Four Case Digests: May 2001

[Originally published in NYPRR May 2001]

Firm Representing State Agency Not Disqualified from Suit Against State

Covington and Burling (C&B) represents Brown & Williamson Tobacco Corp. in an action to block enforcement of a New York State statute restricting cigarette sales. The firm also represents the State’s Division of Budget in matters, including litigation, concerning federal funding of the State’s public assistance programs (e.g., Medicaid, foster care, and child support). As part of this representation, the firm interacts with various state agencies, including the Office of Mental Health, the Department of Social Services and the Department of Health.

In another matter, C&B is representing the State and other states in a suit against the federal government to prevent enforcement of a federal policy to restrict how the states can use block grants under a federal program for the assistance of needy families.

C&B has represented other private litigants against the State. The State has never sought to disqualify the firm in any of these suits. In the Brown & Williamson suit, the firm sought the deposition of two lawyers who were on the staff of the Governor’s Counsel. The State objected that the depositions were protected by executive privilege. When C&B persisted, the State moved to disqualify the firm. The State rejected an offer by C&B to set up a “concrete wall” to shield the tobacco case from its work for the State.

After oral argument on the motion to disqualify, the Court decided in favor of C&B. The Court analyzed the cases under DR 5-105 dealing with the simultaneous representation by a law firm of clients with adverse interests. Acknowledging that the issue was one of first impression, the Court asked: Who is the client when a firm represents a government agency?

The State argued that the client was not simply the agency represented by the firm, but the State as a whole, or, at least, the executive branch of the State. C&B argued that its clients were only the State’s Division of Budget and the agency involved in the federal matter. The firm cited a bar association opinion which said, “treating different governmental departments or agencies as separate clients for the application of conflicts rules is in keeping with opinions treating corporate entities in the private sector as distinct clients for conflicts purposes.”

The Court rejected the State’s contention that the State as a whole became the client simply because C&B occasionally consulted with State officials. It pointed out that the consultations were limited to matters concerning the agencies which the firm clearly represented. Similarly, the State as a whole did not become the client simply because it paid C&B’s bills. The bills specified the matters handled by the firm and proved that the work was performed for a particular agency.

The Court cited several other factors in support of its decision: (1) although simultaneous adverse representation is prima facie improper, C&B has shown that it can represent both parties vigorously and that it will not use confidential information of either to the detriment of the other; (2) Brown & Williamson would be prejudiced by disqualifying C&B at this stage in the proceeding; (3) the State must accept the consequence of delaying its motion to disqualify after asking for expedited proceedings; and (4) the State may be guilty of “tactical maneuvering” in moving for disqualification on these facts when it has never moved to disqualify C&B before.

• Brown & Williamson Tobacco Corp. v. Pataki, S.D.N.Y., No. 00 Civ. 7750 (LAP), (2/26/2001, Judge Loretta A. Preska).

Law Firm Gets Protective Order Against Investigatory Interview of Former Employees

Baron & Budd (B&B) and other law firms brought several lawsuits in state courts alleging asbestos violations by G-I Holdings, Inc. (G-I). G-I brought this civil RICO action against B&B and the other law firms. G-I alleged that the firms had engaged in a scheme to flood the judicial system with hundreds of asbestos cases without regard to their merit and in various illegal acts, including subornation of witnesses.

The matter is now before the New York federal court on a motion by G-I for a preliminary injunction against any further state court actions by B&B and by B&B for a protective order barring G-I from interviewing several former employees of the law firms.

The Court denied G-I’s motion for a preliminary injunction because there is no state court action pending and relief is therefore unnecessary. The facts supporting the B&B motion for a protective order were these: G-I contacted several former employees of the law firms and asked them to submit to ex-parte interviews. Some of these employees contacted the law firms and described the topics the interviewers intended to cover.

Among the former employees were a “claims paralegal,” a word-processor whose job included the entry of data about client consents and waivers, and an administrative assistant. The interviewers asked how the law firms generate litigation documents and retainer agreements; how they prepare clients for depositions; and who decided how settlement funds would be allocated among the clients of the law firms.

