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December 15, 2021 Feature

Disqualifying Lawyers from Suing Former Clients under the “Substantial Risk” Test

Evan Stephenson
Sefa Ozel/iStock via Getty Images Plus

Sefa Ozel/iStock via Getty Images Plus

Under the mainstream approach, lawyers should be wary of suing former clients for the same types of conduct for which they gave the client advice and previously defended.

In May 2020, the supreme courts of Colorado and Washington State issued the two leading opinions in the United States regarding the “substantial risk” test for disqualifying lawyers from a representation on the basis of a conflict of interest with a former client. In Persichette v. Owners Insurance Co.,1 the Colorado Supreme Court disqualified a law firm that had associated into a case as co-counsel to accuse its former insurance-company client of “bad faith” for engaging in types of conduct that it had previously defended. Persichette found a disqualifying former-client conflict. Only weeks later in Plein v. USAA Casualty Insurance Co.,2 the Washington Supreme Court reached the opposite conclusion on similar facts. Although the two cases involved an identically worded ethical rule, the two supreme court opinions could not have diverged more sharply. The two courts applied starkly contrasting legal tests for former-client conflicts. Clients and attorneys analyzing this important issue will need to look to different considerations, and give different weight to the various facts, depending on whether a given jurisdiction’s approach more closely resembles that of Colorado or Washington. This article provides guidance for navigating the uneven legal terrain.

In a nutshell, Colorado’s substantial risk test follows the mainstream majority interpretation of the American Bar Association’s (ABA’s) Model Rules of Professional Conduct Rule 1.9(a) and its comments. Courts following the mainstream approach have disqualified lawyers who sued their former clients by examining the nature of the former-client and current representations. If their nature creates a substantial risk that the lawyer previously possessed confidential factual information that would disadvantage the former client in the present matter, a former-client conflict of interest exists. In Colorado, the focus is on the nature of the two representations, the information likely obtained, and its likely relevance and prejudicial effect on the former client.

Washington, by contrast, adopted a relatively novel substantial risk test. Washington reduces most aspects of the “substantial risk” analysis to an examination of the degree of distinctiveness or relatedness of the actual facts driving the two representations. But in Washington, many aspects of the prior and current matters that intuitively seem important to factual relatedness—e.g., that the law firm is now suing the former client for “bad faith” for types of conduct it previously defended—appear to receive little weight or consideration. Precisely which types of factual relatedness can warrant disqualification in Washington remains unclear.

Although the Colorado and Washington approaches present many contrasts, as a practical matter one chief distinction between them stands above all others: in Washington, former clients will have no choice but to disclose far more detailed information about their prior engagements with their lawyers to obtain disqualification under the substantial risk test than is necessary in Colorado and other mainstream jurisdictions. Colorado and the majority approach have specifically protected against this “strongarm” effect, which may coerce former clients “into divulging confidential client information” to prove a conflict.3 As between the Colorado and Washington approaches, the mainstream Colorado approach better protects client confidences and thereby encourages clients to be more forthcoming in seeking legal advice.

The Importance of Attorney-Client Confidentiality

“Lawyers play a vital role in the preservation of society.”4 Although lawyers have an “interest” in “earning a satisfactory living,”5 “a lawyer is much more than an advocate for her clients; she is also ‘an officer of the legal system . . . having special responsibility for the quality of justice.’”6 Lawyers’ broader responsibilities require them to protect client confidences even after an engagement has ended.7 “Crucial to the attorney-client relationship is the attorney’s obligation not to reveal confidential information learned in the course of representation.”8 Courts have described this duty of confidentiality as “a sacred trust.”9 “Perhaps no other element of the attorney-client relationship is as fundamental as the sacred obligation of the lawyer to keep the confidences of his or her client.”10

Ethical guarantees of lawyer-client confidentiality promote free and candid communication between lawyers and clients. One law professor has explained: “Because our clients are guaranteed confidentiality, they are willing to share their most private thoughts and relate the most sensitive and embarrassing information, secure in the knowledge that what has been shared will be safeguarded and will never be used against them by the lawyer.”11 These ethical guarantees of confidentiality have grown in importance as the roles of lawyers have expanded in society.12 Such bonds of trust depend on the legal profession’s complete assurance to clients that their confidences will not be weaponized against them in the future and that the profession has effective means to enforce that assurance.

