The Fifth Circuit just heard oral arguments in a case about the scope of disqualification that follows a lawyer who leaves a large firm — the departing-lawyer rule. The case, Kirk A. Kennedy and Mark A. D’Andrea v. Mindprint Inc., arises out of Texas and is applying the Texas Rules of Disciplinary Procedure.
The key question is whether Rule 1.09 of the Texas Disciplinary Rules creates an “irrebuttable” presumption that a departing lawyer had privileged information about every single matter being handled by his or her former firm — creating serious future conflicts for anyone who has ever walked the halls of a large law firm.
Texas Lawyer wrote about the case last week in an article by John Council, quoting the attorneys and portions of the oral argument, as well as a few experts in the field. The article is well worth reading.
The current Rule 1.09 does not speak directly to the question of departing lawyers, so the lower courts had inferred a blanket, irrebuttable waiver from more general principles in the rules.
The proposed revision to Texas Disciplinary Rule 1.09, however, does speak directly to this situation, creating a new Rule 1.09(b) to deal with conflicts created by a lawyer’s former affiliation with a law firm. The key is the word “and” between (b)(1) and (b)(2):
(b) Unless the former client provides informed consent, confirmed in writing, a lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which that lawyer formerly was affiliated previously represented a client:
(1) whose interests are materially adverse to the interests of that person; and
(2) about whom the lawyer acquired information protected by Rule 1.05 or 1.09(d) that is material to the matter.
I don’t see how the text of the new rule could be consistent with blanket, irrebutable presumption. (( For example, if every member of the former firm were conflicted forever, there would be no need for (b)(2) distinguishing among its lawyers. ))
That certainly could lower the stakes in the Fifth Circuit’s ongoing Kennedy v. Mindprint, Inc. case. But — if the Fifth Circuit concludes that the former rule barred this representation — it could spark a new set of ethical conundrums about whether and how new Rule 1.09 should be applied retroactively. (( If the new rule marks a change in the law, what event would control which rule applied to a given conflict situation? Would it be the time at which the original matter was retained by the old firm, at which time that client discloses confidences subject to the old rules? Would it be the time the lawyer departs? Would it be the timing of the new matter, so that the conflict would apply differently to the same former client — that the old expectations about conflicts would expire? ))
My suspicion is that, before the Fifth Circuit announced a broad departing-lawyer rule under the outgoing Texas Disciplinary Rules, it would certify the question to the Texas Supreme Court. A certification may be even more likely if the Fifth Circuit is concerned about creating a tension between the old rules and the new rules.
Update: The day after I wrote this, the Fifth Circuit decided Kennedy v. Mindprint, Inc.. Details are available at this more recent blog post.