Court Opinion

ID: 6017538
Source: CourtListenerOpinion
Date Created: 2022-01-13 11:28:28.603149+00
Date Added: 2024-06-11T08:50:36.471854
License: Public Domain

Tom, J. (dissenting).
The issue on this appeal is whether the law firm of Thurm & Heller should be disqualified as counsel to defendants because the firm hired an associate attorney who was actively representing the opposing party on the same matter in litigation.
Plaintiff Kassis commenced the underlying action in 1992 to recover for property damage incurred by his buildings during construction work performed by defendant Cauldwell-Wingate Company on an adjoining building owned by defendant Teacher’s Insurance and Annuity Association. When the complaint was amended in 1994, Weg & Myers, P. C. represented plaintiff. Thurm & Heller, a 26-lawyer firm consisting of 12 partners and 14 associates, represented defendants Teacher’s and Cauldwell.
The Weg & Myers partner who was assigned the file was Joshua Mallín. In or about February 1996, the file also was as*198signed to an associate, Charles Martin Arnold. The partner at Thurm & Heller who had been assigned the Kassis litigation for a year and a half before the disqualification motion was Roula Theofanis. She became acquainted with Arnold as an adversary during his handling of the Kassis case. During the Kassis litigation in early February 1997, Arnold indicated to Theofanis that he was looking for a position with another law firm. She knew that Thurm & Heller was in the process of interviewing associates in Arnold’s class, and she suggested that he submit a resume. Arnold was interviewed by Thurm & Heller on February 5th, was offered employment on February 6th and accepted employment on February 10th, which commenced on March 3, 1997.
As an associate attorney of Weg & Myers, Arnold had worked on the Kassis lawsuit for a period of over one year. During that time, he conducted five depositions in connection with this litigation. Specifically, in the instant matter, Arnold participated in the deposition of coplaintiff North River Insurance Company on July 10, 1996; he conducted the deposition of defendant D&F Masons, Inc. on July 15, 1996; he conducted the deposition of defendant Atlantic Demolition Corporation on July 16, 1996; he conducted the deposition of a nonparty witness, Pierre L. Giani, on August 29, 1996; and he conducted the deposition of another nonparty witness, Armand Azak, on December 9, 1996. He also worked on written discovery, and personally met with plaintiff Kassis, with whom he had almost daily telephone conversations. In addition to conducting the five depositions, Arnold was present with Kassis at the physical inspection of the subject premises. Arnold also represented Kassis twice during mediation sessions conducted by a court-appointed mediator, in an attempt to resolve various issues in connection with this case. Furthermore, in an unrelated action involving Kassis, Arnold took six depositions.
By mid-February, Arnold had advised Weg & Myers of his change in employment. His prior involvement with the Kassis litigation raised a concern. Mallín, the partner assigned to the case, by letter dated February 20, 1997, asked Thurm & Heller to detail the steps it would take to implement an institutional screening mechanism to prohibit Arnold from having any involvement with the Kassis litigation. When Mallín appeared for a deposition on the Kassis litigation at Thurm & Heller’s office on February 27th, Theofanis showed him that her office and Arnold’s office would be widely separated; Mallín also was assured that the entire file of 15 redwells would be removed *199from general file storage and placed in her office to guard against inadvertent contact with Arnold. That same day, Thurm & Heller wrote to Weg & Myers to commemorate these measures. Nevertheless, on March 6, 1997, Weg & Myers moved to disqualify Thurm & Heller from representing the defendants in this case.
In support of the motion, Weg & Myers noted Arnold’s involvement with, and the amount of knowledge he possessed in, this specific case; Thurm & Heller’s relatively small size; and the presumptive familiarity among its lawyers, and discussions regarding cases in general, that made disclosures concerning Kassis likely. In opposition, Arnold minimized his involvement with the Kassis matter. Thurm & Heller, in opposition, argued that retaining new counsel, which would have to familiarize itself with the entire case at such a late date, would significantly prejudice their clients and would only serve to delay trial.
The motion court denied plaintiffs motion for disqualification and noted Arnold’s prior involvement with the case, but found that plaintiff had failed to demonstrate prejudice, especially since Arnold would be segregated from the case by a “Chinese Wall.” The decision also noted that the case was five years old, that substituting counsel would prejudice defendants, that Ms. Theofanis had no need to consult with Arnold and that she had given assurances that she would not do so.
There are three issues in this case: did Arnold possess confidential information; if so, does the nature of the law firm make improper disclosure likely; and from the perspective of public policy, and that of the plaintiff, whether or not Arnold actually possessed confidential information, is there an appearance of impropriety?