Rule 1.9(a) and the “Substantial Risk” Test

To safeguard the confidentiality necessary for the attorney-client relationship, Rule 1.9(a) of the ABA’s Model Rules of Professional Conduct,13 as well as the ethics rules of many states,14 provides that a “lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which [the current client’s] interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.”15 By commanding that such a lawyer “shall not thereafter represent another person” in these circumstances, Rule 1.9(a) mandates disqualification of the lawyer from that matter.16

Some courts have distilled Rule 1.9(a)’s disqualification rule to four elements: (1) the attorney who is the subject of the request to disqualify had an attorney-client relationship in the past with the moving party; (2) the present litigation and the prior litigation involve “the same” matter or are “substantially related”; (3) the present client’s interests and the former client’s interests are materially adverse; and (4) after consultation, the former client has declined to consent in writing to the challenged representation.17

Typically, Rule 1.9(a) disputes pivot on the second element. This requires a showing that “the present litigation and the prior litigation involve ‘the same’ matter or are ‘substantially related.’”18 The text of the rules supplies no definition of “substantially related.”19

Comment 3. Comment 3 to Rule 1.9, however, explains as follows: “Matters are ‘substantially related’ for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.”20 The italicized portion of comment 3 is the substantial risk test. Although comment 3 effectively codified this test, the test was recognized years before by the American Law Institute in the Restatement (Third) of the Law Governing Lawyers.21 And the ABA stated when it adopted comment 3 in 2002 that the comment did not change any substance relative to prior law.22 The remainder of comment 3 explains how the test applies.

First, as its name suggests, the substantial risk test rests on inference. “A former client is not required to reveal the confidential information learned by the lawyer in order to establish a substantial risk that the lawyer has confidential information to use in the subsequent matter.”23 If the former client were to reveal the confidential information and prove the lawyer received it, much more than a “risk” would have been proved. The test may be met by an inference that possession of such information is likely.24

Second, a substantial risk may be inferred based on the nature of the lawyer’s prior and current representations: “[a] conclusion about the possession of such information may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.”25

Third, the inference of a substantial risk will be drawn if the lawyer merely possesses “confidential factual information” about the former client that “would materially advance the [current] client’s position in the subsequent matter.”26 A valid inference of likely possession is enough.

Fourth, in determining whether the information that the lawyer likely possessed materially advances the current client’s position (to the disadvantage of the former client), the question is whether the confidential facts “are relevant to the matter in question,” in which case a former-client conflict will “ordinarily” be found.27 Considerations of relevance account for why, in “the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation.”28 That is because “ordinarily” such “general” knowledge is not “relevant to the matter in question.”29 In the unusual case in which “general knowledge” of the client’s policies and practices is relevant, the substantial risk test is ordinarily met.30 This is borne out by comment 3’s statement that, “on the other hand, knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation.”31

Comment 3 provides illustrations of the substantial risk test at work:

For example, a lawyer who has represented a businessperson and learned extensive private financial information about that person may not then represent that person’s spouse in seeking a divorce. Similarly, a lawyer who has previously represented a client in securing environmental permits to build a shopping center would be precluded from representing neighbors seeking to oppose rezoning of the property on the basis of environmental considerations; however, the lawyer would not be precluded, on the grounds of substantial relationship, from defending a tenant of the completed shopping center in resisting eviction for nonpayment of rent.32

The substantial risk test also takes into account whether the confidential factual information has been rendered obsolete by the passage of time, a consideration that may weigh against disqualification.33 Of course, information is not ordinarily “confidential” if it “has been disclosed to the public or to other parties adverse to the former client.”34

Comment 2. Disqualification under Rule 1.9(a) is more easily obtained than under the substantial risk test when the prior and subsequent representations are a single “matter.” Comment 2 to Rule 1.9(a) defines the scope of a singular “matter”: “The scope of a ‘matter’ for purposes of this Rule depends on the facts of a particular situation or transaction.”35

Although it may seem obvious that a former-client conflict arises when the two representations involve the same matter, comment 2 clarifies that anything less than this will not justify disqualification on the basis of a former-client positional conflict: “a lawyer who recurrently handled a type of problem for a former client is not precluded from later representing another client in a factually distinct problem of that type even though the subsequent representation involves a position adverse to the prior client.”36 Stated more simply, under comment 2, purely positional former-client conflicts do not require disqualification. The remedy may be disqualification for a positional former-client conflict only if the two matters are a singular matter.

Although in mainstream approaches to Rule 1.9(a) the substantial risk test does not normally involve the “matter” concept from comment 2, it is important here because, as explained below, the Washington Supreme Court imported comment 2’s “matter” concept into the substantial risk test in Plein.

Decisional Law Before Persichette and Plein from the Insurance “Bad Faith” Context

Both Persichette and Plein arose in the context of law firms accusing their former insurance-company clients of bad faith for engaging in conduct of a type the law firms had previously defended in litigation. Prior to Persichette and Plein, various courts had addressed this scenario under legal analyses materially similar to the substantial risk test, although no state supreme court had done so.

