Dec. 3 — A law firm that includes a former in-house counsel of a medical technology company is disqualified from suing the company even though the lawyer was “seconded” to another client of the firm and in that capacity is doing no work on the firm's behalf, the U.S. District Court for the District of New Jersey ruled Nov. 30.
Judge Madeline Cox Arleo ejected the Blank Rome law firm as plaintiffs’ counsel in a qui tam whistle-blower suit filed by two former employees of Boston Scientific Neuromodulation Corp. who accuse the company of defrauding government health care programs.
The ruling hinges on the nature of the law firm's relationship with an associate who formerly served as an in-house compliance counsel for Boston Scientific. That lawyer, Ritu Hasan, was “seconded”—temporarily transferred—to another client of the firm, and in that capacity she “shall not continue to work on behalf of the firm” during the secondment. (For more on the ethics of secondment, see New York City Ethics Op. 2007-2, 23 Law. Man. Prof. Conduct 196, and Ohio Ethics Op. 2015-01, 31 Law. Man. Prof. Conduct 88 (2015).)
The firm argued that Hasan's conflict cannot be imputed to Blank Rome under New Jersey Rule of Professional Conduct 1.10 because during the secondment she is not “associated” with the law firm.
The court saw things differently. Arleo noted that in several ways Blank Rome continues to hold out Hasan as a Blank Rome lawyer, including references to her as such on its website. Therefore, the judge said, Hasan's personal conflict under Rule 1.9 must be imputed to the law firm under Rule 1.10. The firm did not fulfill Rule 1.10's requirements to escape imputation through effective screening, Arleo said.
A magistrate judge previously refused to disqualify Blank Rome after concluding that Hasan was hired as a “temporary lawyer” for Blank Rome and was not “associated with” the firm under Rule 1.10.
“Blank Rome hired Ms. Hasan because its client asked Blank Rome to hire Ms. Hasan and then immediately seconded her back to the client,” the magistrate judge stated. “Ms. Hasan had previously worked for the client until the client faced budgetary constraints and could not continue to employ Ms. Hasan.”
The magistrate judge said the determination as to whether a “temporary lawyer” is “associated with” a firm turns on a “functional analysis” focused on whether the lawyer had access to the confidential information of other firm clients. The magistrate judge said Hasan had no such access because the secondment arrangement only allowed her to work on matters for the client with whom she was placed.
But Arleo said the finding that Hasan was a “temporary lawyer” was conclusory and erroneous.
Arleo said that although the New Jersey Supreme Court “has not ruled on when to consider an attorney to be temporary,” one “consistent principle” emerges from authorities that have tackled that question: “a firm cannot hold out a lawyer as one of its own and then later hide behind a functional analysis of that lawyer's duties to avoid ethical conflicts.”
That is what occurred here, the court said. Blank Rome “repeatedly held out Ms. Hasan as an associate of the firm, with no caveats or provisos concerning her secondment or transient status,” Arleo said, and the firm “cannot now conveniently eschew that relationship for the purposes of conflicts analysis.”
Blank Rome said the measures it took after Boston Scientific alerted the firm to Hasan's conflict satisfied the requirement in Rule 1.10(c)(2) to ensure that a “personally disqualified lawyer is timely screened” from a matter.
Arleo disagreed. “To be timely, screening should have been performed at the time of Ms. Hasan's hiring,” she said.
The court said it also could not credit Blank Rome's assertion “that there was a de facto screen because Ms. Hasan was almost never at the firm and did not communicate with firm attorneys about confidential information.” Hasan interacted with Blank Rome attorneys “at firm social gatherings” and other events, Arleo said, and absent “a written screen, there was no reason confidential information could not have been exchanged.”
Arleo also pointed out that screening under Rule 1.10 requires prompt written notice to the former client. Boston Scientific didn't receive such notice, the judge said.
Arleo acknowledged that disqualification “is not an automatic remedy.” Rather, she said, a court must balance the need to maintain high ethics standards against clients' right to choose their counsel.
Applying that test, Arleo said the “rationale for disqualification here is compelling.” She noted “obvious indicia of unfairness,” including the fact that Hasan appeared on “several portions of the privilege log” involving Boston Scientific documents.
Arleo said the fact that Hasan's résumé “list[ed] her prior experience at Boston Scientific” should have alerted Blank Rome to the need for a conflict check when it hired Hasan. Noting that Hasan's prior representation of Boston Scientific was also “listed on her profile on the Blank Rome website,” Arleo added: “Boston Scientific has reason to be concerned.”
Finally, Arleo said the qui tam plaintiffs' right to freely choose their counsel “is not substantially harmed by disqualifying Blank Rome here.” The plaintiffs “have already had three separate counsel,” she said, and the case was not at a “particularly advanced” stage.
Nicholas C. Harbist of Blank Rome, Princeton, N.J., argued for the qui tam plaintiffs. Felice B. Galant of Norton Rose Fulbright US LLP, New York, argued for Boston Scientific.
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Copyright 2015, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
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