In a recent case, the Nevada Supreme Court clarified when an attorney and his new firm should be disqualified based on the attorney’s employment at a previous firm. In New Horizon Kids Quest III, Inc. v. Eighth Jud. Dist. Ct., 133 Nev. adv. Op. 14 (April, 2017), the Court was asked to consider whether an attorney and his current firm should be disqualified from representing the Plaintiff in a case where the attorney’s prior firm represented the opposing party in a previous and separate case.
In New Horizon, the attorney at issue worked in a law firm as an associate in 2007 when that firm represented New Horizon. However, the attorney did not work on that case and never obtained any confidential information about New Horizon while he was at the firm. A few years later, the attorney left his old firm and started at the new firm. Several years after that, the new firm was retained to represent a Plaintiff in a case filed against New Horizon. At some point in the litigation, both the new firm and New Horizon realized that the attorney at issue had previously worked for the firm that represented New Horizon in a prior action. New Horizon moved to disqualify the Plaintiff’s law firm. In response to the motion, the attorney at issue submitted an affidavit indicating that, while at the previous firm, he was not involved in any way with the litigation relating to New Horizon and that he never obtained any confidential information about New Horizon. Another attorney at the old firm also confirmed those statements in a separate affidavit.
The District Court denied the motion to disqualify the attorney or the new firm. The District Court concluded that because the attorney never obtained confidential information about New Horizon while working at his old firm, the new firm did not have to be disqualified. In response, New Horizon filed a Petition for Writ of Mandamus with the Supreme Court.
In reviewing the petition, the Supreme Court first noted that a Petition for Writ of Mandamus was the appropriate procedure for challenging the District Court’s decision. The Court noted that it has consistently held that Mandamus is the appropriate vehicle for challenging Orders that relate to the disqualification of counsel. Thus, the Court confirmed that the Writ was properly before it.
Next, the Court noted that it pays substantial deference to a District Court’s familiarity with the facts of the case at issue to determine if disqualification is warranted. It applies an abuse of discretion standard to issues of attorney disqualification and it grants the District Court broad discretion to decide those issues.
The Court then turned to the applicable Rules of Professional Conduct, Beginning with Rule 1.9(b) of the RPC, the Court noted that a lawyer cannot knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented the client: “1) whose interests are materially adverse to that person and; 2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter…”.The Court further noted that, pursuant to RPC 1.10(a), if an attorney is disqualified under RPC 1.9, that disqualification is imputed to the new law firm. However, the Court did note that imputed disqualification of the new law firm can be overcome in some circumstances, such as by implementing certain screening and notice procedures.
The Court then turned to the issue of whether the attorney acquired confidential information about New Horizon while working at his prior law firm. The Court noted that the requirement that the attorney actually acquire confidential information about the former firm’s client is not presumed. Instead, the District Court finds that the attorney never obtained confidential information and is therefore not personally disqualified, then the issue of imputed disqualification of the new firm does not apply.
In reviewing the record, the Court held that the District Court did not abuse its discretion in determining that the attorney did not obtain confidential information about New Horizon as a result of his work at the prior firm. Therefore, the Court found that the District Court did not abuse its discretion in denying the Motion for Disqualification. then with the finding that the individual lawyer was not disqualified, the Court concluded that it did not have to evaluate issues of imputation of disqualification to the new firm.
In analyzing the issue, the Court looked to comments from the American Bar Association. Noting that the applicable ABA Model rule is identical to the Nevada Model Rule, the Court found that the comments to the ABA Model Rules were instructive. Quoting from the Model Rule comments, the Court noted that if a lawyer with one firm acquires no knowledge or information relating to a particular client of that firm, and the lawyer later joined another firm, neither the lawyer individually nor the second firm is disqualified from representing another client in the same or related matter even though the interest of the two clients conflict. The Court also noted in prior rulings that with respect to non-lawyer disqualification, where it has found that the mere access to confidential information, without proof that the person at issue actually obtained confidential information, is insufficient to warrant disqualification.
I have had the pleasure of working my entire career at one law firm. However, that is appearing more and more to be an unusual circumstance. Any time a lawyer moves from one firm to another, it is both necessary and important to conduct thorough reviews of conflict checks. However, even the most thorough conflict check is unlikely to alert the firm to the situation that occurred in New Horizon. Therefore, it is good to know that if a firm hires a new attorney, it will not be disqualified just because that attorney worked at a prior firm that represented an adverse party, so long as the attorney did not obtain confidential information about the adverse party while working there.
The Writ, “Appellate Briefs”
May 2017, Vol. 39, No. 5
About McDonald Carano
McDonald Carano has helped to shape the Nevada business and legal landscape for nearly 70 years. With more than 60 lawyers and government affairs professionals in our offices in Las Vegas and Reno, we are Nevada's law firm for business. We proudly represent Fortune 500 companies, financial and governmental institutions, fast-growth and mid-market companies, entrepreneurs, start-up ventures, non-profit organizations and individuals. Our attorneys deliver cross-discipline, one-stop, commercial law and government affairs counsel. Our dedication to clients, innovative thinking and practical solutions based in sound business and legal judgments are at the heart of our practice. For more information, visit mcdonaldcarano.com, call 775.788.2000 (Reno office), or 702.873.4100 (Las Vegas office) or reach us by email at email@example.com.
You have chosen to send an email to McDonald Carano. The sending or receipt of this email and the information in it does not in itself create an attorney-client relationship. If you are not already a client, you should not provide us with information that you wish to have treated as privileged or confidential without first speaking to one of our lawyers. If you provide information before we confirm that you are a client and that we are willing and able to represent you, we may not be required to treat that information as privileged, confidential, or protected information, and we may be able to represent a party adverse to you.
I have read this and want to send an email.