These decisions had overwhelmingly disqualified the lawyers bringing such bad faith claims. In part, this is due to the nature of claims for bad faith, which tend to attack the defendant insurance company’s method of conducting business. In such a case, a law firm that previously advised the insurance company on those same practices in general not only will possess all manner of “inside” information regarding the company’s operations that are to one degree or another connected to the subject of the lawsuit but also will likely have given either supportive or unsupportive advice on those very operations, or at least have not advised against them. Ever lurking in such cases is the potential for the law firm to attack its prior advice supporting the company or, conversely, to weaponize its prior work and insights that may have been unsupportive of the company. In light of such considerations, courts before Plein had largely been unwilling to conclude that such lawyers possessed no relevant confidential factual information or that the information did not materially advance the new client’s position in litigation against the former insurance-company client.

For example, in Farris v. Fireman’s Fund Insurance Co., the California Court of Appeal disqualified James H. Wilkins from suing his former insurance-company client for bad faith on behalf of a policyholder client.37 The complaint attacked the former client’s claims handling and underwriting practices.38 Wilkins had previously represented the insurance-company defendant for 13 years and handled 226 files for it.39 He “gave coverage and claims handling advice to senior employees and decision makers”; “discussed settlement, litigation and claims handling strategies”; and “participated in confidential communications with top-level FFIC employees.”40 Farris noted that Wilkins’s general knowledge of his former client’s strategy, decision makers, and overall structure and practices “would not of itself require disqualification unless it were found to be ‘material’—i.e., directly in issue or of critical importance—in the second representation.”41 Wilkins’s knowledge, however, met this criteria because the types of work Wilkins provided gave him a more valuable and confidential vantage point than a lawyer who had not represented the former client. Wilkins gave legal advice on coverage issues, guided key client decision makers in similar cases, personally enjoyed relationships with those key persons, had a privileged viewpoint to observe and direct the handling of coverage decisions, was familiar from the inside with the insurance company’s decision-making process, and actively participated in the former client’s settlement negotiations and decisions.42 Perhaps more importantly, the theory of liability that Wilkins had asserted against his former longtime client required an evaluation of company policies and practices, and “Wilkins was instrumental in formulating those strategies and philosophies.”43 Given “the evidence of Wilkins’s pervasive participation, and indeed his personal role in shaping, [the former client’s] practices and procedures,” Farris required disqualification.44

Other cases had reached similar conclusions applying tests that are consistent with comment 3’s substantial risk test.45 Although some courts had denied motions to disqualify insurance lawyers, those cases generally did not involve allegations that the lawyer helped put the company’s practices in place, alleged the lawyers had only “general experience” with defending the former client, or did not advance theories of bad faith.46

Colorado Supreme Court Follows the Mainstream Approach in Persichette

On May 4, 2020, the Colorado Supreme Court released its unanimous opinion in Persichette and disqualified former defense-side insurance lawyer Marc R. Levy and his law firm, Levy Law, P.C., by reversing a trial court order to the contrary as an abuse of discretion.47

In Persichette, the defendant insurance company, Owners Insurance Company (Owners), provided underinsured-motorist (UIM) coverage to the plaintiff-insured, William Persichette.48 Persichette sued Owners for bad faith and statutory damages on the basis that Owners had failed to reasonably evaluate and investigate his claim, timely pay him UIM benefits, timely communicate with his lawyer, and consent to a proposed settlement with the underinsured driver.49 The largest personal injury law firm headquartered in Colorado, Franklin D. Azar & Associates, P.C., brought the lawsuit for Persichette. Despite being represented by the Azar firm, three months later Persichette retained Levy as co-counsel.50 Levy’s firm had “represented Owners in 455 cases over a 13-year span (between 2004 and 2017)” and had “collected from Owners more than $5,000,000 in attorney fees.”51 More than two dozen of the cases Levy’s firm had handled for Owners “involved claims that mirror those brought by Persichette.”52

Owners brought a motion to disqualify under Colorado’s version of Rule 1.9(a).53 “Owners asserted that Levy Law helped put in place Owners’ claims-handling policies and practices, including some Persichette criticizes.”54 And Levy’s firm “provided legal advice and training to Owners’ employees, including Geoffrey Page, the adjuster at Owners in charge of Persichette’s claim and the primary target of the allegations advanced in this lawsuit.”55 Levy’s firm

counseled Page and others on ways to minimize Owners’ legal exposure and in the process learned confidential client information, including with respect to Owners’ litigation strategy in general and Page’s strengths and weaknesses as an adjuster in particular. Such information, argued Owners, gives Persichette a real leg up and places Owners at a disadvantage in this cause of action.56

