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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: June 7, 2020

Counsel Disqualified Based on Client’s Conflict

On April 21, 2020, Justice Ostrager of the New York County Commercial Division issued a decision in Alam v. Ahmad, 2020 NY Slip Op. 31423(U), disqualifying a law firm based on its client’s conflicts, explaining:

Plaintiffs’ theory of disqualification is rooted in Rule of Professional Responsibility 1.9(c) which provides that [a] lawyer who formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter: (1) use confidential information of the former client protected by Rule 1.6 to the disadvantage of the former client, except as these Rules would permit or require with respect to a current client or when the information has become generally known; or (2) reveal confidential information of the former client protected by Rule 1.6 except as these Rules would permit or require with respect to a current client.

Undeniably, the facts presented do not fit the common attorney disqualification fact pattern. Indeed, the Court agrees with Brickman that there is no prior attorney-client relationship between Brickman and any party to the instant litigation. Moreover, the Court does not suggest that Brickman violated Rule 1.9 by accepting representation of defendants. However, the disqualification rules contained in the Code of Professional Responsibility provide guidance, not binding authority, for courts in determining whether a party’s law firm, at its adversary’s instance, should be disqualified during litigation. And, even in instances where the irrebuttable presumption of disqualification of an attorney for representing conflicting interests does not attach, and, hence, disqualification is not mandatory, disqualification nonetheless may be warranted depending upon the particular facts and circumstances of a given case.

The disqualification of an attorney is a matter within discretion of the court. When deciding a disqualification motion, a court must balance the party’s valued right to choose its own counsel, and the fairness and effect in the particular factual setting of granting disqualification or continuing representation and the preservation of the public trust.

The parties strongly dispute whether Lewis received confidential information pertinent to Alam v. Ahmad. However, the Court need not determine whether Lewis actually has confidential information for two reasons: First, in a disqualification situation, any doubt is to be resolved in favor of disqualification. Second, even the possibility that defense counsel could, through its representation of Lewis, have obtained plaintiffs’ confidential information in the instant litigation, supports a finding of disqualification.

Brickman argues that even if Lewis had information about Pierce Bainbridge’s valuation of Alam v. Ahmad, assessments by lawyers are not confidential information, nor are they the client’s secrets. In other words, Brickman argues that what plaintiffs’ lawyers think Alam v. Ahmad is worth is not an issue in the litigation of Alam v. Ahmad. However, this argument ignores the role that such information could play in resolving the litigation and implications it may have on litigation strategy and the interests of plaintiffs. Indeed, in November 2019, defense counsel sent a discovery request in this action to plaintiffs which included a demand for any documents related to the valuation of Alam v. Ahmad, including those that had been given to third-party litigation funders.

In any event, a party seeking disqualification of opposing counsel is not required to show actual harm to succeed on the motion. Potential conflicts of legal representation must be resolved to avoid even the appearance of impropriety. The purpose of disqualifying counsel where there is the appearance, but not necessarily the existence, of a conflict preserves the client’s expectation of loyalty and also promotes public confidence in the integrity of the Bar.

While the facts before the Court do not fit squarely into precedent, when we find an area of uncertainty, we must use our judicial process to make our own decision in the interests of justice to all concerned. And, while the Court is conscious of defendants’ right to be represented by counsel of their choosing, that right is not unlimited, and defendants continue to be represented by their original counsel AXS. Although the Court disfavors disqualification, it must exercise its discretion to reach the result that upholds the spirit of the ethical rules and avoids potential conflicts. Under these circumstances, the Court finds that the risks articulated by plaintiffs support disqualifying The Law Offices of Neal Brickman.

(Internal quotations and citations omitted).

We both bring and defend motions relating to attorney conflicts and do appeals of the decisions on those motions. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you face a situation where counsel may be–or is accused of being–conflicted.

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