The interviewers were instructed to disclose their identity, to disclose their affiliation with G-I, to describe the nature of their investigation, and to advise the employees not to disclose (1) any privileged communications or other information communicated by the clients of the law firms to any lawyer, or (2) any information the law firms would legitimately expect to remain confidential. B&B argued that the interviews were in the nature of discovery and that it had satisfied the burden under the Federal Rules of showing that the protective order was needed to protect it from “annoyance, embarrassment, oppression, or undue burden or expense.”

It had also satisfied its burden of proving that the interviews came within the attorney-client privilege.

The Court found that ex-parte interviews of former employees who possess knowledge which may be privileged present special problems. When the employee is a layperson, he will not necessarily know what information is privileged, leading him to disclose privileged material either unintentionally or inadvertently. The problem is compounded when the interviewer is also a layperson and is no better able to recognize what is privileged than the employee.

Given the scope of duties performed by the former employees in this case, there is little doubt that they were exposed to privileged material during the course of their work. Indeed, the exposure was probably extensive. On balance, the hardships on B&B outweigh those on G-I.

The Court imposed the following alternative remedies: either (1) G-I could continue the interviews upon notice to and in the presence of B&B’s counsel; or (2) the interviews could be conducted in the presence of a special master who would decide issues of privilege.

• G-I Holdings, Inc. v. Baron & Budd, SDNY 4/13/01, Judge Robert W. Sweet.

Client Objects to Lawyer’s Book

A convicted police killer on Pennsylvania’s death row has asked a federal judge to remove two New York lawyers on his defense team because one of them has written a book about his trial and appeal. Mumia Abu-Jamal’s motion is pending before Judge William H. Yohn of the Eastern District of Pennsylvania.

The author of the book is New York attorney Daniel R. Williams, who insists that he wrote the book with the client’s consent. The book, entitled Executing Justice, is soon to be published by St. Martin’s Press.

Abu-Jamal is relying on ABA Model Rule 1.8(d), which provides “Prior to the conclusion of representation of a client, a lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.” New York’s DR 5-104(B) is substantially the same as the ABA Rule.

States Frown on Chat Room Solicitation

Virtually all states prohibit a lawyer’s direct or in-person solicitation of prospective clients with whom the lawyer has no family or professional relationship. The prohibitions in New York’s DR 2-103(A) extend to all contact in-person or by telephone and to any written or recorded communication which violates the restraints on advertising and publicity in DR 2-101.

As the use of Internet chat rooms has expanded, lawyers have apparently seized upon the real-time opportunity these rooms afford to offer their professional services to other chat room participants. This practice has come under scrutiny by several states, all of which have concluded that real-time conversations in chat rooms cannot be distinguished from in-person contact or contact by telephone.

The latest state to criticize real-time solicitation in Internet chat rooms is Florida. The Standing Committee on Advertising of the Florida Bar determined that the practice violated the Florida rule against in-person solicitation. Substantially similar conclusions have been reached in West Virginia, Utah and Virginia. The West Virginia Bar commented that real-time electronic communication may be more immediate, more intrusive and more persuasive than e-mail or other forms of written communication.

The Florida Bar was careful not to condemn a lawyer’s participation in chat rooms which did not concern his professional qualifications or which were devoted to his nonprofessional interests. [Florida also permits email to prospective clients as a form of direct mail, provided the e-mail conforms to the general requirements of the Florida rules controlling lawyer advertising and publicity.]

The issue of solicitation through Internet chat rooms and other forms of real-time electronic contact drew the attention of the ABA Ethics 2000 Commission in its recent review of the ABA Model Rules. In its report, the Commission recommended the following amendment to Model Rule 7.3:

Direct Contact with Prospective Clients

(a) A lawyer shall not by in-person, live telephone or real time electronic contact solicit professional employment from a prospective client when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain… (Emphasis added).

Thus far, the issue of chat room solicitation does not seem to have drawn any comment from the New York State Bar Association or any other New York bar association.

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Disqualification No-Contact Rule NYPRR Editor Prospective Clients