Opinion ID: 2436005
Heading Depth: 1
Heading Rank: 12

Heading: Is Baker & Botts Adverse to Mr. Cronen

Text: Case law offers little help in defining adverse. One certainly can postulate a spectrum of degrees of adversity: (a) opposing a party in litigation or in a transaction and trying to obtain money, property, or other relief from that party; (b) representing a party against another party in litigation or a transaction that is not directly adverse to the other party, but that may contain elements of conflict, such as co-defendants united in opposing the plaintiff but adverse in allocation of liability; (c) seeking a result in litigation that will directly and detrimentally affect a non-party's property or interests through, for example, collateral estoppel; (d) advocating a legal or factual position in litigation that, if adopted and applied in other proceedings, could detrimentally affect a non-party's property or interest; (e) advancing a position in litigation that might develop facts inadvertently that could detrimentally affect a non-party's property or interest; (f) advocating a position in litigation or advancing an interest in a transaction to which a non-party is strongly opposed. This enumeration is not an exhaustive catalog, but simply illustrates some of the possibilities. While obvious cases may again be found at either end of the spectrum, intermediate cases present difficult questions of judgment and discretion.... 1 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 1.9:202, at 306.1 (2d ed.Supp.1994) (noting the spectrum of adversity in the ABA formulation of Rule 1.09, which refers to materially adverse). Rule 1.09 contains no definition of adverse. Absent a specific statutory definition, Courts are instructed to give words their ordinary meaning. Tex. Gov't Code Ann. § 312.002 (Vernon 1988). One dictionary defines adverse as: 1. unfavorable or antagonistic in purpose or effect: adverse criticism. 2. opposing one's interests or desire: adverse circumstances. 3. being or acting in a contrary direction: opposed or opposing: adverse winds. 4. opposite: confronting: the adverse page. RANDOM HOUSE UNABRIDGED DICTIONARY (2d ed.1993). This definition does not seem materially useful in deciding disqualification. Courts are also directed to look to similar statutory provisions or definitions. Cf. TEX. GOV'T CODE ANN. § 311.023(4) (Vernon 1988). Rule 1.06, dealing with concurrent representation, prohibits any representation that involves a substantially related matter in which that person's interests are materially and directly adverse to the interests of another client of the lawyer or the lawyer's firm. Rule 1.06(b)(1). The comments define directly adverse: Within the meaning of Rule 1.06(b), the representation of one client is directly adverse to the representation of another client if the lawyer's independent judgment on behalf of a client or the lawyer's ability or willingness to consider, recommend or carry out a course of action will be or is reasonably likely to be adversely affected by the lawyer's representation of, or responsibilities to the other client. The dual representation also is directly adverse if the lawyer reasonably appears to be called upon to espouse adverse positions in the same matter or a related matter. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only generally adverse, such as competing economic enterprises, does not constitute the representation of directly adverse interests. Rule 1.06, comment 6. This definition is facially not applicable to Rule 1.09, though it does provide some guidance. Greater care and a higher standard are required when dealing with conflicts arising out of concurrent representations than with conflicts arising out of a former client. E.g., Phoenix Founders, Inc. v. Marshall, 887 S.W.2d 831, 836 (Tex.1994) (The fact that the present case involves representation of adverse parties in the same proceeding, rather than two separate proceedings, increases the danger that some improper disclosure may have occurred.). By analogy, the degree of adversity required for disqualification under Rule 1.09(a) ought at least to rise to the level of directly adverse under Rule 1.06. The Court concludes that seeking relief from a former client in litigation establishes adversity as a matter of law for purposes of Rule 1.09. The Court concludes that a degree of adversity less than directly adverse under Rule 1.06 as a matter of law would not establish adversity for purposes of Rule 1.09. The Court concludes that in between those two boundary points, the quanta of adversity required in Rule 1.09 is a question of fact. In addressing that fact question, the Court will consider all the surrounding facts and circumstances. In deciding what factors are important in making that analysis, the Court should consider the overall goal and purpose of Rule 1.09. Cf. TEX. GOV'T CODE ANN. § 311.023(1) (Vernon 1988). Such factors include: the likelihood that any detriment that would result to the former client from the current representation, the kind of detriment that would result to the former client from the current representation, the likelihood that client confidences from the prior representation would be used in the current representation, [6] whether this particular potential conflict was or in the exercise of reasonable diligence should have been known, and whether this type of conflict is one that as a general matter could easily be discovered in the exercise of reasonable diligence. In considering these factors, the Court concludes that it should consider them based on the existing circumstances, and not based on possible changed circumstances in the future; i.e., on the current state of the pleadings what is the likelihood that any detriment would result to Mr. Cronen, and not whether it is possible that circumstances might change during the prosecution of this action in a manner that would increase the likelihood of detriment to Mr. Cronen. Cf. Hydril Co. v. Multiflex, Inc., 553 F.Supp. 552, 556 (S.D.Tex.1982) (A potential conflict based on potential issues is simply not the standard.) Here, Mr. Cronen contends that Baker & Botts intends to show massive, systemic fraud and conspiracy at NME that involves all of the boxes on the organization chart surrounding Mr. Cronen, that involves his direct predecessor, that involves a patient at a hospital of which he was Administrator, and that involves many patients at hospitals under his supervision as Regional Administrator of the Texas Region. Mr. Cronen contends in essence that Baker & Botts' omission of him from its petition simply makes him an unindicted co-conspirator, and that once Baker & Botts is finished, if it is successful, taking the one extra step to get to Mr. Cronen would be trivial. He