Persichette disagreed and successfully persuaded the trial court to deny the motion to disqualify.57 Owners brought an original proceeding in the Colorado Supreme Court to overturn the trial court’s denial order.58 The court accepted the original proceeding and followed the mainstream approach to Rule 1.9(a) disqualification. The court took pains to note that Owners need only show “that its former lawyer ‘would normally have . . . obtained’ material information of a confidential factual nature in the prior representation” and that this inference “may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.”59

The Colorado Supreme Court was mindful of the baleful and unfair “strongarm” effect that would result from requiring proof that Levy actually possessed confidential client information: “Requiring Owners to prove that Levy Law actually possesses confidential client information about Owners could allow Persichette, through his retention of Levy Law, to strongarm Owners into divulging confidential client information.”60

In keeping with the inferential nature of the substantial risk test, the court concluded, based on the trial court’s findings from its denial order, that Levy’s firm likely possessed confidential factual information that likely disadvantaged Owners.61 These findings included the following:

  • Levy’s firm is “intimately familiar with [Owners’] claim handling policies and procedures, negotiation strategy, settlement pay ranges, and the factors that motivate [Owners] to settle or view a case as a risk.”62
  • Levy’s firm “‘is intimately familiar with [Owners’] handling of cases involving uninsured motorists, unreasonable delay [claims], and bad faith [claims]’; this includes Owners’ ‘hierarchy of settlement authority,’ as well as its ‘negotiation strategy’ in dealing with such cases.”63
  • Levy’s firm “knows Owners’ personnel and is aware of ‘the personalities and tendencies of key figures involved as witnesses for [Owners].’”64
  • Levy’s firm “‘made presentations to [Owners’] employees’ on topics that are ‘relevant’ to this lawsuit, such as memorializing communications with insured customers.”65
  • “‘The most troubling aspect of Levy Law’s representation of [Persichette] is how close Levy Law has come to attacking [its] own work’; after advising Owners ‘on how to handle claims’ and defending Owners ‘against bad faith claims,’ Levy Law is now ‘prosecuting a bad faith claim against [Owners] and potentially attacking the very policies and procedures the firm helped put in place.’”66

The Persichette trial court found these and other findings inadequate to show a substantial relationship between Levy Law’s past representations of Owners and Persichette’s lawsuit.67 The trial court reasoned that the underlying subject matters were “separate” because they “revolve[d] around events” that were factually “distinct” from each other.68

The Colorado Supreme Court disagreed, holding that ending the analysis because the insured “events” themselves were “distinct” and “separate” factually “read[s] Rule 1.9(a) too narrowly.”69 It was erroneous because it “collapsed ‘a substantially related matter’” from Rule 1.9(a) “into ‘the same’ matter.”70 Drawing on comment 3’s illustration involving a divorce, the Colorado Supreme Court noted that a lawyer who cannot be adverse to a former client in a divorce because the lawyer “learned extensive private financial information” has been precluded from a representation by a factually different matter—thus showing that the correct legal test cannot be whether the two matters “revolve around events” that are factually “distinct.”71

Applying the mainstream approach to the substantial risk test, the Colorado Supreme Court inferred the substantial risk contemplated by Rule 1.9(a) from Levy Law’s inside knowledge of Owners’ general policies and procedures, hierarchy of settlement authority, negotiation strategies, settlement pay ranges, and other settlement factors.72 This inference also followed from the firm’s knowledge “[m]ore specific to this case,” including that Levy’s firm “provided advice and training to Owners and Owners’ employees on the policies and procedures Owners uses to handle claims involving uninsured motorists, unreasonable delay, and bad faith,” and also worked “closely” with Page, the employee “whose actions lie at the core of this case,” including having “instructed” him on relevant topics.73 Based on these considerations and others, Persichette inferred that Levy’s firm “probably possesses confidential factual information about Owners” that advantaged Persichette, thereby establishing a former-client conflict.74

In a last-ditch effort to avoid disqualification, Persichette “represented to the district court that he would not attack Owners’ claims-handling policies and procedures to prove his bad faith claim, but would instead cabin that claim by arguing only that Owners failed to comply with those policies and procedures.”75 This attempt to jettison part of the case to avoid an ethical problem, however, backfired. It made “no meaningful difference” to the conflicts analysis “whether Persichette attacks Owners for the policies and procedures Levy Law helped put in place or Page for not following them.”76 Either way, Levy’s firm had an advantage.77 Moreover, throwing overboard an entire theory of liability to avoid an ethics problem only conceded it and may have created a concurrent conflict of interest with Levy’s then current client, Persichette: “in attempting to stave off Owners’ motion for disqualification, Levy Law may be hopping out of the Rule 1.9(a) frying pan and into the Rule 1.7(a)(2) fire.”78 The Colorado Supreme Court disqualified Levy and his firm to “preserve the integrity and fairness of the proceedings.”79

