Georgia Allows Screening of Paralegals but Requires Prompt Notice to Former Firm

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By Samson Habte  

May 6 --By implementing an ethics screen, law firms in Georgia can avoid their removal from a case based on hiring a nonlawyer employee who worked for an adverse party at her previous firm, the Georgia Supreme Court ruled May 5 on an issue of first impression.

The court, speaking through Justice Carol W. Hunstein, agreed with the court of appeals' rationale that nonlawyers should be treated like judges, arbitrators and government lawyers--who, unlike private firm attorneys, can be screened out of conflicts under Georgia Rules of Professional Conduct 1.11 and 1.12 when hired by a firm that represents a party adverse to a former client.


Georgia Supreme Court Explains How Burdens of Persuasion Shift When Nonlawyer Brings in Conflict

The supreme court's opinion in Hodge v. URFA-Sexton includes guidance on how law firms and courts should deal with disqualification motions based on nonlawyer conflicts. First, Hunstein said, courts must consider whether a challenged firm gave “prompt written notice to any affected adversarial party or their counsel, stating the conflict and the screening measures utilized.”

The opposing party may then either grant written consent, or move to disqualify. If the party moves for disqualification it “must show that the nonlawyer actually worked on a same or substantially related matter” while employed at the former firm, Hunstein said.

Such a showing will raise a presumption that the nonlawyer gained confidential information, she explained. But although lawyers in possession of confidential information are presumed under Georgia law to have shared that information with colleagues, the presumption is rebuttable where nonlawyers are concerned, the court stated.

“The new firm may rebut this by showing that it has properly taken effective screening measures to protect against the nonlawyer's disclosure of the former client's confidential information,” Hunstein explained.

“If the new firm can sufficiently rebut the presumption and show that it promptly gave written notice of the nonlawyer's conflict, then disqualification is not required,” the court said.

“On the other hand, the new firm will be disqualified where (1) the nonlawyer has already revealed the confidential information to lawyers or other personnel in the new firm; (2) screening would be ineffective; or (3) 'the nonlawyer necessarily would be required to work [or has actually worked at the new firm] on the other side of the same or a substantially related matter on which the nonlawyer [previously] worked,'” Hunstein added, quoting ABA Formal Ethics Op. 88-1526 (1988).

Pointing to Rule 5.3 on supervisory lawyers' obligations, Hunstein cautioned that “the responsibility for protecting the confidentiality of attorney-client communications must fall to the new lawyer or firm hiring the nonlawyer and the implementation of screening measures.”


But although those rules provide at least minimal instructions on how to screen former public sector lawyers, judges and arbitrators, the court acknowledged an absence of comparable black-letter guidance on screening nonlawyers under Rules 1.9 (former-client conflicts) and 1.10 (imputation of conflicts).

Hunstein thus outlined steps that a law firm must take to screen a conflicted nonlawyer--including a requirement to give “prompt written notice to any affected adversarial party or their counsel, stating the conflict and the screening measures utilized.”

The court remanded the case so that the trial court could determine whether the firm at issue in this matter gave “prompt” notice of a conflict once it learned of the problem.

Undiscovered Conflict

The present appeal was triggered by a motion to disqualify Insley& Race as counsel for defendant URFA-Sexton LP, a developer sued for wrongful death by the estate of an apartment tenant who was shot and killed. The motion was based on Insley & Race's hiring of Kristi Bussey, a paralegal who previously worked on the case while employed by Hanks Brookes, a firm representing the plaintiff estate.

Bussey said she did not learn of Insley & Race's involvement until six months after the firm hired her. At that point, the court said, Bussey told Insley & Race about her prior involvement and the firm “immediately implemented screening measures … to protect against Bussey's disclosure of confidential information she had gained from working on [the] case at Hanks Brookes.”

But the firm did not disclose the potential conflict to opposing counsel until two months after learning about it, Hunstein said. The plaintiff filed a motion to disqualify after the firm refused to withdraw as defense counsel.

The trial court denied the motion, finding that Insley & Race was URFA-Sexton's counsel of choice, had developed specialized knowledge by working on the case for 18 months before learning of the conflict and had implemented appropriate and effective screening measures to protect against the disclosure of confidential information. The court of appeals affirmed.

Majority Approach

The supreme court acknowledged “a split of authority” on whether a nonlawyer's conflict is automatically imputed to a new employer.

A minority of courts hold that “the nonlawyer's conflict of interest is imputed to the rest of the firm, thereby disqualifying opposing counsel,” Hunstein said, citing, among other cases, Zimmerman v. Mahaska Bottling Co., 19 P.3d 784, 17 Law. Man. Prof. Conduct 191 (Kan. 2001).

But a majority of courts reject automatic imputation and permit firms to “implement screening measures to protect any client confidences that [a] nonlawyer gained from prior employment,” Hunstein said. E.g., In re Columbia Valley Healthcare Sys. LP, 320 S.W.3d 819, 26 Law. Man. Prof. Conduct 547 (Tex. 2010); Leibowitz v. Eighth Judicial Dist. Court, 78 P.3d 515, 19 Law. Man. Prof. Conduct 624 (Nev. 2003); Green v. Toledo Hosp., 764 N.E.2d 979, 18 Law. Man. Prof. Conduct 218 (Ohio 2002); and Hayes v. Cent. States Orthopedic Specialists Inc., 51 P.3d 562, 18 Law. Man. Prof. Conduct 271 (Okla. 2002).

The court said the majority approach was preferable for several reasons. “First, nonlawyers generally have neither a financial interest in the outcome of a particular litigation nor a choice about which clients they serve, which reduces the appearance of impropriety,” Hunstein said. “Second, nonlawyers have different training, responsibilities, and discovery and use of confidential information compared to lawyers.”

Third, disqualification presents a hardship to a new firm's client, Hunstein said. “Fourth, if imputation and disqualification were automatic, nonlawyers' employment mobility could be 'unduly restricted,'” she added. “Fifth, our Rules recognize that screening is effective at protecting a client's confidences.”

Concurrence: Go Further

Justice David E. Nahmias concurred in the ruling but wrote separately to urge that Georgia join other states in permitting screening to avoid disqualification for conflicts that arise when firms hire lawyers from other firms--not just nonlawyers and former public sector employees, arbitrators and judges.

“[M]any of the factors that the Court discusses in support of our conclusion that screening measures, rather than imputed disqualification, may be appropriate for nonlawyers also apply to many other lawyers--especially associates,” Nahmias wrote.

Michael A. Mills of Dixon Mills, Atlanta, represented the plaintiffs. Brynda Rodriguez Insley of Insley & Race, Atlanta, represented the defendants.

To contact the reporter on this story: Samson Habte in Washington at shabte@bna.com

To contact the editor responsible for this story: Kirk Swanson at kswanson@bna.com


Full text at http://www.bloomberglaw.com/public/document/HODGE_ADMINISTRATRIX_et_al_v_UFRASEXTON_LP_et_al_No_S13G1626_2014/1.

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