A party seeking to disqualify an attorney or law firm must establish the existence of a prior attorney-client relationship, and that the former and current representations are both adverse and substantially related (Cardinale v Golinello, 43 NY2d 288). The rule has even been extended to nonlawyer employees of law firms (Glover Bottled Gas Corp. v Circle M. Beverage Barn, 129 AD2d 678 [paralegal, formerly employed by plaintiffs firm on litigation between the same parties, was basis to disqualify the defendant’s firm which hired her]). New York has long recognized an irrebuttable presumption of shared confidences among attorneys employed by a firm that forecloses the firm from representing different, adversarial, clients in substantially related matters (Cardinale v Golinello, *200supra; Aversa v Taubes, 194 AD2d 579). Since ethical constraints apply equally to all lawyers in a firm, if one attorney in the firm is disqualified from representing a client, then all attorneys in the firm are disqualified. This is so because of the irrebuttable proscription of shared confidences that is presumed to exist in law firms.
The purpose of the rule is three-fold. First is the concern for protecting client confidences, and especially to avoid disclosure or adverse use of information in connection with the vigorous representation of the current client (Solow v Grace & Co., 83 NY2d 303, 309, and citations therein). Second, the rule avoids the appearance of impropriety on the part of the attorney as well as the firm. A presumption of disqualification avoids the need for a hearing into whether there is an actual conflict. New York favors disqualification over a hearing because the hearing itself may cause disclosure of the very information that it seeks to protect (supra; cf., Lightning Park v Wise Lerman & Katz, 197 AD2d 52 [if disqualification motion cannot be resolved on papers, hearing may be necessary]). Third, the rule is clear, easy to apply and contemplates self-enforcement among members of the Bar (Solow v Grace & Co., supra). Since a lawyer is obliged to avoid even the appearance of impropriety, and in view of the fiduciary relationship that may still bind the lawyer to the adverse litigant, any question should be decided in favor of disqualification (cf, Saftler v Government Empls. Ins. Co., 95 AD2d 54, 60 [Milonas, J., dissenting]).
Although Arnold and defendants’ law firm attempt to minimize Arnold’s involvement in the Kassis matter while he was employed by Weg & Myers, “ ‘it is no answer that the lawyer did not in fact obtain any confidential information in connection with the first employment, or even that it was only other members of the firm who rendered the services to the client’ * * * the former client need only show a reasonable probability that confidential information will be disclosed” that may be “apparent from the situation itself’ (Flaum v Birnbaum, 107 AD2d 1087, 1088). In any event, the argument is unavailing. It is undisputed that he handled five depositions, that included party depositions; he attended the physical examination of the premises with Kassis; and he attended two court mediation sessions. Clearly, in order to be prepared for depositions, and court and mediation appearances, Arnold had to have reviewed the Kassis file and familiarized himself with the different aspects of the Kassis action. Arnold does not deny having had access to the Kassis file; rather, he contends that he “never *201read the overwhelming majority of documents contained in the file.” Thus, while he claims that he never read the entire file consisting of approximately 15 redwells, he did have access to, and presumably did read sufficient portions of the file to familiarize himself with the case.
Plaintiff described Arnold as his “voice” to Mallín when Mallín was unavailable, and contends that Arnold actually was plaintiffs sole contact with the firm on the many occasions when Mallín was away from the office on business. Plaintiff avers that he had discussed the case with Arnold regularly, telephoning him almost daily for periods of time, and that he had discussed his own deposition with Arnold. Plaintiff describes the discussions as including strategies in general, but also strategies for deposing other witnesses, and settlement strategies in connection with various parties. Plaintiff expresses the founded concern that he had conveyed confidential information to Arnold, and that Arnold must know his thought processes with respect to this case.
These allegations are not directly refuted by Arnold. It is not overly speculative to conclude that, at the least, Arnold had ample opportunity to size up plaintiff himself, assess some legal vulnerabilities and perhaps plaintiffs personal style and goals and thereby assess what is substantive and what is bluster as plaintiff personally walks through this litigation. Just as important, Arnold likely became aware of Mallin’s professional conclusions about the strengths and weaknesses of the case.
The totality of circumstances makes clear that Arnold was privy to confidential information directly related to the Kassis litigation.
The circumstances of this case also increase the likelihood of disclosure. The Court of Appeals in Solow (supra) held that in instances where large, departmentalized law firms are involved, the presumption of shared confidences may be rebutted, so as to allow the firm to continue its representation of the client after an analysis of the nature of the prior representation is made and upon a showing by the law firm that there is no reasonable possibility that any of its other attorneys acquired confidential information concerning the client (Solow v Grace & Co., supra, at 313). The smaller and more informal the setting, the more necessary it becomes to protect the client and avoid the appearance of impropriety by deeming the information to be imputed as a matter of law. Conversely, the larger the firm, the more onerous the rule becomes, especially if per *202se application results in all members of the firm being disqualified indiscriminately whether or not they had knowledge of a former client’s confidences, which ends up creating hardships for many current clients.