Washington Supreme Court Adopts a Factual Distinctiveness Test in Plein

In contrast to the Colorado Supreme Court’s approach, the Washington Supreme Court adopted a factual distinctiveness/relatedness test in Plein based on an ethics rule worded identically to the rule applied in Persichette. Plein’s standard will be much more difficult for former clients to meet than Persichette’s rule. Plein held that the insurance law firm in that case could not be disqualified under the substantial risk test.80

The disqualification facts in Plein resemble in many ways the facts in Persichette. The defendant-insurer, USAA Casualty Insurance Company (USAA), issued a homeowners insurance policy to Richard and Debra Plein.81 In 2016, a fire damaged the Pleins’ home and personal property.82 USAA agreed to cover the damage and recommended the Sterling Group, Inc. (Sterling) to perform repairs.83 According to the Pleins, however, Sterling’s work had numerous deficiencies, and USAA declined to pay for the cost of additional repairs “or the cost of the temporary living arrangements.”84 The Pleins sued USAA.

The Pleins retained a cocounseling law firm, Keller Rohrback LLP (Keller), that had defended USAA in bad faith litigation for over 10 years.85 Keller had access to the “business customs and practices, including confidential claims handling materials and business relationships with outside companies and vendors”; the “thought processes of adjusters, business representatives, and in-house attorneys”; “[b]usiness and litigation philosophies and strategies, including approaches to settlement discussions, motion practice, case analysis, defenses, witness meetings, witness preparation, trial preparation, and discovery both on a case-by-case and institutional, company-wide level”; and “internal proprietary and confidential documents regarding insurance bad faith litigation, including document repositories holding attorney-client information and electronic claim databases.”86 Keller also advised USAA regarding insurance coverage, litigation strategy, litigation mitigation recommendations for training, and legal arguments, as well as defended USAA in public appearances, court filings, and mediations.87 Even more specifically, Keller had defended USAA in a matter known as the “Cueva matter” that alleged, like the Pleins alleged, that USAA failed to provide adequate alternative housing during fire repairs to a home.88

Faced with these allegations, the Washington Supreme Court found them insufficient to show that Keller’s prior and current representations involving USAA were substantially related or that there was any substantial risk that Keller possessed confidential client factual information that would disadvantage USAA.

Plein’s method of analysis diverges from the mainstream approach embodied in Persichette in three ways. First, Plein’s analytical framework for the substantial risk test owes more to comment 2 from Rule 1.9(a), which defines the scope of a singular matter, than it does to comment 3, where the substantial risk test is found. Plein heavily emphasizes the part of comment 2 stating merely that there are no purely positional conflicts of interest recognized in separate matters for former clients: “a lawyer who recurrently handled a type of problem for a former client is not precluded from later representing another client in a factually distinct problem of that type even though the subsequent representation involves a position adverse to the prior client.”89 The “factually distinct” language defines which matters are considered a single matter under the rule. A “matter” is defined in scope by its facts, meaning that two representations involve a single matter when the “problem” they address is factually the same, or indistinct. And the language stating that a lawyer is “not precluded” from taking an adverse “position” to a former client in a separate matter of the same type means nothing more than that: former clients cannot assert purely positional conflicts to require lawyers to adhere to the same position forever, in later and factually separate matters for other clients.90

Plein’s grafting of comment 2’s “factually distinct” test for defining the scope of a matter onto comment 3’s substantial risk test makes it more difficult for clients to disqualify counsel than it would otherwise be under the mainstream approach, given that the mainstream approach does not limit all former-client conflicts to factually indistinct matters. Indeed, the Colorado Supreme Court in Persichette rejected that notion, reasoning that limiting disqualifying “substantially related” matters to those with the same facts would collapse “substantially related” into “the same,” contrary to the rule’s text.91

Second, Plein expanded the “position adverse” language from comment 2 to include not only adverse positions but also adverse lawsuits filed directly against the former client.92 In Washington, taking a “position adverse” to one’s former client includes suing the client on behalf of a new client. In fact, Plein says suing the former client is the “exact situation” the Washington Supreme Court contemplated with the “position adverse” language: “But comment 2 anticipates the exact situation presented by this case: a lawyer representing a current client against a former organizational client on a ‘factually distinct problem’ of the same type as the prior representation.”93

