Migrating Lawyers
Howard W. Brill
Coaches switch teams; players transfer to another university; executives move to another corporation; fast food workers make hamburgers at a different franchise. But lawyers find it more difficult to switch law firms. However, a 2018 decision of the Arkansas Supreme Court has clarified the rules.
It is the story of Summer Wooten McCoy. After graduation from the University of Arkansas in 2001, and being admitted to practice, she and her husband Matt moved to Little Rock. In 2016 they returned to Fayetteville, where he became Senior Associate General Counsel for Athletics for the University and she (in July 2016) became Staff Attorney for Legal Aid of Arkansas. She worked in the economic-justice workgroup at Legal Aid, dealing primarily with health and unemployment issues.
Now, switching to the other part of this story, Shilah Plants was a tenant in The Park Apartments. The Park is owned by The Park Apartments, a Limited Partnership. Lindsey Management Co., Inc. provides management and accounting services to The Park. In November 2015, Plants sued The Park, its general partner, and Lindsey Management, challenging the liquidated-damages clause in her lease with The Park. She was represented by Jason Auer, staff attorney for Legal Aid of Arkansas. John Pesek, corporate counsel for Lindsey Management, represented the defendants.
The issue for the Arkansas Supreme Court developed in January 2017. Summer McCoy resigned her position and began working as a staff attorney for Lindsey Management. A month later Plants moved to disqualify the entire in-house legal department of Lindsey on the grounds that the department had a conflict of interests because of the intersection of two Arkansas Rules of Professional Conduct. Rule 1.9 bars an attorney from opposing a former client in the same or a substantially related matter, and Rule 1.10 imputes such a disqualification to the entire firm. In other words, because Legal Aid (and thus Summer McCoy) represented Plants, Summer (and thus Lindsey Management’s entire legal department) cannot oppose Plants in the same matter.
This argument is based on two presumptions that are well-established in Arkansas case law.[1] Presumption #1: every attorney in a firm knows everything confidential that any member of the firm knows about any client of the firm. As I tell my students, when a newly admitted lawyer returns to the office from being sworn in, on entering the office, she immediately knows everything that every other lawyer in the firm knows. Obviously, this presumption is absurd. Accordingly, this presumption is rebuttable. The burden is on the moving lawyer (and her new law firm) to demonstrate that while in the first firm she learned nothing confidential that could be used against a former client.
Presumption #2: a lawyer who leaves a firm and joins another firm will immediately share all that she knows from the first firm. However, unlike presumption #1, this presumption is irrebuttable. The rationale for that evidentiary principle: information is commonly shared routinely and informally in law firms; there may be significant economic incentive to reveal confidential information previously acquired; young attorneys may be subject to pressure to reveal; the matter in which information in law firms is shared cannot be truly evaluated from the outside.
This law was developed in Norman v. Norman, 333 Ark. 644, 970 S.W. 2d 270 (1998) and Burnette v. Morgan, 303 Ark. 150, 794 S.W. 2d 145 (1990). However, both contained an imprecise phrase: “a lack of access to information should rest with the challenged attorney alleged to be disqualified.” The question thus becomes what does the attorney (or her new law firm) need to rebut. In granting the plaintiff’s motion and disqualifying Summer McCoy and the entire Lindsey legal department, the circuit court relied on the imprecise phrase. McCoy needed to rebut the presumption of “access to information”, which is a virtually impossible burden.
Writing for the court, Justice Woods properly held that the test is not access, but knowledge.[2] Can McCoy or her new employer rebut the presumption of knowledge obtained while with Legal Aid? Both Rule 1.9(b) and Comment 5 refer to actual knowledge acquired. As the Justice states, “the attorney must only rebut the presumption that she acquired actual knowledge of information protected.”
How is the presumption rebutted? Perhaps by evidence as to the physical set up in the first firm; by geographical distance between firm offices; by internal firm barriers; by the passage of time; by the status of the migrating lawyer.
