December 10, 2013 Top Story

Lawyer's Duty of Loyalty to Client Trumps Loyalty to Spouse

Attorneys must not assist others, including spouses, if actions are adverse to a client

M. Derek Harris

Lawyers owe an undivided duty of loyalty to their clients, which means denying assistance to a spouse if providing such assistance would be adverse to a client’s interests. In Flatworld Interactive v. Apple Inc., the U.S. District Court for the Northern District of California denied Apple’s motion to disqualify Flatworld’s counsel. The court did, however, find that the husband of one of Flatworld’s owners, who was a partner a law firm that regularly represents Apple, acted “contrary to his legal and professional duty” by providing assistance to his wife in securing counsel to sue Apple in a patent infringement case while he was a partner at one of Apple’s regular law firms.

Apple claimed that Flatworld’s counsel was tainted as a result of the actions of Flatworld’s owner’s husband. Specifically, Apple argued that the husband breached his ethical duties to Apple by acting as an attorney for its adversary, Flatworld, and consequently Flatworld’s counsel, was conflicted because it was infected with his conflict. Flatworld’s counsel opposed the motion, arguing that the husband never acted as an attorney for Flatworld, that the husband never possessed confidential information about Apple, and that Flatworld would be prejudiced if its chosen counsel was disqualified.

Disqualification Not Always Appropriate 

As noted, the law firm where the husband worked regularly provided counsel to Apple, including handling intellectual property matters related to the technology at issue in the Flatworld dispute. The husband was cochair of the environmental practice group and neither he nor the attorneys in his group ever worked on any of Apple’s matters. Also, the district court found there was no evidence that he ever received or passed along material confidential information about Apple, and Flatworld’s counsel was not aware of the conflict until Apple raised the issue.

Based on these findings, the district court concluded disqualification of Flatworld’s counsel would prejudice Flatworld and was not warranted. In arriving at its conclusion, the district court noted that motions to disqualify counsel are strongly disfavored and should be subjected to particularly strict judicial scrutiny, as such motions are susceptible to tactical abuse. The court had a “very cogent analysis in line with the vast majority of cases that deal with disqualification motions,” observes David J. Wolfsohn, Philadelphia, PA, cochair of the ABA Section of Litigation’s Intellectual Property Litigation Committee.

“Disqualification motions are usually strategic moves by a party. So it is often clear to the court that the reason the party is filing one is less because the party is concerned about an ethical issue or breach of confidentiality and more because the party perceives that disqualifying opposing counsel will give it an advantage,” adds Wolfsohn. However, “most courts are going to see those motions as strategic attempts to hurt the other party. And, as such, courts don’t like those motions,” explains Wolfsohn.

Such motions asserted for strategic purposes are not only disfavored by the courts, but they are disfavored by litigants as well. “I personally don’t care for those kinds of tactics to try and get a law firm out,” says Betsy P. Collins, Mobile, AL, cochair of Content Subcommittee of the Section of Litigation’s Pretrial Practice & Discovery Committee.“It looks like Apple was using a strong arm approach. Unless it is something super important, I don’t usually like those tactics,” adds Collins. “My experience has been that as a strategic matter, it is probably not such a good idea to file a motion to disqualify just because you can,” offers Wolfsohn.

Attorneys Cannot Be Adverse to Firms’ Clients

While the district court refused to disqualify Flatworld’s counsel, it did conclude that the husband breached his ethical duty by acting on behalf of Flatworld contrary to Apple’s interests. Despite the fact that the husband did not work on any Apple matters, he still ran afoul of his ethical obligations. As the district court explained, this is because attorneys cannot be adverse to their firms’ clients regardless of whether they actually perform work for the clients. If the firm has a conflict, that conflict is imputed to all of the firm’s attorneys.

Under the rule at issue here, California Rule of Professional Conduct 3-310(E), a lawyer cannot accept employment adverse to a client without the client’s informed consent. “The way the rule reads, it is clear that attorneys have a duty to maintain an undivided loyalty to their clients,” explains Oran F. Whiting, Chicago, cochair of the Section’s Ethics and Professionalism Committee. As for the husband, who did not obtain Apple’s consent, “he violated the statute.” “It is just that simple. Contrary to his client’s interest, he aided and abetted the plaintiff,” concludes Whiting.

The husband’s actions adverse to Apple included, among other things, assisting Flatworld and his wife over the course of more than five years by exploring suing Apple, finding and retaining counsel to sue Apple, assisting in seeking a patent troll company to buy the patent and sue Apple, attending a meeting with his wife at a law firm seeking legal counsel for Flatworld, receiving Flatworld-related emails from his wife at his law firm account, and editing a Flatworld letter for his wife using his computer at work.

Avoid Acting As Counsel When Conflicts Arise 

Whether you are being asked for assistance or being solicited to provide assistance, Section leaders agree that in all scenarios it is important to keep your ethical obligations in mind and proceed with caution. If a friend, relative, or spouse is in need of help, but you have a conflict, “you can make suggestions without necessarily giving legal advice or without giving advice that is contrary to your client’s interests, but be very conservative,” offers Whiting. “We all have to be careful not to cross the line in sharing our legal knowledge with someone who could be perceived as a possible client before first making sure there are no conflict issues,” suggests Wolfsohn. Otherwise, what starts with the best of intentions may end with serious consequences.

M. Derek Harris is an associate editor for Litigation News.


Keywords: ethical duty, conflicts, California Rule of Professional Conduct 3-310(E), adverse engagement, confidential information, attorney disqualification

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