Commercial Division Blog

Posted: April 3, 2014 / Categories Commercial, Law Firms and Professional Ethics

Motion to Disqualify Granted Despite Absence of "Significant Harm"

On March 28, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Mayers v. Stone Castle Partners, LLC, 2014 NY Slip Op. 50461(U), granting the plaintiff's motion to disqualify a law firm from representing the defendants.

In Mayers, the plaintiff's motion was premised upon a conversation the plaintiff had with a litigator at the law firm before the present action began. The plaintiff made an unsolicited call a lawyer at the firm seeking to have the firm represent him in a related matter. The lawyer declined due to conflicts.

Although that conversation, "on its own, does not warrant disqualifying," the firm, the lawyer subsequently discussed the call with his colleague, the defendants' lead counsel, and information regarding the plaintiff's call to the firm was included in the complaint. Indeed, the complaint specifically mentioned that the plaintiff "contacted an attorney about the possibility of representing him [and] falsely told the attorney that he was no longer with" the defendant. The court found that these disclosures violated the law firm's fiduciary obligation to preserve the confidential secrets of prospective clients pursuant to Rule 1.18 of the New York Rules of Professional Conduct:

[The law firm's] use of [its lawyer's] discussion with [the plaintiff] in paragraph 33 of the Company's complaint mandates disqualification. This is so even though: [the defendants' trial lawyer] did not affirmatively seek this information in his discussion with [his colleague]; the information is not particularly damning in the context of the more troubling allegations about [the plaintiff’s] actions; and most of these facts were public knowledge at the time and would have (and indeed did) come to light on their own.

. . .

After carefully scrutinizing the allegations and weighing the strategic motives of the motion, the court concludes that [plaintiff] has not met his heavy burden of establishing a significant harm caused by [the law firm's] representation of the Company. Nonetheless, [the law firm's] disqualification is still necessary because, as the appellate courts have long held, the inquiry must go beyond the strict determination of whether a technical violation has occurred. This inquiry arises from the undeniable maxim of the legal profession that an attorney must avoid even the appearance of impropriety . . . . In other words, the movant need not suffer any harm from the violation.

(Internal citations and quotations omitted.) The court acknowledged that "though courts have long paid homage to the notion that gamesmanship may be ground to deny a motion for disqualification, in practice, the movant's motive is not what tips the scales."

This opinion recognizes that, in almost every motion to disqualify, the movant will be acting for strategic reasons, but that that is not a sound basis to deny the motion.  Creating a significant appearance of impropriety will, this decision shows, provide a basis for granting the motion.