalf of Lacey and 

Larkin, and attorneys from HCM entered appearances on behalf of Lacey. 

 On April 5, 2018, Ferrer pleaded guilty to conspiracy to facilitate prostitution and 

money laundering. (CR 18-464-SPL, Doc. 7) The charges against Ferrer were based on 

his work at Backpage.com (“Backpage”). (Doc. 118 at 6) On April 13, 2018, Ferrer sent 

letters to DWT and HCM asking that the firms comply with their ethical duties to him, as 

a former client, and withdraw from representing Lacey and Larkin. (Doc. 118, Exs. A and 

B) On April 20, 2018, DWT sent Ferrer a letter stating that they would “withdraw from 

representation in all matters and cases as counsel for you, Backpage.com, LLC, and all 

related entities owned or controlled by you . . . .” (Id. at Ex. U) HCM states that it withdrew 

from its representation of Backpage.com and Ferrer on October 17, 2017. (Doc. 176 at 7) 

Neither DWT nor HCM withdrew from their representation of Lacey and Larkin in this 

matter. 

 The Government asserts that, before filing the Motion, it met with various defense 

counsel in an attempt to resolve its concerns regarding potential conflicts of interest. (Doc. 

118 at 2; see also Doc. 176 at 8 (HCM states that it retained counsel to meet with the 

Government to discuss HCM performing a limited role representing Lacey)) The parties 

were not able to resolve these issues, and the Government filed the Motion. (Doc. 118) 

A. Briefing on the Motion to Disqualify 

 On June 6, 2018, after receiving extensions of time to respond, Defendants filed 

responses to the Motion. (Docs. 130, 134, 147, 149, 154, 156, 160, 162, 163, 172, 174, 

176, 177, 180) Lacey filed a response in opposition to the Government’s Motion directed 

at HCM, through his separately retained trial counsel. (Doc. 174) HCM also filed a 

response in opposition to the Motion, through its separate counsel. (Doc. 176) On June 

13, 2018, the Government filed a reply to Lacey’s and HCM’s responses. (Doc. 192) 

/// 

 

1

 On July 25, 2018, the grand jury returned a 100-count superseding indictment against the Defendants. (Doc. 230) 

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 On June 6, 2018, Lacey and Larkin, through separate counsel, also filed a joint 

response to the Government’s Motion directed at DWT. (Doc. 180) On June 13, 2018, the 

Government filed a reply to Lacey’s and Larkin’s response to the Motion directed at DWT. 

(Doc. 193) On July 2, 2018, the Government filed a supplement to that reply. (Doc. 207) 

Defendant Andrew Padilla (“Padilla”), through separate counsel, also filed a response in 

opposition to the Government’s Motion directed at DWT (Doc. 177), and the Government 

filed a reply to Padilla’s response. (Doc. 194) In addition, several Defendants filed 

joinders to the various responses to the Motion.2

 On October 5, 2018, the Court heard 

argument on the pleadings, and the arguments made by each party were taken under 

advisement. 

II. Motion to Disqualify 

 The Government argues that each firm’s prior representation of Ferrer presents an 

incurable conflict of interest that should disqualify both firms from participation in this 

case. Relying on Ethical Rule 1.9(a) of the Arizona Rules of Professional Conduct (Duties 

to Former Clients), the Government asserts that HCM and DWT have incurable conflicts 

of interest because (1) they previously represented Ferrer in substantially related matters, 

(2) Ferrer’s interests as their former client are materially adverse to the interests of their 

current clients, Lacey and Larkin, because Ferrer has pleaded guilty to criminal conduct 

related to his work at Backpage and is cooperating with the Government in its pursuit of 

criminal charges against other Backpage principals, including Lacey and Larkin,3

 and (3) 

 

2

 Defendant Joye Vaught (“Vaught”) filed a joinder to Padilla’s response to the Government’s Motion directed at DWT (Doc. 178), and a joinder to Lacey’s and Larkin’s response to the Motion directed at HCM. (Doc. 186) Defendant John “Jed” Brunst 

