September 25, 2018 Practice Points

Advance Waivers Don’t Apply to Existing Conflicts

A law firm’s engagement agreement, under which it had claimed to have been paid $4.5 million in fees, was invalidated because of a conflict not disclosed at the time the matter was opened

by William T. Barker

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc., 2018 WL 4137013 (Cal. Aug. 30, 2018), invalidated a law firm’s engagement agreement, under which it had claimed to have been paid $4.5 million in fees, because of a conflict not disclosed at the time the matter was opened. The client, J-M Manufacturing was sued in a qui tam action brought on behalf of a number of public entities, including the South Tahoe Public Utility District. At the time the firm began representing J-M, it had done employment work, off and on, for the district. It had no active matter for the district at that time and had a broad advance waiver for unrelated work adverse to the district. J-M also provided a broad advance waiver when it retained the firm.

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