Law Practice
Aug. 15, 2002
With Fire Wall in Place, Lawyer Needn't Be Tossed, Court Says
LOS ANGELES - A law firm should not be tossed off a case automatically because it hires a lawyer who once worked for the other side, a state appellate court said Monday.
By showing that the tainted lawyer is not sharing confidential information, the firm can avoid disqualification, the 4th District Court of Appeal said. Panther v. Park, 2002 DJDAR 9228 (Cal. App. 4th Dist. Aug. 12, 2002).
"A client's confidences can be maintained by adopting and implementing measures to screen the tainted lawyer from the litigation or matter at issue," said Justice James. A. McIntyre, writing for the three-judge panel. "And where a law firm can show that it has timely and effectively implemented such measures, it should be able to rebut the presumption that the lawyer has contaminated the entire firm and avoid vicarious disqualification."
The appeals court reinstated the longtime lawyer for a San Diego man who filed suit in 2000 against a real estate concern, arguing it had improperly prevented him from selling stock options in another company.
A trial court had ruled that Mazzarella, Dunwoody & Caldarelli could not represent James B. Panther in his suit, because the law firm had hired Stephen Schreiner, who had previously represented the president of one of the companies Panther was suing.
One legal expert hailed the decision as major ruling that will free lawyers to practice when and where they please.
"There has never been, before this case, state authority. That's why this is a critical, wonderful case," legal ethics attorney Diane Karpman said. "It means that baby boomers can go to another firm, young people can get experience, people can move and not be locked in a community."
But legal expert Carol Langford said she thought the case made bad law.
"To me, what they're trying to say in this case is, screening solves all problems of protecting the confidences of clients," Langford said. "Screening is the panacea."
Federal courts have previously allowed attorneys to set up "ethical walls," or screening procedures, to protect information. But while California has allowed ex-government lawyers to join firms that oppose their former agencies, Monday's ruling is the first to extend that protection to attorneys whose conflicts stem from private practice, lawyers said.
Panther's underlying suit charges a handful of companies and individuals, including San Diego-based CanAm Properties, for slander, defamation of character and interference with his contractual rights. But CanAm and its co-defendants asked the trial court to disqualify Panther's lawyer, Steven Micheli and his firm Mazzarella Dunwoody.
Mazzarella Dunwoody employed Schreiner as a contract attorney. He had defended CanAm's president when Panther sued the company on a different set of claims in 1999. CanAm argued that because the company and its president had coordinated their defenses, the firm should be disqualified because Schreiner had confidential information.
Mazzarella Dunwoody argued that Schreiner had been kept completely apart from anything related to Panther's litigation. The firm took several measures to keep Schreiner separate, according to the opinion, going so far as to keep his computer independent of the firm's computer network.
The court said that automatic disqualification does not "comport with the realities of today's legal world and the increased mobility of lawyers among firms, and can cause unnecessary serious hardship for the lawyer, the firm and particularly, the firm's clients, who bear the burden of losing the counsel of their choice when the firm is vicariously disqualified."
The appellate court told the trial court to throw out its earlier ruling disqualifying Micheli's firm.
Micheli, who has represented Panther since 1992, said he was happy with the decision, and that he thought it was "good that this issue was clarified."
James McFall of Neil Dymott Perkins Brown & Frank in San Diego represented Financial Asset Management Foundation, a company involved in the litigation, which had also argued that Micheli should be disqualified.
"We're disappointed with the decision," McFall said.
But Karpman said the appellate court's decision made Monday "a great day for California lawyers."
"We have to balance the reality of our modern world and life, with the fact that clients do have a right to loyalty," Karpman said. "If you leave a law firm and join a new law firm, the presumption with the existing conflicts rule is that we're going to be dishonest ... and bleed out everything we know about every client. Which is silly."
But Langford warned that screening procedures might not be enough because sometimes, "lawyers lie."
"Who polices it? Is there a judge watching? Is there a police department?" Langford asked. "Nobody can. We have to believe the lawyers. Is that fair, is that right? Does that work? No."
For the Record A story published in the Los Angeles Daily Journal on August 14, 2002 mistated how long San Diego attorney Steven Micheli has been representing his client, James B. Panther. Micheli has represented Panther since 1982. The Daily Journal regrets the error.
Katherine Gaidos
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