(“Brunst”) filed a joinder to Lacey’s and HCM’s responses to the Motion directed at HCM, 

and a joinder to Padilla’s response to the Motion directed at DWT. (Doc. 181) Padilla filed a joinder to Lacey’s and HCM’s responses to the Motion directed at HCM, and a 

joinder to Lacey’s and Larkin’s response to the Motion directed at DWT. (Doc. 184) Lacey and Larkin filed separate joinders to Padilla’s response to the Motion directed at 

DWT. (Docs. 188, 190) Finally, Defendant Scott Spears (“Spears”) filed a joinder in Lacey’s and HCM’s responses to the Motion directed at HCM, a joinder to Lacey’s and Larkin’s response to the Motion directed at DWT, and a joinder in Padilla’s response to the Motion directed at DWT. (Doc. 191) 

3

 The Government appears to use “Backpage” to refer generally to the website 

Backpage.com. (See Doc. 118 at 1–2, 6) The Government asserts that Lacey, Larkin, and 

Ferrer are the founders of the website Backpage.com, and then refers to their “work at 

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Ferrer has not given informed consent, confirmed in writing, to allow HCM and DWT to 

represent Lacey and Larkin. (Doc. 118 at 2, 8) The Government also argues that HCM’s 

and DWT’s continued representation of Lacey and Larkin in this matter would violate 

Ethical Rule 1.7(a)(2) of the Arizona Rules of Professional Conduct (Conflicts of Interest: 

Current Clients) because there is a significant risk that the firms’ representation of Lacey 

and Larkin would be materially limited by their responsibilities to their former client 

Ferrer. (Id. at 8–9) 

A. Applicable Standards 

 This Court applies the Arizona Rules of Professional Conduct to evaluate the 

conduct of attorneys admitted or authorized to practice before it and, therefore, the Court 

applies these rules to resolve the Government’s motion to disqualify.4

 See LRCiv 83.2(e); 

Roosevelt Irrigation Dist. v. Salt River Project Agric. Improvement & Power Dist., 810 F. 

Supp. 2d 929, 944 (D. Ariz. 2011) (“this Court applies the Arizona ethical rules when 

evaluating motions to disqualify counsel.”) (citations omitted); Amparano v. ASARCO, 

Inc., 93 P.3d 1086, 1092 (Ariz. Ct. App. 2004) (courts have “looked to the ethical rules for 

guidance on disqualification motions.”). 

 The preamble to the Arizona ethical rules explains that the rules are designed to 

provide guidance to lawyers and a structure for regulating conduct, but cautions that “the 

purpose of the [r]ules can be subverted when they are invoked by opposing parties as 

procedural weapons.” Ariz. R. Sup. Ct 42, preamble at ¶ 20. In addition, the Arizona 

Supreme Court has stated that “[o]nly in extreme circumstances should a party to a lawsuit 

be allowed to interfere with the attorney-client relationship of his opponent.” Alexander v. 

Superior Court, 685 P.2d 1309, 1313 (Ariz. 1984). “The burden is on the moving party to 

 

Backpage,” and “Backpage-related lawsuits.” (Id. at 2, 3) The Government also sets forth the factual basis from Ferrer’s plea agreement in United States v. Ferrer, CR 18-464-SPL, 

in which Ferrer stated, in part, that in 2004 he co-founded “the website 

www.Backpage.com (‘Backpage’), along with M.L [Michael Lacey] and J.L. [James Larkin.]” (Doc. 118 at 6) 

4

 The Arizona Rules of Professional Conduct, also referred to as the Arizona ethical rules, 

are set forth in Rule 42 of the Rules of the Supreme Court and are cited by rule number and the abbreviation “ER.” See Ariz. R. Sup. Ct. 42. 

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show sufficient reason why an attorney should be disqualified from representing his [or 

her] client.” Id. 