contends that regardless whether Baker & Botts is presently intending to pursue him directly, in pursing all those around him Baker & Botts will likely, if not inevitably, develop evidence that could be used subsequently against him in civil or criminal actions. Baker & Botts notes that it is not presently pursuing any claims against Mr. Cronen in this lawsuit. Baker & Botts argues that one must look past Mr. Cronen's rhetoric and metaphors at the actual facts, which indicate that prosecution of plaintiffs' claims would not result in prosecution of Mr. Cronen. Baker & Botts essentially argues that one cannot assume any culpability on Mr. Cronen's part simply because people around or before him may have engaged in culpable conduct. Absent that assumption, Baker & Botts urges, there is not any indication that pursuing the claims in this lawsuit will have any detriment to Mr. Cronen and, to the contrary, all available evidence suggests that Baker & Botts' pursuit of its claims here would not harm Mr. Cronen. Baker & Botts notes: that the consistent position of Mr. Cronen and NME is that Mr. Cronen has committed no wrongdoing; that the vast amount of publicly available information about NME does not include any mention of allegations of wrongdoing by Mr. Cronen; that while Mr. Cronen was initially named as a defendant in 33 out of 55 civil actions in Tarrant County that NME identified as similar to this one, he was dismissed or nonsuited in all 33; and that no judgment has ever been entered against Mr. Cronen relating to the operation of any psychiatric hospital, and that Mr. Cronen has never paid to settle any such claim. Thus, Baker & Botts argues, the facile assumption that pursuing claims against NME and others will result in judgments, damages, or indictment against Mr. Cronen has time and again proven incorrect. Moreover, Baker & Botts claims, its pursuit of this action is not likely to uncover any information detrimental to Mr. Cronen that would not come to light in any event. Baker & Botts suggests that given the extensive media, litigation, and criminal investigations that have already taken place, most pertinent information is already available anyway. In NME's plea agreement with the federal government, moreover, NME has agreed to cooperate with the government and provide the government with any requested information and disclosure of any credible evidence of misconduct that ... may constitute a violation of federal law regarding the operation or activities, past or present, of any psychiatric or substance abuse treatment facility owned or operated by NME. Plea Agreement. United States of America v. NME Psychiatric Hospitals, Inc., Case No. 94-0268 (D.D.C. June 29, 1994), at 7. Finally, Baker & Botts notes, the parties have stipulated that Baker & Botts' present representation will not cause any state or federal criminal authority or any civil litigant to have access to documents they are not otherwise legally entitled to obtain. In short, Baker & Botts argues that the record shows that prosecution of claims against NME and NME personnel does not pose a threat to Mr. Cronen, and to the extent Mr. Cronen is at risk, that risk is not increased by Baker & Botts' participation in this action. The Court finds that it is wrong to assume that prosecution of claims against NME and NME personnel other than Mr. Cronen inherently poses a significant risk to Mr. Cronen. The Court finds that the risk to Mr. Cronen from Baker & Botts' prosecution of this action is small given that he is not a defendant and is not even alleged by any party to have committed any misconduct. Nonetheless, there is still some risk that Baker & Botts' diligent development of this case will bring to public light information adverse to Mr. Cronen that is not presently publicly known and that otherwise would have passed unnoticed to governmental or media investigations or other civil litigants with less available resources. Based on the current record, the Court finds that risk to be minimal, given the large volume of information presently known and the number of other parties investigating these subjects. The Court finds that the kind of detriment to which Mr. Cronen could be subjected is serious, and includes possible criminal liability, as well as possible civil liability. While it seems likely that criminal prosecution of Mr. Cronen would already have commenced were it going to do so, the Court understands that some criminal investigations are still proceeding. Although no prosecutor has advised Mr. Cronen that he is a target of an investigation, that fact does not remove all risk of criminal prosecution. The Court finds, as discussed in greater detail below, see infra Section II.B, that Baker & Botts' representation of plaintiffs is not likely to result in the use of confidential information obtained in the course of representing Mr. Cronen. [7] The Court finds that Baker & Botts was actually aware of this possible conflict at or before the time it undertook the representation of plaintiffs in this action. The Court also finds that this is a category of potential conflictpossible detriment to former client arising out of possible development of adverse facts during course of litigation to which former client is not a partythat generically would be difficult to discover and thus would make an imprudent basis for a prescriptive rule. Based on the foregoing, the Court finds that Baker & Botts' representation of plaintiffs here is not directly adverse to Mr. Cronen within the meaning of Rule 1.06. That is, Baker & Botts' independent judgment on behalf of plaintiffs and Baker & Botts' ability or willingness to consider, recommend or carry out a course of action will not be and is not reasonably likely to be adversely affected by Baker & Botts' prior representation of, or responsibilities to, Mr. Cronen; nor does Baker & Botts reasonably appear to be called upon to espouse positions adverse to Mr. Cronen in this matter. Thus that representation cannot be adverse for purposes of Rule 1.09 since it does not meet the more protective standard of Rule 1.06. Without reference to Rule 1.06 or directly adverse, the Court further finds that considering all of the surrounding facts and circumstances, together with all of the factors discussed above, Baker & Botts' representation of plaintiffs here is not adverse to Mr. Cronen for purposes of Rule 1.09. The Court emphasizes that its findings on adversity are based on the present state of the pleadings and the record before the Court on discovery. If it should later develop that Baker & Botts in its prosecution of this action is developing substantial evidence that poses a specific threat to Mr. Cronen, the Court would certainly take that information into consideration in revisiting this ruling. [8]