Ethics Opinion Articles - NC State Bar Journal

The Expansion of Attorney Conflict Screening

By Douglas J. Brocker

This article was originally published in the Wake County Bar Association’s Bar Flyer in October 2003. It is one of a series of articles, that discuss the practical implications of the more significant changes to the Rules of Professional Conduct.

Up until the most recent revisions to the Rules for Professional Conduct (hereafter “Revised Rules”), North Carolina only allowed screening of lawyers for conflicts of interests within law firms in very limited situations. In adopting the recent revisions, the State Bar recognized the more mobile and transient nature of the modern practice of law and significantly expanded the situations in which attorneys may be screened from potential conflicts of interest. This article will address three basic questions regarding the newly-expanded screening mechanism: (1) What is it? (2) When can you use it? and (3) How do you implement it?

1. The What

Screening is the current term for what lawyers traditionally have referred to as a “Chinese wall” to signify the barriers put in place within a law firm to isolate a disqualified lawyer. Screening allows an attorney in a law firm to represent a client even though another lawyer in the same firm is disqualified because of a conflict of interest. Screening isolates the disqualified lawyer from any participation in the matter involving the conflict. The primary purpose of screening is to ensure that confidential information known by the personally disqualified lawyer remains protected. If properly implemented, screening gives clients more freedom to choose attorneys, allows attorneys more flexibility in moving among employment situations, and permits law firms and other organizations more latitude to hire experienced attorneys.

2. The When

Screening can be used in three different situations when attorneys change employment. First, under Revised Rule 1.11(b), screening is permitted when an attorney moves between government employment and private practice. Second, screening is allowed, pursuant to Revised Rule 1.12(c), when a lawyer joins a firm after being involved in a matter as a former judge, arbitrator, mediator, or other third-party neutral. In these situations, a law firm can screen a disqualified lawyer to allow other attorneys in the same firm to represent a client that the disqualified lawyer could not. This was permissible even under the former rules.

Third, screening now is permissible, under the Revised Rules, when lawyers move between private law firms. When a lawyer changes from one law firm to another (hereafter, “lateral attorney”), the lateral attorney brings along all his or her conflicts. These conflicts are then imputed to all members of the new firm pursuant to Revised Rule 1.10(a). These imputed conflicts can present significant problems, particularly in large law firms.

Traditionally, the firm wishing to hire the lateral attorney had a Hobson’s choice—do not hire the lateral attorney or withdraw from or avoid the representation of existing and potential new clients. Under Revised Rule 1.10(c), other lawyers in the new firm now may represent a client that the lateral attorney cannot if the firm screens the disqualified attorney. Screening was not permitted in this situation under the former rules. Because movement of attorneys between private firms is commonplace, this change marks a significant increase in the potential uses of screening.

Additionally, screening is incorporated into an entirely new rule concerning prospective clients. Revised Rule 1.18 defines prospective clients as those who consult with an attorney (hereafter, “consulting attorney”) but ultimately do not retain him or her to perform legal services. A potential conflict arises when a new client, whose interests are materially adverse to the prospective client, seeks to retain the consulting attorney’s law firm. Under Revised Rule 1.18(d), other lawyers in the same firm may represent the new client if the consulting lawyer is effectively screened. This is true even if the disqualified consulting lawyer stays in the same firm. Thus, the Revised Rules treat former prospective clients differently than former clients by allowing attorney screening even when an attorney does not change firms.

In contrast, screening is not permissible to cure conflicts in two types of situations. First, screening cannot be used to remedy a concurrent conflict of interest. For example, a lawyer who currently represents client A cannot be screened to allow another lawyer in the same firm to represent client B if the two clients’ interests are directly adverse or the firm’s responsibilities to one client would materially limit representation of the other client. Second, screening cannot be used if an attorney has a conflict involving a former client and remains in the same firm. If a lawyer formerly represented client A while at his firm, other lawyers in that same firm cannot represent client B against client A in the same or a substantially related matter merely by screening the disqualified lawyer. The only way to represent the clients in these latter two situations is to get informed consent from the client or former client, confirmed in writing, pursuant to Revised Rules 1.7 and 1.9, respectively.

3. The How

The Revised Rules set out two requirements necessary to implement screening. First, pursuant to Revised Rule 1.0(l), the disqualified lawyer must be isolated from any participation in the matter in a timely fashion. Second, the law firm must give the affected former client written notice sufficient to ascertain compliance with the screening procedures. If these requirements are met, the law firm does not need consent from the affected client.

Comments [9] to Rule 1.0, which includes a definition of screening, sets forth the following examples of reasonably adequate screening procedures:

The personally disqualified lawyer should acknowledge the obligation not to communicate with any of the other lawyers in the firm with respect to the matter. Similarly, other lawyers in the firm who are working on the matter should be informed that the screening is in place and that they may not communicate with the personally disqualified lawyer with respect to the matter. Additional screening measures that are appropriate for the particular matter will depend on the circumstances. To implement, reinforce, and remind all affected lawyers of the presence of screening, it may be appropriate for the firm to undertake such procedures as a written undertaking by the screened lawyer to avoid any communication with other firm personnel and any contact with any firm files or other materials relating to the matter, written notice, and instructions to all other firm personnel forbidding any communication with the screened lawyer relating to the matter, denial of access by the screened lawyer to firm files or other material relating to the matter, and periodic reminders of the screen to the screened lawyer and all other firm personnel.

Additionally, 2003 Formal Ethics Opinion 8, which the State Bar council just adopted, fleshes out the notice requirement:

Written notice should be given as soon as practical after the need for screening becomes apparent and before any confidential information is leaked, even inadvertently, to the other lawyers in the firm. The notice should include a description of the screened lawyer’s prior representation and of the screening procedures employed.

Finally, as noted in Comment [10] to Rule 1.0, notice must be given and screening procedures must be implemented in a timely fashion. Notice and screening procedures that otherwise might be adequate may not be sufficient if a firm fails to put them in place soon enough. This is particularly true if confidential information is disclosed before the procedures are implemented and the notice given to the affected client.

The recent revisions to the Rules made one additional change regarding screening. Under the former rules, the disqualified lawyer could not receive any portion of a fee from the screened matter. The Revised Rules eliminate this restriction. The disqualified lawyer now may receive a salary or distribution that includes a part of the fee from the screened matter. The State Bar recognized that attempting to preclude fee sharing from screened matters is impractical, particularly in large firms.

The State Bar’s expansion of screening and its removal of the fee sharing prohibition significantly increases the usefulness of screening and the ability of firms to implement it.

Interestingly, in revising its Model Rules, the ABA refused to adopt similar expansions of screening and retained the prohibition on fee sharing. Thus, North Carolina has taken the lead in removing barriers to attorney mobility and client choice.

Douglas J. Brocker was formerly trial counsel to the North Carolina State Bar. He recently became Of Counsel to Millberg, Gordon & Stewart, PLLC and concentrates his practice in representing professionals before their respective licensing boards or agencies and in professional liability matters.

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