 1. Ethical Rule 1.9(a)—Duties to Former Clients 

 Ethical Rule 1.9(a) states that “[a] lawyer who has formerly represented a client in 

a matter shall not thereafter represent another person in the same or a substantially related 

matter in which that person’s interests are materially adverse to the interests of the former 

client unless the former client gives informed consent, confirmed in writing.” ER 1.9(a). 

For a conflict to exist pursuant to this provision, the moving party must show: (1) the 

existence of an attorney-client relationship; (2) that the former representation was “the 

same or substantially related” to the current litigation; and (3) that the current client’s 

interests are “materially adverse” to the former client’s interests. Roosevelt, 810 F. Supp. 

2d at 944 (citing Foulke v. Knuck, 784 P.2d 723, 726–27 (Ariz. Ct. App. 1989)). 

 2. Ethical Rule 1.7(a)—Concurrent Conflicts of Interest 

 Ethical Rule 1.7(a)(2) states that “a lawyer shall not represent a client if the 

representation involves a concurrent conflict of interest. A concurrent conflict of interest 

exists if . . . there is a significant risk that the representation of one or more clients will be 

materially limited by the lawyer’s responsibilities to another client, a former client or a 

third person or by a personal interest of the lawyer.” ER 1.7(a)(2). “Notwithstanding the 

existence of a concurrent conflict of interest . . . a lawyer may represent a client if each 

affected client gives informed consent, confirmed in writing.” ER 1.7(b). However, even 

with consent, concurrent conflicts are allowed only if “the lawyer reasonably believes that 

the lawyer will be able to provide competent and diligent representation to each affected 

client,” “the representation is not prohibited by law,” and “the representation does not 

involve the assertion of a claim by one client against another client represented by the same 

lawyer in the same litigation or other proceeding before a tribunal.” ER 1.7(b)(1)-(3). 

Thus, representation may be undertaken, despite the existence of a conflict, only if the 

conflict is “consentable.” Id.; Cmt 2 (2003 Amendments). 

/// 

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B. The Joint Representation Agreement and Joint Defense Agreement 

 In response to the Motion, Lacey and Larkin argue that Ferrer previously waived 

any right to seek disqualification of counsel or assert a conflict of interest against DWT 

pursuant to certain confidential joint representation and joint defense agreements. (Doc. 

180 at 12–13) Specifically, the Defendants argue that Ferrer was party to a Common 

Interest and Litigation Management Agreement (the “JRA”), or joint representation 

agreement, and a joint defense agreement (the “JDA”) in which Ferrer waived his right to 

seek disqualification of counsel in the event that he withdrew from either of the confidential 

agreements. (Doc. 180 at 13–14) The JRA was executed by Ferrer on behalf of several 

corporate entities including Backpage, and the JDA was executed by Ferrer and HCM 

attorneys on behalf of Ferrer, among other parties. Both the JRA and JDA were provided 

to the Court for in camera review. 

 The Ninth Circuit has long recognized that the joint defense privilege is “an 

extension of the attorney-client privilege,” and joint defense agreements allow parties with 

cohesive interests to share information without waiving confidentiality. United States v. 

Gonzalez, 669 F.3d 974, 978 (9th Cir. 2012). The “joint defense privilege” is designed to 

facilitate communication among joint parties regarding matters that are important to protect 

their interests in litigation. The concept of a joint defense is not technically a privilege in 

and of itself, but instead constitutes an exception to the rule on waiver where 

communications are disclosed to third parties. Continental Oil Co. v. United States, 330 

F.2d 347, 350 (9th Cir. 1964). A joint defense agreement can be written or oral, but joint 

defense agreements cannot extend greater protections than the legal privileges on which 

they rest. Stepney, 246 F. Supp. 2d 1069, 1079–80 (N.D. Cal. 2003). 

