California Bar Journal
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Receiving confidential information
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Violation of Rule of Professional Conduct 3-310, our generic and acrobatic conflicts of interest prohibition, can lead to disqualification, disgorgement of fees and discipline. It is dense with numerous sections. Ordinarily, for disqualification, the predicate is an attorney-client relationship. However, the rule also can be applied to circumstances where there is no attorney-client relationship, and the facts of the case clearly fall outside the strict construction of the rule.

In these cases, the court may reference "square pegs which don't fit in round holes," a concept which justifiably can terrify good, hardworking lawyers who are attempting to follow the rules. How do you anticipate amorphous situations that are not even within the confines of the conflicts rule? One method is to consider if you are acting as fiduciary.

Diane KarpmanIn Raley v. Superior Court (1983) 149 Cal.App. 3d 1042, a partner of the law firm served on the board of directors of a bank in a fiduciary capacity. In disqualifying the law firm, the court maintained that a disqualifying conflict may result from a lawyer's relationship with a non-client, if the relationship creates an expectation of confidentiality, "or where the lawyer acquired confidential information in the course of such a relationship that will be, or may appear to be, useful in litigation on behalf of the client."

A recent case, Morrison v. Hancock (1999) 81 Cal. Rptr. 2d 425, gives new viability to the idea that lawyers can be disqualified for the receipt of confidential information, even absent an attorney-client relationship. The lawyer was acting as "monitoring counsel," and the court found, again, that the lawyer was acting in a fiduciary capacity.

Then there is Allen v. Academic Games Leagues of America Inc. (C.D. Cal. 1993) 831 F. Supp. 785, where a non-lawyer student served on a board as a student competitor and coach. After he became an attorney and his firm was pursuing litigation against Academic Games, the firm was disqualified because of information the lawyer was exposed to before he even became an attorney. Here, the court maintained that although the conduct was not within the confines of Rule 3-310, the general prohibition on all lawyer misconduct contained within Rule 1-100 justified disqualification.

Rule 1-100 states the basic purpose, function and intent of the rules, i.e., to promote respect and confidence in the legal profession. This rule often is thought of as a diaph-anous prohibition restricting lawyers from doing anything that is wrong. Still, this case shows that it can be resurrected on a whim to justify a court's predilection to disqualify counsel.

Remember that disqualification involves the court's attempt to level the playing field. Therefore, in litigation, if one side is raised on a mound (due to information received in or out of an attorney-client relationship), the courts will not hesitate to bring in the bulldozers in the interest of not compromising the adversarial system or creating an unfair advantage.

Diane Karpman of Los Angeles represents attorneys at the State Bar.