Summer McCoy had submitted an affidavit in which she stated that Legal Aid was divided into four divisions; she worked in the economic justice division; she did not work in housing division which was representing the plaintiff. Further she did not participate in conferences with the housing division; she did not access the file of plaintiff Plants; she never participated in Plants’ case; she never reviewed any documents or pleadings involving Shilah Plants while employed at Legal Aid.[3] With her sworn statement, the burden shifted to Plants or her attorneys, Legal Aid of Arkansas, to offer competing evidence. They offered no evidence, and the order disqualifying McCoy and the Lindsey in-house legal department was reversed.
Interestingly, in some jurisdictions, the issue of disqualification would have been more easily resolved. The Model Rules of Professional Conduct, as adopted by the American Bar Association and as modified in 2002, permit a screen[4], commonly called a Chinese Wall, to be created in the second law firm. The Model Rules, and the rules in those jurisdictions that have adopted the language, would permit the second law firm (Lindsey Legal) to build a screen around Summer McCoy and to notify the first firm (Legal Aid) and the client that Summer McCoy would not be working on the matter. Although Arkansas permits a Chinese Wall in a variety of situations it has refused to do so when a lawyer moves from one private law firm to another private law firm.[5]
On a broader policy basis, the Court emphasized while the Rules of Professional Conduct are controlling in disqualification matters, motions to disqualify should be viewed with caution and should be granted “only when clearly required.” A client’s choice of counsel should not be unduly limited.
Justice Karen Baker was the only dissenting justice. Her dissent, in part, rested upon a phrase that exists almost exclusively in professional ethics terms in Arkansas and has not always been well received: “the appearance of impropriety.”[6] She argued that while the standard is not controlling, it “should be considered in any instance where a violation of the Rules of Professional Conduct [is] at issue. The principle pervades these Rules and embodies their spirit.”[7] She would have disqualified the entire in-house legal department of the defendant.
With this strong opinion from the court, the question of the lateral move of an attorney from one firm to another should be more easily resolved in the future.[8]
Notes
[1] See Norman v. Norman, 333 Ark. 644, 970 S.W. 2d 270 (1998).
[2] The Park Apartments at Fayetteville, LP, 2018 Ark. 172, 542 S.W. 3d 755 (2018).
[3] She further stated that she had not reviewed any documents or pleadings while employed at Lindsey Management.
[4] A “screen” is defined in the terminology section of the Arkansas Rules of Professional Conduct as: “the isolation of a lawyer from any participation in a matter through the timely imposition of procedures within a firm that are reasonably adequate under the circumstances to protect information that the isolated lawyer is obligated to protect under these Rules or other law.”
[5] Chinese walls are not permitted when a lawyer is disqualified because of a concurrent conflict with a current client (Rule 1.7), because of a conflict with a former client (Rule 1.7), because of the likelihood of being a necessary witness (Rule 3.7), and because the lawyer is the grantee in a deed or other instrument (Rule 1.8(c); Rule 1.8(k); Comment 20). If the lawyer is disqualified, the entire law firm is disqualified (Rule 1.10). However, Chinese walls are permitted when a government lawyer moves to a private law firm (Rule 1.11); when a non-lawyer or law student moves to a different firm (Herron v. Jones, 276 Ark. 493, 637 S.W. 2d 569 (1982); Comment 4 to Rule 1.10); when a judge or law clerk joins a firm (Rule 1.12); when a lawyer has a personal interest (Comment 10 to Rule 1.7; Rule 1.10(a)); when a lawyer has sexual relations with a client (Rule 1.8(k) Comment 20); when a lawyer is related to opposing counsel (Rule 1.8(l)).
[6] For the background to this phrase, see Floyd v. State of Arkansas, 2016 Ark. 264, 495 S.W. 3d 82, 86 (2016)(concurring opinion by Chief Justice Brill).
[7] This quote is taken from Comment 37 to Rule 1.7.
[8] Rule 1.6(b)(7) permits the disclosure of confidential information to detect and resolve conflicts of interests between lawyers in different firms. Comment 13 points out that such disclosure of limited information may be appropriate when a lawyer is considering associating with another firm.