Legal Malpractice has become so complicated that
you need an expert to help figure it out.

Third Circuit: Violation of RPC 1.7 Does Not Require Automatic Disqualification

Wyeth v. Abbott Laboratories, 692 F.Supp.2d 453 (D.N.J. 2010)

Facts:  Wyeth brought a motion to disqualify Howrey LLP from representing Boston Scientific Scimed, Inc. ("BSC") in an underlying patent infringement action.  Wyeth alleged that it was a conflict of interest for Howrey to represent BSC against Wyeth in the underlying action, while representing Wyeth in a separate, ongoing patent matter in Europe.  More specifically, Wyeth contended that Howrey’s conduct was in violation of RPC 1.7(a)(1).  

The Court held that Howrey’s conduct was in violation of RPC 1.7 and disqualified Howrey, interpreting applicable case law as requiring mandatory disqualification for a violation of RPC 1.7. Howrey appealed.

Issue:  Can a law firm represent an adversary of a current client in another, unrelated matter? 

Ruling:  Perhaps. 

The Court first determined that BSC, a defendant in the underlying patent litigation, and Wyeth, a plaintiff in that litigation, were adversaries, and that Howrey was representing Wyeth in the separate European patent matter, thus creating a current attorney-client relationship between Wyeth and Howrey.  

RPC 1.7(a)(1) provides that a concurrent conflict of interest exists if the representation of one client will be directly adverse to another client. Accordingly, the Court then moved on to the question of whether a violation of RPC 1.7 requires disqualification.  In making this determination, the Court stated:

The Court of Appeals for the Third Circuit has noted that "[a]lthough disqualification ordinarily is the result of a finding that a disciplinary rule prohibits an attorney’s appearance in a case, disqualification never is automatic." U.S. v. Miller, 624 F.2d 1198, 1201 (3d Cir.1980). The question of whether disqualification is appropriate is committed to the sound discretion of the district court, which "means that the court should disqualify an attorney only when it determines, on the facts of the particular case, that disqualification is an appropriate means of enforcing the applicable disciplinary rule." Id.

The Court then set forth twelve factors to be considered in determining whether disqualification was warranted: 

(1) prejudice to Wyeth; (2) prejudice to BSC; (3) whether’s Howrey’s representation of Wyeth in the [European] matter allowed BSC access to any confidential information relevant to this case; (4) the cost—in terms of both time and money—for BSC to retain new counsel; (5) the complexity of the issues in the case and the time it would take new counsel to acquaint themselves with the facts and issues; (6) which party, if either, was responsible for creating the conflict; [7] whether the two matters at issue are related in substance; [8] whether both matters are presently active; [9] whether any attorneys from the firm have been involved in both matters; [10] whether the matters are each being handled from offices in different geographic locations; [11] whether the attorneys from the law firm work with different client representative[s] for each matter; and [12] the relative time billed by the law firm to each matter.

Ultimately, the Court found that there was no evidence that Howrey’s independent professional judgment would be impaired if it was permitted to continue as counsel for BSC, since the matters were completely unrelated and no Howrey attorneys overlapped on the two matters.  Additionally, Howrey had put up an "ethical wall" with regard to the attorneys working on the matters, as well as the confidential information with regard to each matter.  With regard to prejudice to each party, the Court noted: 

Given Howrey’s historical representation and the complex technologies at issue in this case, depriving BSC of its counsel of choice deprives BSC of Howrey’s depth of experience and expertise. Additionally, if BSC were required to obtain new counsel, there would likely be some delay in this litigation as well as certain additional costs incurred by BSC while new counsel familiarized itself with this case. In contrast, Wyeth has not identified any prejudice that it will suffer if Howrey is not disqualified from this matter.

Consequently, the Court allowed Howrey to continue as counsel for BSC in the underlying patent litigation. 

Lesson:  Whether or not a law firm will be disqualified for a concurrent conflict of interest under RPC 1.7 is a fact sensitive determination.  It will depend on, among other factors, the remoteness of the two matters at issue, the existence of an ethical wall, the historical relationship between the law firm and the two clients, and potential prejudice to either party.

Tagged with: , , , , , , , , , ,

Posted in: Conflicts of Interest, Federal, Intellectual Property, New Jersey