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Nov. 9 — An ex-client’s sensitive e-documents that a departing lawyer left in his former firm’s records system don’t automatically disqualify the firm from handing a related adverse matter, the New Jersey Superior Court, Appellate Division, decided Nov. 4 ( Estate of Kennedy v. Rosenblatt , 2016 BL 368782, N.J. Super. Ct. App. Div., No. A-5397-15T4, 11/4/16 ).
Storing the former client’s protected material doesn’t create a conflict of interest for the firm if no one at the firm has actual knowledge of the information or has accessed the client’s file, the court held. Moreover, the firm isn’t disqualified merely because someone in the firm reviews nonsubstantive information in the ex-client’s file to determine whether a conflict exists, Judge William E. Nugent said.
The case illustrates the complexities of guarding against conflicts of interest in an era when lawyers frequently change firms and client files are stored both electronically and in paper.
At issue was whether Riker, Danzig, Scherer, Hyland & Peretti LLP was correctly booted from representing plaintiffs in an action, either because the firm’s electronic records system contained the file of one of the defendants—which the Riker firm had represented for a time in a previous iteration of the case—or because a Riker lawyer checked the former client’s electronic file to see if anyone had accessed the documents.
Attorney John M. Loalbo filed and dismissed a professional negligence case against several defendants, including the estate of a deceased lawyer, before he ever joined the Riker firm.
Riker had initially represented the estate in that action, but the lawyers working on the case left Riker and moved to another firm while the action was pending. They took the estate’s paper file with them but left electronically stored documents, including a privileged strategy memorandum.
After Loalbo shifted to Riker, he refiled the professional negligence action. One of the departed Riker lawyers, who was representing the estate at his new firm, contacted Riker about the conflict.
Riker then immediately established an ethics screen to prevent Loalbo and his staff from accessing the estate’s electronic file. In addition, a senior attorney at Riker, assisted by information technology personnel, reviewed some part of the electronic file and determined that no attorney other than those who left Riker had accessed the documents.
The appeals court vacated the order disqualifying Riker and remanded for a closer look at the firm’s contact with the former client’s file. Disqualification isn’t appropriate unless the Riker senior attorney actually reviewed substantive content in the file, the court directed.
The rule provides that when a lawyer has left a law firm, the firm may represent a client with interests adverse to a client that the departed lawyer represented unless: (1) the matter is the same or substantially related to the previous representation, and (2) any lawyer remaining in the firm “has information” that’s material to the matter and protected by the rules on lawyer-client confidentiality and duties to former clients.
Neither side here disputed that the previous and current actions were substantially related, or that the estate’s electronic file contained protected material. The issue boiled down to whether any remaining Riker lawyer “has information” that’s protected and material to the case.
The court concluded that in regard to electronic files, the phrase “has information” means “has actual knowledge or has accessed the electronic file.”
It’s self-evident that a lawyer can’t betray a former client if the lawyer hasn’t represented the client, hasn’t obtained information about the client or the client’s matter, and hasn’t accessed the client’s file, the court said.
The court carved out what it called a “narrow exception” for investigating whether a conflict exists. That’s what the senior Riker attorney was doing when he and the firm’s IT staff accessed part of the file, it said.
The court said that Riker didn’t have to be disqualified if the Riker senior attorney merely accessed metadata—that is, the embedded information associated with the client’s electronic documents—solely to determine if anyone other than the departed lawyers had accessed them.
Also, the court said that Riker would not be disqualified if the Riker senior attorney accessed only enough information in the electronic file to determine whether a conflict existed—such as viewing only the title of a document—and then looked at metadata to see if any other attorney had accessed the file.
“Merely determining whether an electronic file contains protected information, as distinguished from reviewing the content of the information, does not result in an attorney having protected information proscribed by RPC 1.10(b)(2),” the court said.
Accessing a file in other circumstances results in disqualifying knowledge for a firm, but Rule 1.10(b) doesn’t prohibit a lawyer from reviewing nonsubstantive information to determine whether a conflict exists, it said.
The court cited a recent amendment and commentary to Rule 1.6 on lawyer-client confidentiality as support for its decision. As of Sept. 1, Rule 1.6(d)(5) authorizes limited disclosure of confidential client information to detect and resolve conflicts of interest, it noted.
The court said that on remand Riker must file certifications from the senior attorney and IT staff describing what information was accessed, how they avoided reviewing the content, and whether the protected information can be deleted. Also, Riker must make arrangements to access the estate’s electronic file again in the presence of the opponent’s counsel, it directed.
In a footnote, the court noted that the new language in Rule 1.6 doesn’t address an outgoing attorney’s duties to make sure her former firm will safeguard electronically stored information, and what assurances should be made to clients affected by the transition. Counsel agreed at oral argument that this is a worthwhile subject to refer to the Advisory Committee on Professional Ethics, the court said.
The court didn’t mention it, but Section 124(1) of the Restatement (Third) of the Law Governing Lawyers (2000) addresses the same subject as Rule 1.10(b).
The Restatement takes the position that after a lawyer has left a firm, other lawyers in the firm are no longer tainted by the departed lawyer’s conflict, so long as no relevant confidential client information “has been communicated” to the firm or other lawyers in the firm.
Comment c(i) puts the burden on the remaining lawyers to show, among other things, that “the firm does not now possess or have access to sources of client confidential information, particularly client documents or files.”
The other members of the panel were Judges Heidi Willis Currier and Jack M. Sabatino.
Riker Danzig Scherer Hyland & Perretti LLP represented the plaintiffs. Sherman, Wells, Sylvester & Stamelman LLP represented the estate of Joel Shoobe.
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