Commercial Division Blog

Posted: November 1, 2014 / Categories Commercial, Law Firms and Professional Ethics

Litigation Counsel Disqualified Under Attorney-Witness Rule

On October 20, 2014, Justice Bransten of the New York County Commercial Division issued a decision in Anderson & Anderson LLP-Guangzhou v. North American Foreign Trading Corp., 2014 NY Slip Op. 51530(U), disqualifying plaintiffs’ counsel under the attorney-witness rule and his firm under the former-client rule.

The plaintiffs, Chinese law firms and David Buxbaum of Anderson & Anderson LLP, were retained by the defendant, NAFT, to bring proceedings in China to enforce an arbitration award defendant had obtained in New York. The current action involves a dispute between plaintiffs and NAFT about whether the plaintiffs are entitled to a contingency fee based upon their legal work in China. Mr. Buxbaum was serving as the plaintiffs' lead counsel, and when the plaintiffs moved for summary judgment, NAFT moved to disqualify him and Anderson & Anderson LLP under the attorney-witness rule and the former-client rule.

Justice Bransten disqualified Mr. Buxbaum as a "necessary witness" because he was the principal drafter of the retainer agreements at the heart of the dispute:

The complexity of this case arises from the interpretation of the Agreements that Buxbaum negotiated, drafted, and signed. Plaintiffs assert that they performed legal services under the Agreements; NAFT does not dispute the actions that Plaintiffs took. Rather, the dispute in this action is whether the work Plaintiffs performed entitles them to payment under the terms of the agreement. Buxbaum is the only individual identified by either party who has personal knowledge of the Agreements, and therefore his testimony is critical . . . . Buxbaum is more critical as a witness than as an advocate.

Justice Bransten rejected the plaintiffs' argument that exceptions to the advocate-witness rule applied in this case, holding that the exception for testimony that relates "solely to the nature and value of legal services rendered" on the grounds that that exception applies only to services rendered in that particular action, and holding that plaintiffs had not established the "substantial hardship" exception, which applies "only in the most exceptional situations."

Justice Bransten also disqualified Anderson & Anderson, on the grounds that, under the former-client rule, NAFT was Mr. Buxbaum's former client any disqualification was automatically imputed to the attorney's entire firm.

Finally, Justice Bransten rejected the plaintiffs' argument that NAFT had waited too long to bring its motion, because "the need for disqualification became evident only after Buxbaum, and only Buxbaum, submitted an affidavit in support of summary judgment, showing his testimony to be ‘necessary."

NOTE: The author of this post (and Schlam Stone & Dolan LLP) represent NAFT in this action.