Case: All American Semiconductor, Inc. v. Hynix Semiconductor, Inc., Nos. C 06-2915, C 07-1200, C 07-1207 and C 07-1212, 2008 WL 5484552 (N.D. Cal. Dec. 12, 2008).
Status: Ready, Aim, Fire
The Defendant in four cases related to a larger multi-district anti-trust action sought to disqualify the plaintiffs' law firm due to a conflict of interest of one of the firm's attorneys. Prior to joining the plaintiffs' law firm, the attorney had represented an employee of Defendant during the criminal investigation of the price-fixing scheme at issue in the cases. In that representation, the attorney had entered into a Joint Defense Agreement (JDA) with the Defendant. The court found that the JDA created a reasonable expectation of confidentiality on the part of the Defendant even though there was no direct attorney-client relationship. Accordingly, the attorney and his firm were bound by the conflicts rule governing successive representations. Because everyone agreed that the matters were "substantially related," a disqualifying conflict had occurred for both the attorney and the firm. It did not matter that the JDA contained a waiver of conflict of interest or that the law firm had erected "an ethical wall." The former was temporally ineffective and the latter is not currently recognized by controlling California case law.
- JDA's may be advisable -- even necessary -- in representing your client, but be aware that they may impact future representations by you and/or your law firm in an action that involves any of the signatories.
- Know that if the signatories to a JDA share confidential information, one party may thereafter successfully seek to disqualify you, your law firm or the law firm representing you from future representations in adverse actions.
- Before signing a JDA consider including a clause that makes clear that the joint agreement does not create new representation for the signatories to the agreement as well as an advance waiver clause that limits or prevents signatories from trying to disqualify other lawyers from any future representations.
Conflicts checks before law firm mergers may just require a review of JDAs. The disqualifying conflict arose here when plaintiffs' Washington, D.C. office merged with the attorney's California law firm in order to have a California office. The attorney's ethical obligations from his prior representation became that of the firm he joined and, ultimately, out-gunned the plaintiffs' important right to (very experienced anti-trust) counsel of their own choosing.
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