Third, even though Plein allows that “factually related” matters may also give rise to former-client conflicts,94 the court’s examples give little guidance on the meaning of “factually related.” That phrase appears nowhere in Rule 1.9(a) or any of its comments. Although Plein did little to explain “factually related,” its holding provides some basis for surmising the types of facts that may be disqualifying. For instance, the “facts forming the basis for each claim” are an ingredient in deciding when two representations are “factually related.”95 The court rejected as too general to establish a disqualifying factual relationship broad information such as USAA’s business customs and practices, claims handling materials, thought processes of personnel, litigation philosophies and strategies (including as to settlement and trial), and so on.96 These similarities in the two representations, in the court’s view, presented no instance of factual relatedness, given that the court found the two matters “completely different” factually.97 Plein further held that merely noting that two representations are of “similar types” is not enough to show factual relatedness between them.98 Nor was it sufficient to provide “specific information relevant to the facts of the instant case” from another prior matter (the Cueva matter) because that matter was “unrelated,” despite having “facts based on similar allegations.”99 Plein concluded: “Keller did not represent USAA on the Plein matter or on anything factually related to the Plein matter.”100

In light of these considerations, Plein’s factual relationship test appears to contemplate that former clients will show specific common facts that form the basis of the issues to be litigated in both representations. These facts must link the two representations concretely and not solely at the level of common legal theories or conceptual similarity. The covered damage, the particular company guideline under scrutiny, or some other actual piece of evidence or factual ingredient in the case must either be the same in both representations or be concretely “related.” USAA may have been able to satisfy the Washington Supreme Court if it could have identified, for instance, a specific company guideline or practice regarding which Keller had represented the company but which had been attacked in Plein but defended by Keller in a prior case. Such a hypothetical company guideline may in theory establish a factual relatedness under Plein. The factual relatedness concept from Plein will likely support disqualification only where the former client has supplied relatively detailed, case-specific factual information with close parallels between the two representations.

The Washington Supreme Court’s narrow focus on case-level factual commonality in Plein leaves the test for disqualification undeveloped and unclear in Washington State. It is unclear, for instance, how the Washington Supreme Court would reach the conclusion that the fact pattern in the divorce illustration from comment 3—which appears to involve two factually distinct representations within the meaning of Plein—requires disqualification. For such reasons, it is most prudent to take Plein at face value as a narrow ruling decided solely on the facts and arguments presented there. It remains to be seen whether the Washington Supreme Court in the future will rule that only two factually related or indistinct matters can ever produce a former-client conflict.

Persichette Is More Protective than Plein of Client Confidences and the Attorney-Client Relationship

In May 2020, the state supreme courts of Colorado and Washington State decided two important, leading cases with contrasting approaches to identifying former-client ethical conflicts under Rule 1.9(a) of the ABA’s Model Rules of Professional Conduct or similar state-law ethics rules. These cases—Persichette in Colorado and Plein in Washington State—reached opposite conclusions. Persichette disqualified a lawyer from suing his firm’s former insurance-company client by inferring that he possessed confidential factual information that gave him an advantage. Plein, by contrast, largely eschewed Persichette’s inferential approach and denied disqualification based on a narrow analysis of whether the two representations were “factually distinct.”

To the extent that Plein’s factual-distinctiveness approach can truly be generalized (which remains to be seen), it presents far greater challenges to clients seeking disqualification. And it allows lawyers more latitude to sue, or otherwise be adverse to, their former clients. Compared to former clients in Colorado, a client in Washington State will be required to provide more factual detail about the lawyer’s two representations and to explain in greater detail why the factual commonalities involve client confidences that disadvantage the client. By contrast, Colorado’s mainstream approach is inferential, in part to avoid the “strongarm” effect of Washington State’s approach, which may coerce former clients “into divulging confidential client information” that they are trying to protect.101 The mainstream approach also weighs in favor of disqualification, as did Persichette, similarities between the underlying legal theories pursued in the two representations.

Because Persichette gives former clients more tools to defend themselves from weaponization of their confidences in litigation, Persichette is more protective than Plein of the lawyer-client duty of confidentiality and its salutary purposes. Not only will Plein allow more law firms to sue their clients generally, but any former client that attempts to disqualify its former counsel under Plein will face the strong-arm effect that Persichette described—the intractable problem of being required to risk disclosing information to protect it.

These difficulties inherent in the Plein decision may cause courts in the future to continue following the mainstream Persichette approach rather than adopting Plein’s relatively anticlient, uncommon rule. It also may cause Washington courts to read Plein narrowly in future cases to limit any negative impact on attorney-client relationships.


1. 462 P.3d 581 (Colo. 2020).

2. 463 P.3d 728 (Wash. 2020).

3. Persichette, 462 P.3d at 590 n.6.

4. Model Rules of Pro. Conduct pmbl. ¶ 13 (Am. Bar Ass’n 2020).

5. Id. pmbl. ¶ 9.

6. Persichette, 462 P.3d at 583 (quoting Colo. Rules of Pro. Conduct pmbl. ¶ 1 (Colo. Bar Ass’n 2020)); see also Model Rules of Pro. Conduct pmbl. ¶ 1 (“A lawyer, as a member of the legal profession, is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice.”).

