American Bar Association
Commission on Evaluation of the Rules of Professional Conduct
Comments of Robert A. Creamer
Concerning Draft Model Rule 1.10
August 5, 1999
My name is Robert Creamer. My employer and some other affiliations are listed at the end of this statement. I have identified these affiliations only to give you my background, and I should emphasize that I appear here today as an individual and not as a representative of any other person or group. The views that I will express are mine alone and may or may not reflect those of others.
For purposes of today's discussion, the relevant part of my background is that from 1967 to 1993, I was affiliated with a Chicago-based law firm that grew from 100 to 350 lawyers in about ten years. When I left, we had offices in New York City, Washington D.C., Houston, Los Angeles, San Francisco, and Peoria.
The purpose of my appearance here today is to speak in favor of amending Model Rule 1.10 to permit screening. By screening, I mean a procedure like that described in Rule 1.10(e) of the current Illinois Rules of Professional Conduct to avoid the imputed disqualification of a law firm in situations arising out of the lateral movement of private lawyers among law firms. For the reasons listed below, I believe that the Commission's present position on screening is both ill-advised and unfair to the majority of practicing lawyers.
1. The opposition to screening is based on questionable grounds. Because screening is intended to be a cure for imputed disqualification in lateral movement situations, it is useful to consider the reasons usually given to justify disqualification of the lateral lawyer's new firm. The cases and commentary on imputed disqualification based on lateral movements almost always invoke two assumptions, typically treated as presumptions, about how lawyers and law firms operate. See Gillers, Regulation of Lawyers 317-332 (5th ed., 1998).
The first assumption is that every lawyer in every law firm always know everything about every matter in which every other lawyer in the firm may be involved. This sweeping generalization may have had some basis in fact in the nineteenth century when Scrooge and Marley worked at the same desk, but it makes little sense in the contemporary law firm environment. The Second Circuit recognized this almost 25 years ago in Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp., 518 F.2d 751 (2d Cir. 1975), holding that a lateral associate could rebut the presumption that he had received significant confidential information about the pending matter at his former firm. Since then, numerous court decisions have found that the automatic assumption that every lawyer has perfect knowledge of all firm matters was either unrealistic or could be rebutted.
In this regard, it is significant to note that revised DR 5-108(B) [1200.27(b)] of the New York Code of Professional Responsibility, effective June 30, 1999, effectively removes the presumption of shared knowledge in most lateral movement situations. A lawyer who leaves a firm is disqualified from knowing participation in matters adverse to clients of the former firm only if the lawyer actually acquired protected information "material" to the new adverse representation. Removing the unrealistic assumption of universal shared knowledge will also remove the need for consideration of screening in many, if not most, lateral movement situations. New York's straightforward and sensible solution is preferable to 204 of the proposed Restatement of the Law Governing Lawyers. The Restatement would permit screening, but only in situations like those covered by new New York DR 5-108(B), where it is not really needed. Whether one prefers the New York or the Restatement approach, the presumption of shared knowledge should no longer be used to deny law firms the ability to use screening to avoid imputed disqualification.
The second assumption is most relevant to those situations where the lateral lawyer truly does have confidential information of a former firm's client that is material to a current adverse representation. This presumption, usually said to be irrebuttable in the case of private lawyers, is that the lateral lawyer will inevitably disclose the material confidential information within the new firm, despite the lateral's obligations under the relevant jurisdiction's version of Model Rule 1.6 or Model Code DR 4-101. Although this second presumption appears to be accepted widely in case law and commentary, there seems to be little hard evidence that lateral lawyers have in fact been routinely "debriefed" by their new firms. Perhaps my experience is too limited and my research faulty, but I have never known or read about an actual case. (See point 6 below concerning experience in states that now allow screening.) It has probably happened, but it seems reasonable to conclude that disclosures of material confidential information of former clients by lateral lawyers is not a prevalent practice within the profession.
If improper disclosures by lateral lawyers have not been a problem, then there is no reason to assume that they will occur in every situation. Yet that is the practical effect of the irrebuttable presumption that requires imputed disqualification. It is unfair to the profession to presume that every lateral lawyer who may have material information will misuse that information. Unless one is ready to assume that both the lateral lawyer and the new firm will violate their duties, there is no reason to believe that appropriate screening will not protect the legitimate interests of clients of the lateral's former firm.
2. C ourts have often recognized screening in the absence of authorizing rules. Much of the opposition to screening appears to emanate from commentators rather than the courts that are required to assess actual imputed disqualification situations. As Peter Moser has observed, the trial and appellate courts in the Second, Third, Sixth, Seventh, Eleventh, and Federal Circuits have tended to recognize screening in appropriate cases even when state rules would not have sanctioned screening. For example, as early as 1983, the Seventh Circuit (which hears appeals from district courts in Illinois, Indiana and Wisconsin) set out the suggested elements of an acceptable screen in LaSalle National Bank v. County of Lake, 703 F.2d 252, 259 (7th Cir. 1983). This was seven years before the Illinois screening rules were adopted.
In addition to the cases cited by Peter Moser, other examples of cases where the court recognized screening of a lateral with material information in the absence of an express state rule include: Hunter Douglas, Inc. v. Home Fashions, Inc., 811 F.Supp. 566 (D. Colo. 1992) (firm not disqualified even though lateral lawyer had formerly represented plaintiff with respect to patent involved in litigation where lateral had been effectively screened from case); and Chapman v. Chrysler Corp., No. IP 96-1714-C-T/G, 1999 U.S. Dist. LEXIS 9768, 1999 WL 444507 (S.D. Ind. April 28, 1999) (firm that hired associate who had worked on plaintiff's employment claim that was subject of pending action not disqualified where firm had adopted timely screening mechanisms).
