Commercial Division Blog

Posted: May 13, 2016 / Categories Commercial, Law Firms and Professional Ethics

Late Attorney Disqualification Motion Justified By Change In Factual Circumstances

On May 10, 2016, the First Department issued a decision in Anderson & Anderson LLP v. North American Foreign Trading Corp., 2016 NY Slip Op. 03669, unanimously affirming a decision by Justice Bransten of the New York County Commercial Division disqualifying plaintiffs' counsel and his firm under the attorney-client and attorney-witness rules.

Plaintiffs' counsel David Buxbaum, and his firm, Anderson & Anderson LLP, along with several Chinese law firms, had represented the defendant ("NAFT") in proceedings in China to enforce a New York arbitration award, and in the current action plaintiffs are demanding a contingency fee based upon that representation. NAFT moved to disqualify when it learned that Anderson & Anderson LLP (the plaintiffs' law firm) and Anderson & Anderson LLP Guangzhou (the named plaintiff) were different legal entities, meaning that Anderson & Anderson LLP was not appearing pro se through one of its partners. Justice Bransten granted the disqualification motion, which we discussed on here at the time.

The Appellate Division focused on Justice Bransten's former-client rule analysis, holding that "the former representation (enforcement of defendant's arbitral award against a nonparty in China) and the present litigation (plaintiffs' entitlement to fees for the work done in China) are substantially related."

The Appellate Division also upheld Justice Bransten's determination that the motion to disqualify was timely despite the fact that Buxbaum had been representing plaintiffs for several years:

Defendant submitted affirmations—which were not rebutted by plaintiffs on the relevant motion—saying it believed that 'Anderson & Anderson LLP' and 'Anderson & Anderson LLP Guangzhou' were the same until plaintiffs' brief on their summary judgment motion, which clarified that the two were separate legal entities. After defendant realized that Anderson & Anderson LLP Guangzhou was not acting pro se, it moved to disqualify Anderson & Anderson LLP and Buxbaum (the Anderson attorney handling the instant case for plaintiffs). Because defendant acted promptly after the facts changed, the branch of its motion based on [the former-client rule] is timely. The branch of its motion based on [the attorney-witness rule] is not subject to laches.

(Internal citations omitted) (emphasis added).

This decision is of interest because it reaffirms that late attorney disqualification motions can be justified under the right circumstances—so long as you move as soon as you become aware that the facts have changed.

NOTE: The author of this post (and Schlam Stone & Dolan LLP) represents NAFT before the Supreme Court and on this appeal.