Although the majority relies on Solow to articulate the need for flexibility in application of the disqualification rule, the differences with the case at bar are manifest in almost every regard. By contrast with Solow, the law firm involved in the present case, as in Cardinale (supra), is a small firm with 26 lawyers whose activities and interrelationships are presumptively informal; in Solow, the law firm had 372 attorneys segregated in different departments. Although measures in the current case are intended to isolate files and Arnold with respect to the Kassis litigation, nevertheless the basic point remains: the size of a small firm enhances the likelihood—and the associated appearance—that a collegial exchange of information, in which attorneys seek one another out with ease to share ideas about how to handle client matters, will lead to improper disclosures. Similar reasoning has been employed elsewhere in rejecting a “Chinese Wall” defense, that in a 35-attorney firm, even instituting formalities intended to segregate a new attorney from litigation with which he was familiar does not prevent the continuing danger that he may unintentionally transmit information gained from the prior relationship (Cheng v GAF Corp., 631 F2d 1052, 1058, vacated on other grounds 450 US 903; Baird v Hilton Hotel Corp., 771 F Supp 24). Solow noted the continuing vitality of the Cardinale principle that “the duty of loyalty * * * and the avoidance of even an appearance of impropriety are so important that any harm associated with disqualification was minimal when compared with furthering these goals” (Solow v Grace & Co., at 312).
As was said in Cardinale (supra), the possibility is too great that an attorney in a small firm either wittingly or unwittingly may acquire confidential information about the particular client, a likelihood not lessened even if the attorney does not personally represent the adversary. As also was said in Solow, a factual setting such as that present here might well lead laypersons to believe that the attorney was “hired not only because of his legal talent, but also because of confidential information that he possessed” (Solow v Grace & Co., supra, at 311). Federal courts have made the similar point under analogous circumstances that the former client or members of the public would consider the attempted quarantine to be inadequate especially when the attorney had a prior personal con*203nection with the former client (Baird v Hilton Hotel Corp., 771 F Supp 24, supra) and, in this case, the Thurm & Heller partner responsible for the Kassis litigation is the very attorney who had brought Arnold to the Thurm & Heller firm during the pendency of this litigation. The facts in this case unquestionably create a clear appearance of impropriety.
The majority is concerned with plaintiffs motive and the advantages that he may secure vis-a-vis these defendants as a result of disqualification. The majority focuses on the issue of actual conflict—finding none—without, however, giving sufficient consideration to the separate issue of whether there is an appearance of impropriety. The majority has concluded that this record indicates that the motion to disqualify was only an obvious litigation ploy calculated to give plaintiff an unwarranted advantage. The record clearly does not support this conclusion. It should be noted that Thurm & Heller created this situation for themselves when they hired Arnold while this matter was still in the process of being litigated, knowing that he had worked on this case for plaintiffs counsel. The majority’s concerns, which do not find support in the record, still must yield to the more important consideration that immitigable impropriety appears to be inherent in the entangled relationships in this case. In ethical matters, “ ‘ “we cannot paint with broad strokes. The lines are fine and must be so marked” ’ ” (Board of Educ. v Nyquist, 590 F2d 1241, 1246, quoting Fund of Funds v Andersen & Co., 567 F2d 225, 227, quoting United States v Standard Oil Co., 136 F Supp 345, 367).
The motion to disqualify very quickly followed the change in Arnold’s employment giving rise to the purported conflict (compare, Matter of Prudential Sec. v Wyser-Pratte, 187 AD2d 306 [motion to disqualify filed only on eve of proceedings; record supported inference that motion was made solely to secure tactical advantage]). Plaintiffs, immediately upon learning of Arnold’s acceptance of employment with Thurm & Heller, wrote on February 20, 1997 to the firm concerning the potential conflict of interest. Arnold then commenced employment with Thurm & Heller on March 3, 1997 and plaintiffs moved to disqualify on March 6, 1997. In this sense, the record does not support the majority’s concern that the motion was only a belated pretrial strategy designed to place defendants at a disadvantage and to delay trial. The majority is concerned that the case is now on the Trial Calendar; however, it was not in that posture when the motion to disqualify was made more *204than a year ago. The majority also contends that Mallín failed to object when he was informed of the proposed protective measures, but a motion to disqualify a few days later, if nothing else, promptly articulates protest over the questionable effectiveness of segregating the new junior associate within the confines of a relatively small firm.
Hence, I respectfully differ from the majority as to the likelihood of Arnold’s actual possession of confidential information; the nature of the law firm, increasing the likelihood of disclosure; and the significant likelihood that these facts depict impropriety to plaintiff as well as the public. Any of these factors would persuade me of the necessity of disqualification; considered in the aggregate, I believe that conclusion to be compelled.
The order denying plaintiff’s motion to disqualify the law firm of Thurm & Heller from representing defendants Teacher’s and Cauldwell should be reversed and disqualification should be granted.
Milonas and Wallach, JJ., concur with Sullivan, J. P.; Williams and Tom, JJ., dissent in a separate opinion by Tom, J.
Order, Supreme Court, New York County, entered on or about April 17, 1997, affirmed, without costs or disbursements.