Friday, May 10, 2019

Rules of Professional Conduct: Setting an effective screen

A few of my colleagues and I recently presented at the Association of Corporate Counsel, Central Pennsylvania Chapter meeting. The theme for the day was "Defending the Corporate House," and our presentation was Navigating Conflicts of Interest in the In-House and Outside Counsel Context.

My particular part of our presentation dealt with setting an effective screen under the Rules of Professional Conduct. If an attorney has a conflict of interest (perhaps it involves a former client), then that attorney may be disqualified from representing a current client in that matter - even if (s)he is in-house counsel. Worse still, one attorney's conflict of interest may be imputed to the entire firm, or even the entire in-house counsel's office! For example, see Dynamic 3D Geosolutions LLC v. Schlumberger Ltd. (disqualifying entire in-house and outside counsel).

If a law firm (for purposes of the Rules of Professional Conduct, an in-house counsel office is generally a "firm") has an attorney with a conflict, there is still hope. The Pennsylvania Rules of Professional Conduct allow for a "screen" - a way to block the conflicted attorney out of any involvement in the matter, and therefore cutting off the imputation of his or her conflict of interest to the rest of the firm:
Rule 1.10. Imputation of Conflicts of Interest: General Rule  
 (b) [T]he firm may not knowingly represent a person in the same or a substantially related matter . . . unless:  
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and 
(2) written notice is promptly given to the appropriate client to enable it to ascertain compliance with the provisions of this rule.
 When is screening effective? In Pennsylvania, courts look at multiple factors:
(1) the substantiality of the relationship between the attorney and the former client,
(2) the time lapse between the matters in dispute,
(3) the size of the firm and the number of disqualified attorneys,
(4) the nature of the disqualified attorney's involvement and
(5) the timing of the wall. 
Dworkin v. General Motors Corporation, 906 F. Supp. 273 (E. D. Pa. 1995). And then, what makes the screen effective?
(1) the prohibition of discussion of sensitive matters,
(2) restricted circulation of sensitive documents,
(3) restricted access to files,
(4) strong firm policy against breach, including sanctions, physical and/or geographical separation, to determine its effectiveness.
James v. Teleflex, Inc., 1999 U.S. Dist. LEXIS 1961 (E. D. Pa. 1999)(citing Dworkin, 906 F. Supp. at 280).

This is definitely a tricky issue, and it requires some thoughtful analysis to pull off an effective screen.

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