Metropolitan News-Enterprise


Wednesday, August 14, 2002


Page 1


Court of Appeal Limits Vicarious Disqualification of Law Firm


By KENNETH OFGANG, Staff Writer/Appellate Courts


A law firm is not necessarily disqualified from representing a client in a suit solely because it has hired a lawyer who represented an adverse party in separate, but related, litigation, the Fourth District Court of Appeal has ruled.

Div. One Monday granted a writ of mandate sought by the San Diego firm of Mazzarella, Dunwoody & Caldarelli after San Diego Superior Court Judge William Pate disqualified it from representing longtime client James B. Panther in a suit for alleged defamation and interference with business relations.

The suit grew out of earlier litigation in which Panther sued former business associates for wrongful foreclosure on real estate Panther owned and the defendants cross-complained with allegations that Panther had defrauded them and mismanaged a business in which they had invested.

One of the defendants, Russell Grosse, was represented in that suit by Stephen Schreiner, who joined with counsel for the other defendants in a joint defense that included an exchange of confidential information among them.

In the course of discovery, it was learned that Panther owned an option to purchase stock in another company and was in negotiations to sell that stock once he acquired it. According to his complaint in the subsequent lawsuit, some of the defendants then used that information to interfere with his plans..

Grosse was not a defendant in the second suit.

Fees Received

Schreiner’s law firm subsequently dissolved, and he formed a relationship with the Mazzarella firm. He maintained his own caseload and had his own paralegal and computer, was not tied in to Mazzarella’s computer network, and did not have access to its files, but received a percentage of the fees generated by his cases.

The defendants in the second suit moved to disqualify the Mazzarella firm, claiming its relationship with Schreiner mandated the firm’s ouster from the case. The firm responded with evidence that it had erected an elaborate ethical wall to ensure that Schreiner would remain uninvolved in the case and would not share confidential information with Panther’s counsel.

Pate granted the motion. He noted that past cases rejecting vicarious disqualification of a law firm that hires an attorney who previously represented an adverse party have all involved the hiring of government lawyers.

But Justice James McIntyre, writing for the Court of Appeal, said there is no reason to treat lawyers who change firms in the private sector differently.

Screening Procedures

“We conclude that the better view is that law firms, whether they hire or otherwise associate former government attorneys or private attorneys, should be able to rebut the presumption of shared confidences within a firm and therefore avoid vicarious disqualification by showing that effective screening procedures were implemented to prevent the passing of information between the tainted lawyer and other members of the firm,” he wrote.

“A rule of automatic vicarious disqualification of an entire firm 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,” McIntyre continued.

As for Schreiner and the Mazzarella firm, the justice went on to say, the evidence presented in opposition to the motion to disqualify was sufficient to rebut the presumption that confidential information had been shared.

Both Schreiner and Steven A. Micheli, the Mazzarella partner who had been representing Panther for nearly two decades, submitted unrefuted declarations that Schreiner was not involved in the ongoing case and that they had shared no confidences.

In addition, McIntyre noted, neither Schreiner nor the Mazzarella firm had access to the files of Schreiner’s former firm, personnel at Mazzarella had been instructed that nothing related to the case was to be shown to or discussed with Schreiner, Panther had been instructed by Micheli not to talk to Schreiner, and there was no evidence that any of those screening measures failed.

“Such measures undertaken in a relatively small firm like Mazzarella are adequate; they protect the legitimate interests of [the defendants] and rebut the presumption of shared confidences between Schreiner and the Mazzarella firm,” the justice said.

The case is Panther v. Park, 02 S.O.S. 4226.


Copyright 2002, Metropolitan News Company