 Courts generally encourage parties to enter into written joint defense agreements 

that, under the advice of separate counsel, allow each defendant the opportunity to fully 

understand his rights prior to entering into the agreement. United States v. Almeida, 341 

F.3d 1318, 1327 (11th Cir. 2003); Stepney, 246 F. Supp. 2d at 1084–86. It is well settled 

that waivers of rights in joint defense agreements are valid to cure conflicts with the ethical 

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rules. Stepney, 246 F. Supp. 2d at 1085 (recognizing that waiver provisions are appropriate 

to avoid conflicts). Additionally, ER 1.10(c) provides that a disqualification prescribed by 

ER 1.9 may be waived by the impacted client under the conditions stated in ER 1.7. ER 

1.10(c). Ethical Rule 1.7 states that the affected client must give “informed consent, 

confirmed in writing” to waive a conflict of interest. ER 1.7(b). Informed consent “denotes 

the agreement by a person to a proposed course of conduct after the lawyer has 

communicated adequate information and explanation about the material risks of and 

reasonably available alternatives to the proposed course of conduct.” ER 1.0(e); See also 

Roosevelt, 810 F. Supp. 2d at 957 (citing ER 1.7 stating informed consent requires that 

each affected client be aware of the relevant circumstances and of the material and 

reasonably foreseeable ways that the conflict could have adverse effects on the interests of 

that client). 

 The Court finds that the express terms of the JRA and JDA5

 are fatal to the 

Government’s argument for disqualification because the content of these agreements 

demonstrates that Ferrer waived his right to pursue disqualification against HCM, DWT, 

and other parties identified in these agreements. Both the JRA and the JDA anticipated 

circumstances in which a party to either agreement chose to withdraw. Without directly 

quoting the language of the JRA, it is clear to the Court that the plain language of the 

agreement prevents Ferrer from seeking disqualification of counsel based on any conflict 

arising out of the JRA. Similarly, by joining the JDA, the plain language of the agreement 

demonstrates that Ferrer waived his right to assert that any attorney party to the JDA is 

barred from continuing his or her representation under the agreement. Per the terms of the 

JDA, Ferrer waived his right to seek disqualification as to both HCM and DWT, which 

were both parties under the terms of the JDA.6

 Ferrer executed the JRA and JDA in his 

 

5

 Importantly, the Government does not dispute the existence or validity of either agreement. (Doc. 193 at 7) 

6

 The Court recognizes that neither Lacey (Doc. 174) nor HCM (Doc. 176) raised the issue of the JDA in their responses to the Motion in defense of HCM. However, the clear terms 

of the JDA demonstrate that HCM was party to the JDA along with DWT. 

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individual capacity and on behalf of Backpage when appropriate. It is undisputed that 

Ferrer signed the JDA under advice of counsel. (Doc. 193 at 8) Therefore, the Court finds 

that these agreements are valid and enforceable, and that Ferrer’s signatures demonstrate 

his intent to abide by the terms of these agreements. 

 The Government argues that the JRA and JDA are not controlling because the 

agreements were not signed by DWT. (Doc. 193 at 7) The Court finds that this argument 

is unavailing and irrelevant because Ferrer signed the agreements, and, per the terms of 

each agreement, Ferrer waived his right to seek to disqualify HCM and DWT or assert any 

future conflicts of interest. The Government has only provided the Court with precedent 

in which no joint defense agreements were present, save for a brief summary of the Henke

case, making each case relied on in the Motion substantively distinguishable from the facts 

at issue. To cure this defect, the Government relies on U.S. v. Ross, a case inapplicable to 

circumstances involving a joint defense agreement, for the proposition that it is within the 

Court’s discretion to refuse to accept a conflict waiver where the interests of justice require. 

United States v. Ross, 33 F.3d 1507, 1524 (11th Cir. 1994) (stating that trial courts may 

refuse waivers of conflicts of interest to ensure adequacy of representation, to protect 

integrity of court, and to preserve trial judge’s interest to be free from future attacks over 

adequacy of waiver and fairness of trial). However, the Court declines to exercise its 

discretion to disregard Ferrer’s waiver at this time. 

