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A law firm that hired an expert who previously spoke to the opponent about the same case won't be disqualified where the firm overcame the presumption that the expert shared the other side's confidences with the firm, the Nebraska Supreme Court ruled July 19 (Mid America Agri Prods./Horizon, LLC v. Rowlands, Neb., No. S-12-473, 7/19/13).
In an opinion by Justice John F. Wright, the court decided that a firm is not invariably disqualified when it hires an expert who has acquired confidences from a client's opponent. The firm is presumed to have learned the opponent's information, but this presumption is rebuttable, the court held.
The court first had to decide whether experts are “support persons” under the state's unique version of the rule on former-client conflicts. They are not, it concluded.
The issue arose in litigation between Lansing Trade Group LLC and Mid America Agri Products/Horizon, LLC over contracts for future delivery of corn.
Horizon's counsel spoke with Howard J. O'Neil, a grain industry expert, about serving as an expert witness in the litigation. O'Neil ultimately declined the role. Horizon's counsel paid O'Neil's $225 invoice for talking with him.
O'Neil later agreed to serve as an expert for Lansing. When Lansing's counsel disclosed him as an expert, Horizon objected, asserting that its counsel had shared confidential information with O'Neil.
The trial court barred O'Neil from testifying as an expert for Lansing, but it declined to disqualify Lansing's counsel due to a dearth of evidence that O'Neil had communicated confidential information about Horizon to Lansing's counsel. Horizon then sought a writ of mandamus from the supreme court, asserting that the trial court was required to remove Lansing's counsel.
The supreme court held that Lansing's counsel did not have to be disqualified because the firm established that it did not learn any of Horizon's confidential information from O'Neil.
Under Nebraska case law, Wright said, a bright-line rule applies that an attorney who has changed firms must not become involved in a representation against a client of the attorney's former firm if the current and former matters are the same or substantially related. Moreover, the attorney's new firm is disqualified from handling the matter because there is an irrebuttable presumption that lawyers in a firm share confidences.
This irrebuttable presumption does not apply when an expert changes sides, the court concluded. “[A]n irrebuttable presumption of shared confidences shall be applied only to actions involving individuals who obtained confidential information as lawyers,” it announced.
A presumption of shared confidences arises when an expert switches sides, but this presumption is rebuttable, the court decided. “The central concern in cases in which counsel has retained a side-switching expert is whether counsel has unfairly obtained confidential information about the opposing party,” it stated.
In adopting a rebuttable presumption where experts are concerned, the court relied heavily on N. Pacifica, LLC v. City of Pacifica, 335 F. Supp.2d 1045 (N.D. Cal. 2004), and Shadow Traffic Network v. Superior Court, 29 Cal. Rptr.2d 693 (Cal. Ct. App. 1994).
The court agreed with N. Pacifica that substantial differences between the roles of lawyers and experts warrant a different rule. Lawyers owe duties of confidentiality and loyalty to their clients and typically share confidences with other lawyers in their firm, whereas retained experts do not have the same duty of loyalty to clients and do not have a sustained relationship with the attorneys who hire them, Wright explained.
Drawing on a test described in N. Pacifica, the court prescribed several steps for determining whether counsel must be disqualified for retaining an expert who previously was consulted by an adversary in the same or a substantially related matter:
• The party requesting disqualification must establish that it conveyed confidential information to the expert and reasonably believed that the information would be kept confidential.
• If that showing is made, a presumption arises that the expert conveyed the confidential information to counsel who subsequently hired the expert.
• Counsel who subsequently hired the expert must rebut this presumption by proving that confidential information was not received from the expert.
• If the presumption is not rebutted, the court should determine whether continued representation by counsel will taint the proceedings.
In this case, the court observed, a special master accepted the trial court's findings that Horizon had communicated confidential information to O'Neil but that he never passed any of that information to Lansing's counsel. According to the special master, Lansing rebutted any presumption that O'Neil had disclosed Horizon's confidences to Lansing's counsel, and the continued involvement of Lansing's counsel did not threaten to taint the case.
Those findings were not clearly against the weight of the evidence, and therefore Lansing's counsel did not have to be disqualified, the court concluded.
Before addressing the presumption issue, the court had to decide whether experts are “support persons” under Nebraska's unique rule on former-client conflicts.
Part of Nebraska Rule of Professional Conduct 3-501.9 specifies lawyers' duties regarding “support persons” who may have acquired an opponent's confidential information in the course of employment at another firm.
The rule forbids a lawyer to allow a support person to work on a client's matter against a party that the support person's former firm represented in the same or a substantially related matter. The lawyer and her firm are not disqualified, however, if the support person is screened from the matter to avoid any sharing of confidential information.
The rule defines “support person” to mean any nonlawyer associated with a firm, including law clerks, paralegals, legal assistants, secretaries, messengers, “and other support personnel employed by the law firm.” Experts aren't mentioned.
The court decided that experts such as O'Neil are not support persons under the rule. “[T]he term 'support person' implies a continuing employment associated with the day-to-day activities of the lawyer or firm,” but experts are hired for an opinion or testimony on a particular issue and are independent of the firm's control, it reasoned.
Wright also pointed out that experts would be prevented from testifying if they were deemed support persons, in light of the ethics rule that forbids lawyer-advocates from testifying as witnesses (Rule 3-503.7) and the rule that requires attorneys to ensure that their nonlawyer assistants act in conformity with a lawyer's professional obligations (Rule 3-505.3).
George E. Clough, Clough Law Office, North Platte, Neb., and Paul H. Schwartz of Shoemaker, Ghiselli & Schwartz, Boulder, Colo., represented Horizon.
Lansing's attorneys were Jay C. Elliott, Elliott Law Office, North Platte, Kirk T. May and Jeremy M. Suhr of Rouse Hendricks German May, Kansas City, Mo., and William G. Dittrick and Kenneth W. Hartman of Baird Holm, Omaha, Neb.
Copyright 2013, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
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