7. Model Rules of Pro. Conduct r. 1.6(a) (“A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).”); Villas at Highland Park Homeowners Ass’n, Inc. v. Villas at Highland Park, LLC, 394 P.3d 1144, 1147 (Colo. 2017) (noting that “an attorney has certain ethical duties to former clients that persist even after the attorney-client relationship has concluded,” such as the duty of confidentiality). A lawyer may disclose client information in some circumstances. See, e.g., Model Rules of Pro. Conduct r. 1.6(b)(1).

8. A. v. B., 726 A.2d 924, 926 (N.J. 1999).

9. E.g., id.; State ex rel. Verizon W. Va., Inc. v. Matish, 740 S.E.2d 84, 95 (W. Va. 2013) (referring to “the sanctity of the attorney-client relationship and the confidential information that is shared by a client during the course of an attorney-client relationship”); In re Sandblast, 307 P.2d 532, 534 (Or. 1957) (“The relationship existing between an attorney and his client is a sacred trust.”).

10. Gregory C. Sisk, Change and Continuity in Attorney-Client Confidentiality: The New Iowa Rules of Professional Conduct, 55 Drake L. Rev. 347, 356 (2007).

11. Id.

12. See Gregory C. Sisk & Pamela J. Abbate, The Dynamic Attorney-Client Privilege, 23 Geo. J. Legal Ethics 201, 202 (2010) (“As the law has grown to pervade nearly every nook and cranny of human society, the role of lawyers has magnified within the business and economic world, with attorneys structuring deals, negotiating contracts, advising on regulatory compliance, and consulting on environmental matters.”); id. at 204 (“As the scope of the practice of law expands, so also should the defining compass of the attorney-client privilege (and the attendant expectations of attorney confidentiality).”).

13. Washington State effectively adopted the ABA’s Model Rules of Professional Conduct in pertinent part. Plein v. USAA Cas. Ins. Co., 463 P.3d 728, 731 (Wash. 2020).

14. E.g., Colorado’s equivalent to ABA Rule 1.9(a) is identical to it. Compare Model Rules of Pro. Conduct r. 1.9(a) (Am. Bar Ass’n 2020), with Colo. Rules of Pro. Conduct r. 1.9(a) (Colo. Bar Ass’n 2020).

15. Model Rules of Pro. Conduct r. 1.9(a).

16. Id.

17. Persichette v. Owners Ins. Co., 462 P.3d 581, 586 (Colo. 2020) (citing Villas at Highland Park Homeowners Ass’n, Inc. v. Villas at Highland Park, LLC, 394 P.3d 1144, 1152 (Colo. 2017)).

18. Id.

19. See Model Rules of Pro. Conduct r. 1.9(a).

20. Id. r. 1.9 cmt. 3 (emphasis added).

21. Restatement (Third) of the L. Governing Laws. § 132(2) (Am. L. Inst. 2000) (“The current matter is substantially related to the earlier matter if . . . there is a substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known.”).

22. ABA Ctr. for Pro. Resp., A Legislative History: The Development of the ABA Model Rules of Professional Conduct, 1882–2013, at 242 (Art Garwin ed., 2013) (“This new Comment explains when matters are ‘substantially related.’ That term has been the subject of considerable caselaw, and this definition and suggestions about applying it are an effort to be helpful to lawyers in complying with the Rule and courts in construing it. No change in substance is intended.” (emphasis added)).

23. Model Rules of Pro. Conduct r. 1.9 cmt. 3.

24. Persichette v. Owners Ins. Co., 462 P.3d 581, 587 (Colo. 2020).

25. Model Rules of Pro. Conduct r. 1.9 cmt. 3.

26. Id.

27. Id.

28. Id. (emphasis added).

29. Id.

30. Id.

31. Id.

32. Id.

33. Id.

34. Id.

35. Id. cmt. 2.

36. Id.

37. 14 Cal. Rptr. 3d 618, 626–27 (Ct. App. 2004). Farris applied California’s substantial relationship test. The Farris court saw “no substantial difference” between the substantial risk test in the Restatement (Third) of the Law Governing Lawyers section 132(2), which is the same as comment 3’s substantial risk test, and California’s substantial relationship test. Id. at 623.

