Opinion ID: 506328
Heading Depth: 2
Heading Rank: 2

Heading: The of Counsel Relationship and the Presumption of Shared Confidences

Text: 13 The test for disqualification under Ninth Circuit decisions is whether the former representation by the attorney changing sides is substantially related to the current representation. E.g., Trone v. Smith, 621 F.2d 994, 998 (9th Cir.1980). On this point Atasi argues Kallman was only minimally involved in the case while he was of counsel to the Flehr firm. Therefore, Atasi argues, he did not receive any significant confidential information. However, the rule does not require that the lawyer changing firms should actually have received confidences in the former representation. Id. at 999. The disqualification rule is designed to preserve the confidences of the former client. To require an actual disclosure before disqualification would be improper, since it would require the very disclosure the rule is intended to protect against. Id. Thus the test does not depend on whether actual confidences were received or on the length of the former representation. The test only depends on whether the former and current representations are substantially related. This test is met, since here the former representation is the same action at law as the current representation. 14 The possible harshness of this rule is mitigated by the peripheral representation standard. Trone, 621 F.2d at 998 n. 3. Under this standard an attorney previously associated with a firm that handled matters substantially related to those in which the attorney's disqualification is sought may avoid disqualification by showing he had no personal involvement in the matters. Id. On the facts of the instant appeal the peripheral representation defense fails. As we have previously noted, Kallman's signature appeared on a pleading for Seagate, he helped prepare a brief, and he twice visited a Seagate facility. Kallman, therefore, was personally involved in the matter. 15 Once one of a law firm's members is found to have been counsel for an adverse party in a substantially related matter the entire firm must be disqualified. Iacono, 722 F.2d at 442; Trone, 621 F.2d at 999. The disqualification applies whether or not the other lawyers of the firm were actually exposed to the confidential information possessed by the attorney switching firms. Trone, 621 F.2d at 999. Thus, a presumption exists that the other members of the firm shared in the confidential information. 3 16 The applicability of this presumption to the facts before us is the key issue in the instant appeal. That is, whether the presumption of shared confidences is raised where the attorney switching firms is of counsel rather than an associate or partner. To decide this issue we must identify the ethical regulations applicable to Kallman and the Skjerven firm in the instant appeal. Also, we must identify the policies underlying the Ninth Circuit decisions applying imputed disqualification and determine if those policies are furthered where an of counsel attorney is involved. Lastly, we must determine if any adverse consequences would result from excepting an of counsel attorney from the presumption. 17 Kallman and the Skjerven firm are governed in the instant appeal by both the California Rules of Professional Conduct and the local rules of the Northern District. Under Northern District Local Rule 110-3 lawyers are, in addition to the California rules, bound by decisions of any court applicable to standards of professional conduct. Iacono, 722 F.2d at 440. The California rules do not provide for imputed disqualification but the ABA Model Code of Professional Responsibility does so provide. Disciplinary Rule 5-105(D) states that [i]f a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment. Model Code of Professional Responsibility Disciplinary Rule 5-105(D). The ABA Model Code as applied in court decisions is binding on the lawyers practicing before the Northern District. 4 Iacono, 722 F.2d at 439-40. Since the language of Rule 5-105(D) includes any other lawyer associated with him in addition to partner or associate, we construe this language to include of counsel attorneys. 18 In addition to the plain language of the disciplinary rules there are sound policies underlying the presumption of shared confidences. The most important policy is the preservation of secrets and confidences communicated to the lawyer by the former client. Trone, 621 F.2d at 998. The client has the right to expect that confidences disclosed to his lawyer will not be shared with others and will not be used against him by his former lawyer or by lawyers associated with his former lawyers. The presumption that a lawyer switching sides shares confidences with his associates is essential to protecting these confidences. 19 This policy of preserving the client's confidences would be hindered if of counsel attorneys were excepted from the presumption of shared confidences. To require a showing of actual shared confidences before applying imputed or vicarious disqualification would be inconsistent and would have the same undermining effect on the policy with an of counsel attorney as it would with associates and partners. That is, it would require the very disclosure the rule is intended to protect against. In conclusion, we construe the plain language of the disciplinary rule to include of counsel attorneys. The policy underlying the rule requires a presumption of shared confidences and excepting of counsel attorneys from the presumption would undermine this underlying policy. Therefore, we hold the presumption of shared confidences applies to Kallman and the Skjerven firm. 20 In holding that the district court properly exercised its discretion in disqualifying the Skjerven firm we must observe that Kallman was more than a de minimus of counsel, an independent contractor working part time for the firm. His contract with Skjerven was in evidence before the district court and is before us. In brief, the contract establishes that Kallman had an active and very close relationship with the firm. 21 The of counsel contract between Kallman and the Skjerven firm provided in part that: 22 a full time secretary would be provided to Kallman if necessary and that an office would be provided to him; 23 billing would be done by the firm; 24 the firm's medical and dental insurance policies would cover Kallman, at his option; 25 his mail would be received through the firm's office; 26 he would do all of his legal work through and in the name of the firm; 27 miscellaneous costs such as postage, telephone, copying, etc., would be billed to his clients by the firm; 28 backup help would be provided when he was overloaded with work; 29 legal work of the firm's clients would be sent to him; 30 Kallman's work would be billed for him by the firm at the rate of $160 per hour; and 31 the firm would reimburse Kallman for dues and fees paid for state bars and law associations. 32