Departure Ends Imputed Conflict for Uninvolved Lateral

By Joan C. Rogers

Feb. 19 — A lawyer and her new firm may continue to represent plaintiffs in hailstorm litigation against an insurer even though her former firm represented the insurer in substantially related matters, the Texas Court of Appeals, Thirteenth District, held Feb. 10.

The crucial fact—on which both sides agreed—is that at her ex-firm the lawyer in question didn't participate in or learn about her colleagues' services on behalf of the insurer, the court said.

The ruling is good news for experienced lawyers who want to make a move—and the firms that want to hire them.

According to the decision, a lateral hire and her new firm may handle related matters adverse to clients of the lawyer's former firm, provided the lawyer wasn't involved in those matters or exposed to the client's confidential information.

The ruling saves a Texas law firm from removal as counsel for plaintiffs in hundreds of hailstorm cases against an insurer.

A lawyer who previously worked at the firm representing the insurer does not have a conflict of interest in currently representing the plaintiffs because she did not acquire confidential information about the insurer or personally represent it at her former firm, Justice Gregory T. Perkes said.

Persuasive Fifth Circuit Case

The court acknowledged that under Texas case law a lawyer who works on a matter is irrebuttably presumed to obtain confidential information during the representation, and that the attorney's knowledge is imputed by law to every other lawyer in the firm. Thus, there is an irrebuttable presumption that an attorney in a law firm has access to the confidences of the clients of other attorneys in a firm.

Moreover, the court continued, when that lawyer moves to another firm and the second firm represents an opponent of the lawyer's former client, a second irrebuttable presumption arises—that the lawyer has shared the former client's confidences with members of the new firm.

However, Perkes said the Texas Supreme Court has not addressed the precise issue here: whether a departing lawyer must have actually acquired confidential information about the former firm's client or must have personally represented the client to remain under imputed disqualification after leaving the firm.

On this issue, the court was persuaded by Kennedy v. MindPrint (In re ProEducation Int'l, Inc.), 2009 BL 235644, 587 F.3d 296, 25 Law. Man. Prof. Conduct 612 (5th Cir. 2009).

In that decision the Fifth Circuit held that once a lawyer has left a firm, there is no longer an irrebuttable presumption that confidences about all of the firm's clients were shared with every one of the lawyers. A lawyer may therefore avoid imputed disqualification in a related, adverse matter by demonstrating that he was not involved in the earlier representation and did not acquire knowledge of the client's confidences, it said.

In reaching that conclusion, the Fifth Circuit found that under both the Texas Disciplinary Rules of Professional Conduct and the ABA Model Rules of Professional Conduct, the departing lawyer must have actually acquired confidential information about the former firm's client or must have personally represented the former client to remain under imputed disqualification.

When the lawyer ends his affiliation with a firm without personally acquiring a client's confidential information, the lawyer's imputed disqualification also ends, the federal court said.

DQ Ended With Move

Applying the Fifth Circuit's analysis, Perkes said attorney Lauren Chapman and the Mostyn Law Firm are not disqualified from representing the plaintiffs in hailstorm cases against National Lloyds Insurance Co.—even though Chapman previously was associated with the Andrews Kurth law firm, which has been representing National Lloyds in multidistrict hailstorm litigation and related cases.

The court said that under Texas Rule 1.09(b) on former-client conflicts, Chapman was disqualified from representing the plaintiffs while she remained at Andrews Kurth. However, her imputed disqualification vanished, it said, when she ended her affiliation with Andrews Kurth without actually acquiring confidential information about National Lloyds or having been personally involved in representing the insurer.

In this situation, the court said, “we examine the evidence pertaining to actual disqualification rather than presuming imputed disqualification”—that is, Chapman's involvement with National Lloyds and any confidential information she might have obtained about the insurer.

Perkes said the parties stipulated that while Chapman was associated with Andrews Kurth, she did not personally represent National Lloyds or work on any of its matters, and did not personally receive any of its confidential information.

This evidence demonstrates that Chapman did not have a conflict of interest in representing the plaintiffs when she joined the Mostyn Law Firm, the court said.

Chief Justice Rogelio Valdez and Justice Nelda V. Rodriguez concurred.

The Mostyn Law Firm and Herring & Panzer LLP represented the plaintiffs. Doyen Sebesta Ltd. LLP and Pillsbury Winthrop Shaw Pittman LLP represented National Lloyds Insurance Co.

To contact the reporter on this story: Joan C. Rogers in Washington at

To contact the editor responsible for this story: Kirk Swanson at

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