The Risk Manager, Winter 2006

Kentucky allows screening by a firm to avoid disqualification for a conflict of interest when the only reason for disqualification is a former client conflict by a current member of the firm. The disqualified member must be screened, receive no part of fees from the representation, and the client must be notified in writing (SCR 3.130 (1.10 (d)).

Two cases in other states show how ineffective screens can lead to a malpractice claim or disqualification:

  • In Idaho a firm screened a conflicted lawyer with the client’s waiver and the understanding that the screened lawyer would receive no confidential information. Subsequently, a memorandum was circulated in the firm involving settlement issues. This memorandum was received by the screened lawyer. After settling the case for $3.5 million, the client sued the firm for malpractice for $6.3 million. In the course of discovery the client found out about the violated screen and moved for an additional malpractice claim. The Idaho Supreme Court held that the facts alleged a viable claim. The client asserted that it would not have settled the claim had it known that confidentiality was breached and was thereby damaged by the lost opportunity for arbitration. Spur Products Corp. v. Stoel Rives LLP, Idaho No. 30433,9/30/05; ABA/BNA Lawyers’ Manual On Professional Conduct, Current Reports, Vol. 21, No. 21, page 518 (10/19/05).
  • In Pennsylvania a lawyer changed firms resulting in him switching sides in a case in which he had been lead counsel. The firm immediately screened the lawyer, but the opposing party still moved for disqualification. In granting the motion for disqualification the court pointed out deficiencies in the screen to include:
    • no absolute prohibition on conversations with, around, near, or in the presence of the screened lawyer concerning or related to the matter;
    • no guidance that violators would be terminated and disciplined;
    • no guidance that the screened lawyer was to receive no part of the fees from the representation.

Norfolk Southern Railway Co. v. Reading Blue Mountain & Northern Railway Co., M.D. Pa., No. 3:03cv736,10/25/05; ABA/BNA Lawyers’ Manual On Professional Conduct, Current Reports, Vol. 21, No. 23, page 574 (11/16/05).