38. Id. at 627.

39. Id. at 619–20.

40. Id. at 620.

41. Id. at 623.

42. Id. at 624–25.

43. Id. at 627.

44. Id. at 629–30.

45. See Lott v. Morgan Stanley Dean Witter & Co., No. 03 Civ. 9235 HB, 2004 WL 2980193, at *3 (S.D.N.Y. Dec. 23, 2004) (disqualifying a lawyer who had defended the former client previously from allegations of bad faith in part because the lawyer had “maintained an advanced, highly developed understanding of First Unum’s claims review procedure” that was assailed in the litigation); Edwards v. Gould Paper Corp. Long Term Disability Plan, 352 F. Supp. 2d 376, 378 (E.D.N.Y. 2005); Battagliola v. Nat’l Life Ins. Co., No. 03 Civ. 8558 GBD AJP, 2005 WL 101353, at *2 (S.D.N.Y. Jan. 19, 2005); Brand v. 20th Century Ins. Co./21st Century Ins. Co., 21 Cal. Rptr. 3d 380, 381–82, 386–87 (Ct. App. 2004) (barring a lawyer from testifying as an expert against an insurer, in part because he had provided 21st Century with coverage opinions on the same types of claims and “taught the company’s claims adjusters how to evaluate claims for coverage under 21st Century’s homeowner’s policy and made suggestions to the company for improving its claims handling procedures”).

46. E.g., Roberts v. Unum Life Ins. Co. of Am., No. CV-17-2171-R, 2018 WL 5116470, at *2 (C.D. Cal. Mar. 12, 2018) (denying motion to disqualify because the lawyer had only “general experience” with defending benefits cases for the insurance company); Sanchez v. Am. Fam. Mut. Ins. Co., No. 2:11-cv-01507-KJD-RJJ, 2012 WL 4498226, at *2 (D. Nev. Sept. 28, 2012) (denying motion to disqualify because the lawyer had “no role in shaping American Family’s policies, practices, or procedures” and “had no direct or general contact with the claims department”); Hartford Cas. Ins. Co. v. Am. Dairy & Food Consulting Labs., Inc., No. 1:09-cv-0914-OWW-SKO, 2010 WL 2510999, at *3 (E.D. Cal. June 17, 2010) (denying motion to disqualify because the lawyer was not “involved with any review, analysis or discussion of an insurer’s specific claim file handling or bad-faith litigation strategies, practices or procedures”). However, in one order issued in the U.S. District Court for the District of Colorado that is not retrievable via Westlaw, a federal judge denied a motion similar to the one at issue in Persichette involving the same former client and lawyer, before Persichette was decided. That order was challenged in an unsuccessful petition for a writ of mandamus. Following the resolution of the petition, in response to a second motion to disqualify in the district court based on Persichette, the law firm chose to withdraw rather than respond to the second motion.

47. Persichette v. Owners Ins. Co., 462 P.3d 581, 592 (Colo. 2020).

48. Id. at 584.

49. Id.

50. Id.

51. Id.

52. Id.

53. Id.

54. Id.

55. Id. at 584–85.

56. Id. at 585.

57. Id.

58. Id. at 585–86.

59. Id. at 587 (quoting Colo. Rules of Pro. Conduct r. 1.9 cmt. 3 (Colo. Bar Ass’n 2020)).

60. Id. at 590 n.6.

61. Id. at 588–90.

62. Id. at 588 (alterations in original).

63. Id. (alterations in original).

64. Id. (alteration in original).

65. Id. (alteration in original).

66. Id. (alterations in original).

67. Id.

68. Id. at 589.

69. Id.

70. Id.

71. Id.

72. Id. at 590.

73. Id.

74. Id. at 590–91.

75. Id. at 591.

76. Id.

77. Id.

78. Id.

79. Id. at 592.

80. Plein v. USAA Cas. Ins. Co., 463 P.3d 728, 738 (Wash. 2020).

81. Id. at 730.

82. Id.

83. Id.

84. Id.

85. Id. at 729–30.

86. Id.

87. Id. at 730.

88. Id.

89. Id. at 733 (emphasis added).

90. Sande L. Buhai, Lawyers and the First Amendment: Conflicts between Former Clients and Personal Speech, 83 U. Cin. L. Rev. 73, 80 (2014) (noting that “[b]y their terms, [Rule 1.9(a)’s prohibitions] do not apply to purely positional conflicts with former clients at all,” and then quoting comment 2).

91. Persichette v. Owners Ins. Co., 462 P.3d 581, 589 (Colo. 2020).

92. Plein, 463 P.3d at 734.

93. Id.

94. Id. at 734–35 (emphasis added).

95. Id. at 735.

96. Id. at 735–36.

97. Id.

98. Id. at 735.

99. Id. at 736.

100. Id. (emphasis added).

101. Persichette v. Owners Ins. Co., 462 P.3d 581, 590 n.6 (Colo. 2020).

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Evan Stephenson is a partner in the Denver office of Spencer Fane LLP. He focuses his practice on insurance, commercial, and class action litigation, with an emphasis on trials and appeals. Stephenson represented Owners Insurance Company in Persichette v. Owners Insurance Co.