 The Court finds that Ferrer waived his right to seek disqualification of HCM and 

DWT or to assert any conflict of interest in this case. Pursuant to the terms of the JRA and 

the JDA, the Court finds that Ferrer has provided DWT and HCM with the written informed 

consent necessary for each firm to continue its participation as counsel. The Court is 

confident that allowing HCM and DWT to continue their participation in this case will not 

run afoul of the interests of justice, and Ferrer’s executed JRA and JDA provide the written 

informed consent necessary to satisfy ER 1.9(a) and ER 1.7(b). 

/// 

/// 

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C. Government’s Arguments in Support of Disqualification 

The Court recognizes that it may be difficult for the Government to understand what 

it cannot see in how the terms of the JRA and the JDA distinguish this decision from the 

precedent and ethical opinions identified by the Government in the Motion. First, Arizona 

Ethics Opinion 91-5 focuses on how ER 1.9 should be used as a shield to protect a former 

client, but the opinion is silent on any situation in which said former client had expressly 

waived his right to challenge any continued or future adverse representation by counsel. 

Similarly, the Ross, Moscony, Williams, and Alfonzo-Reyes cases relied on by the 

Government are silent on the issue of waivers appearing in joint representation or joint 

defense agreements acting as blanket waivers of future conflicts. Instead, each of the cases 

cited by the Government reiterates the Court’s power to disregard a defendant’s knowing 

and intelligent conflict waiver. United States v. Ross, 33 F.3d 1507, 1524 (11th Cir. 1994); 

United States v. Moscony, 927 F.2d 742, 750 (3d Cir. 1991) (recognizing that the 

presumption in favor of a defendant’s counsel of choice can be overcome, and a trial court 

may disqualify counsel and reject the defendant’s waiver of conflict-free representation); 

United States v. Williams, 81 F.3d 1321, 1325 (4th Cir. 1996) (upholding a district court’s 

decision to disqualify a defendant’s choice of counsel due to conflict of interest); United 

States v. Alfonzo-Reyes, 592 F.3d 280, 294 (1st Cir. 2010) (stating that no conflict waiver 

actually occurred). The Court finds these cases unpersuasive. 

 The Court does not find that allowing HCM and DWT to continue to participate in 

this case as auxillary counsel threatens the integrity of the trial process. The only case that 

the Government relies on that even mentions a joint defense agreement is the Henke case. 

United States v. Henke, 222 F.3d 633 (9th Cir. 2000). In Henke, a client withdrew from a 

joint defense agreement, and his counsel moved to withdraw from the case. Id. at 637. The 

Court denied counsel’s motion to withdraw, and counsel chose not to cross-examine its 

former client at trial. Id. The Henke decision addressed conflicts that require withdrawal 

of trial counsel. It did not address the issue of waiver under a joint defense agreement. 

Further, it has been made clear that neither HCM nor DWT will participate as trial counsel 

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in this matter, and both firms have stated that neither firm will participate in crossexamining Ferrer. (Doc. 176 at 11; Doc. 180 at 28) Thus, the Court finds that the Henke

case is also unpersuasive for ordering disqualification. 

D. Conclusion 

 At this time, the Court declines to decide whether the terms of Ferrer’s proffer 

agreement waived his personal attorney-client privilege. The Court also finds that the 

arguments advanced by Padilla are moot per the terms of this Order. Moving forward, the 

Court will rely on the representations of HCM, DWT, and their respective counsel that the 

firms will continue to preserve the confidences of Ferrer as a former client, create ethical 

walls where necessary, refrain from engaging in trial preparation or participating as trial 

counsel, and only participate in the limited capacity set forth in the pleadings, without an 

order from the Court. Accordingly, 

 IT IS ORDERED: 

 That Government’s Motion to Disqualify Counsel (Doc. 118) is denied. 

Dated this 12th day of October, 2018. 

Honorable Steven P. Logan 

United States District Judge 

 

 

 

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