3. The blanket prohibition of screening ignores the interests of other clients. This point is often overlooked in the debate over screening. Most of the discussion tends to be focused on the concerns of the clients of the lateral's former firm. Such concerns are surely worthy of the Commission's consideration, but they are not exclusive. For every imputed disqualification based on the rejection of screening, there is a client that lost its lawyer of choice. Often the disqualification occurs after a matter is under way and the client has spent substantial sums in fees. Typically, the affected client has played no part in the circumstances that led to the disqualification. Yet the innocent client usually bears the brunt of any disqualification.
The Commission's position exalts the fears of the former client, fears often imputed on the basis of questionable assumptions, over the very real and tangible interests of the innocent other client. This approach is inverted. Screening would provide protection for the legitimate concerns of the clients of the lateral's former firm without inflicting the undeserved punishment of imputed disqualification on the other client.
4. The prohibition of screening unduly restricts the mobility of lawyers. Most authorities agree that lawyers of all ages and practice areas are now changing affiliations more often than in the past. There appear to be many reasons for this phenomenon. Peter Moser has, for example, suggested that many lawyers are seeking greater autonomy, more interesting work, and higher compensation. These are surely among the factors. Others might include family relocations in two-worker households or a desire for more flexible hours.
But not all the migration has been voluntary. Despite the strong general economy, many law firms around the country have downsized, dissolved, or drifted into bankruptcy. These changes have forced the relocation of thousands of lawyers. In addition, there are always a certain number of involuntary separations that result in lateral movements among firms. Whatever the cause, the wooden application of the current rules of imputed disqualification without screening restricts the ability of these lawyers to find new positions without unnecessary delay and disruption.
5. There is no principled reason for allowing screening only for former government lawyers. Current Model Rule 1.11 expressly approves screening for former government lawyers. The justification for screening in this context is given in Comment , which states that the screening provision is "necessary to prevent the disqualification rule from imposing too severe a deterrent against entering public service." While the Commission is willing to tolerate screening to grease the hinges of the revolving door between public and private employment, it does not seem similarly concerned for the livelihood of private lawyers. Handicapping the ethics rules to encourage or favor one type of practice, however noble, is simply unfair.
This distinction is also illogical. It has never been suggested that former government lawyers are any more (or less) virtuous than ordinary private lawyers. If private lawyers and former government lawyers are equally trustworthy, then they should be trusted equally. If former government lawyers can be trusted to comply with a screening mechanism, then private lawyers can be trusted to do so as well.
6. Screening has been successful. The materials presented to the Commission by my colleague Brain Redding clearly demonstrate that there has been no surge of disciplinary complaints or civil cases against lawyers in those jurisdictions that have permitted screening for many years. In fact, there have been virtually no complaints anywhere arising out of the various state screening regimes.
The Illinois experience is particularly instructive. The current Illinois screening rule, Rule 1.10(e) of the Illinois Rules of Professional Conduct, became effective in August 1990. The requirements of an Illinois screen include: isolation of the lateral from protected material information concerning the matter in question; isolation of the lateral from client contacts; precluding the lateral and other firm lawyers from discussing the matter; and affirmative steps by the firm to accomplish the foregoing requirements. There is no requirement of notice to the lateral's former clients.
The most recent annual report of the Illinois Attorney Registration and Disciplinary Commission shows that there were 72,149 lawyers registered in Illinois as of October 31, 1998. Recent admissions have brought the current unofficial total close to 74,500. In either event, the number is surely statistically significant. As shown by the Administrator's letter of July 19, 1999 [copy attached to Brian Redding's submission] the experience of about 70,000 lawyers over nearly nine years has been " no formal cases involving charges that an effort to screen under Rule 1.10 was inadequate to protect confidential information."
It is also significant that in addition to the positive experience with screening in Illinois, Oregon and Washington, documented in Brian Redding's submission, there appear to be no reports of disciplinary complaints or civil actions arising from the screening of former government lawyers under the various state versions of Model Rule 1.11. If the total number of lawyers permitted to use screening (former government lawyers plus lawyers in Illinois, Oregon, Washington and the five other jurisdictions that have adopted some form of screening by rule or case law) were aggregated, that group would comprise a substantial segment of the entire profession. Yet the number of actual complaints arising from this huge group is virtually nil. The case for screening has been proven in the real world.
The Illinois experience provides another useful lesson. As noted above, the Illinois screening rule does not require formal notice to the former client, unlike the rules in Oregon and Washington. The absence of complaints in Illinois suggests that formal notices and affidavits are not necessary to protect clients. As a practical matter, when a lawyer leaves a firm for a new affiliation, the former firm and its clients are almost always aware of the move. If there is a real concern for the protection of material confidential information, the former firm will surely inquire into new firm's screening procedures. In my personal experience with dozens of lateral lawyers who joined my former firm in the 1980s and early 1990s, true concern for protecting material confidential information was rare. For these reasons, I believe that an adequate screening regime need not require formal notice or affidavits. These would simply be additional paperwork without real purpose.
Conclusion. Screening plays in Peoria. It's time for the Commission to take it on the road.
I appreciate the opportunity to express my views here today. I would be happy to answer any questions the Commission may have.
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Rule 6.4 Statement. My employer is Attorneys' Liability Assurance Society, Inc., A Risk Retention Group, a mutual insurance organization that provides professional liability insurance coverage for large law firms. I am a member of the Association of Professional Responsibility Lawyers, the Maritime Law Association, The American Law Institute, the American Bar Association, the Chicago Bar Association, and the Illinois State Bar Association. I served on the Standing Committee on Professional Conduct of the Illinois State Bar Association from 1983 to June 1999. I was Chair of that committee in 1989 and 1998. I also serve as Chair of the Board of Ethics of the City of Evanston, Illinois.