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Disqualification for Conflicts of Interest

Maritrans GP, Inc. v. Pepper, Hamilton & Scheetz, 529 Pa. 241 (Pa. 1992)

Student Contributor: Melissa Goldberg

Underlying: Motion to disqualify for  Conflict of Interest 

Facts: Defendant represented Plaintiff in broad range of labor matters for well over a decade. During the course of their labor representation of Plaintiff, Defendant became familiar with Plaintiff’s operations and "gained detailed financial and business information. The Court of Common Pleas of Philadelphia County entered an order preliminarily enjoining Pepper and Messina from continuing to act as labor counsel for seven of Plaintiff’s New York-based competitors. The trial court ruled that preliminary injunctive relief was necessary given the existence of a substantial relationship between Defendant’s current representation of the New York companies, whose interests were adverse to the interests of Plaintiff, and their former longstanding representation of Plaintiff.

Issue: Is the conduct of Defendant Attorney’s is actionable independent of any violation of the Code of Professional Responsibility?

Result: Violations of the Code do not per se give rise to legal actions that may be brought by clients or other private parties; however, the record supports a finding that Defendant’s conduct here constituted a breach of common law fiduciary duty owed to Plaintiffs.
1) there is a well-entrenched body of substantive law prohibiting fiduciaries from engaging in conflicts of interest, and that there is no law excepting attorneys from that prohibition.
2) the trial court improperly relied upon the Rules of Professional Conduct without any independent finding that Pepper and Messina’s conduct was "actionable." Just as there would be an independent cause of action available to a client whose attorney has misappropriated his funds, so too there is an independent cause of action available to a client whose attorney engaged in impermissible conflicts of interest vis a vis that client.

Lesson: The public’s trust in the legal profession undoubtedly would be undermined if the Court did not recognize the common law foundation for the principle that an attorney’s representation of a subsequent client whose interests are materially adverse to a former client in a matter substantially related to matters in which he represented the former client constitutes an impermissible conflict of interest actionable at law.

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Posted in: Conflicts of Interest, Fiduciary Duty, Legal Ethics, Pennsylvania