Can a North Carolina lawyer who defended a company in workers' compensation cases move to a plaintiffs' firm that sues that company, and how must she be screened?

Plain-English summary

Attorney J defended Large Manufacturer in workers' compensation cases at one firm, then moved to a plaintiffs' firm that routinely sues Large Manufacturer on workers' compensation claims. The opinion concludes she may make the move. Under Rule 1.9(a), she is personally disqualified from any claim she defended for Large Manufacturer and from any matter substantially related to her prior representation; under Rule 1.9(b), she is disqualified from a matter another lawyer at her old firm handled for Large Manufacturer if she acquired confidential material information about it.

Where she is personally disqualified under Rule 1.9, Rule 1.10(c) lets the new firm screen her instead of imputing her conflict to the whole firm. Two conditions apply: she must be timely screened from any participation in the matter, and written notice must be promptly given to the affected former client so it can verify compliance. The opinion cites Rule 1.0(l) and 2003 FEO 8 for the screening procedures.

The opinion also addresses new claims that arise after Attorney J's move. Even when a new matter is not substantially related to her prior work, she has a continuing duty under Rule 1.9(c) not to use confidential information of Large Manufacturer that is material, not generally known, and usable to the company's disadvantage; if such information is in play, she must be screened from that matter too. The opinion notes that general knowledge of an organizational client's policies and practices ordinarily does not preclude a later representation, while knowledge of specific facts relevant to the new matter ordinarily does. So long as Attorney J is screened where required, the other lawyers at her new firm may represent claimants against Large Manufacturer.

In practice

Under the North Carolina rules as they stood at the time of the opinion, conduct in which a lawyer who switched sides joins a firm adverse to her former client is permitted if the firm screens her under Rule 1.10(c). Per the opinion, the screen must isolate her from matters she handled, substantially related matters, and matters on which she holds disqualifying confidential information, and written notice of the screen must go to the former client.

Per the opinion, the lawyer's obligation is ongoing: she must monitor each new matter involving the former client to determine whether it is substantially related to her prior work or implicates confidential information that is material and not generally known, and a screen must be promptly implemented for any such matter. The opinion lists factors for that judgment, including the length and role of the prior representation, the passage of time, and the relevance of the former client's litigation policies and strategies to the new matter.

Common questions

Q: Can a lawyer who defended a company switch to a firm that sues that company?

A: Yes. Opinion #1 concludes the lawyer may join the plaintiffs' firm if she is properly screened from matters she handled for the former client, substantially related matters, and matters on which she acquired material confidential information, with written notice to the former client.

Q: Does the whole new firm get disqualified when the lateral lawyer is conflicted?

A: No. The opinion applies Rule 1.10(c), which avoids imputing the lawyer's Rule 1.9 disqualification to the firm if she is timely screened and the affected former client receives prompt written notice.

Q: Can the lateral lawyer take new cases against her former client that arise after she changes firms?

A: It depends. Opinion #2 concludes she may, unless the new matter is the same or substantially related to her prior representation, or she acquired confidential information of the former client that is material, not generally known, and usable to the former client's disadvantage. In that case she must be screened.

Q: Does general knowledge of the former client's business disqualify the lawyer?

A: Not by itself. The opinion states that, for an organizational client, general knowledge of the client's policies and practices ordinarily will not preclude a later representation, while knowledge of specific facts relevant to the new matter ordinarily will.

Q: What factors decide whether a new matter is substantially related or off-limits?

A: Opinion #2 lists, among others, the length of the prior representation, the lawyer's role (including presence at strategy sessions), her authority over the prior matter, the passage of time, the factual and legal similarity between matters, and the relevance of the former client's litigation policies and strategies to the new matter.

Background and rules framework

The opinion applies North Carolina Rule 1.9 (duties to former clients, the analogue of Model Rule 1.9) together with Rule 1.10(c) (screening to avoid imputed disqualification when a lawyer joins a firm) and Rule 1.0(l) (definition of a screen). Rule 1.9(a) bars representation adverse to a former client in the same or a substantially related matter; Rule 1.9(b) addresses matters handled by a lawyer's former firm; Rule 1.9(c) restricts using or revealing a former client's confidential information unless it has become generally known.

The opinion relies on the official comments to Rule 1.9 to explain the "substantially related" test (Comment [3]) and the "generally known" exception (Comment [8]), and it cites the Restatement (Third) of the Law Governing Lawyers section 59 on what information is "generally known." It points to 2003 FEO 8 for the mechanics of an effective screen.

Citations and references

Rules of Professional Conduct:

• MR 1.9 / NC Rule 1.9 (duties to former clients)
• MR 1.10 / NC Rule 1.10(c) (screening a lateral lawyer to avoid imputed disqualification)
• MR 1.0 / NC Rule 1.0(l) (definition of "screened")

Other authorities:

• Restatement (Third) of the Law Governing Lawyers section 59, cmt. d ("generally known" information)
• Ethics in Government Act of 1978, 18 U.S.C. section 207(c) (cited in an endnote as an example of a post-employment conflict timeframe)

Other opinions cited:

• NC 2003 FEO 8: procedures for an effective screen.

See also

• ABA Formal Op. 99-414: Lawyers Changing Firms
• ABA Formal Op. 489: Notice When Lawyers Change Firms
• ABA Formal Op. 479: 'Generally Known' Exception
• ABA Formal Op. 99-415: Former In-House Lawyer Conflicts

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2012-formal-ethics-opinion-4/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry #1:

Attorney J was employed with Law Firm H where she did workers’ compensation defense work. During this time, Attorney J handled many such cases for Large Manufacturer and its insurer. In addition, Attorney J was privy to Large Manufacturer’s workers’ compensation policies and procedures, litigation strategies, and system for case preparation. Attorney J participated in workers’ compensation strategy meetings with representatives of Large Manufacturer as well as with defense counsel from Law Firm Y, another firm providing workers’ compensation defense representation to Large Manufacturer.

Attorney J resigned from Law Firm H to work for Law Firm S, a plaintiffs’ personal injury firm that routinely handles workers’ compensation cases against Large Manufacturer.

May Attorney J work at Law Firm S?

Opinion #1:

Yes, if Attorney J is properly screened from participation in (1) any matter in which Attorney J represented Large Manufacturer or any other adverse party; (2) any matter that is substantially related to a matter in which Attorney J represented Large Manufacturer; and (3) any matter in which a lawyer with Law Firm H represents or represented Large Manufacturer or any other adverse party and about which Attorney J acquired material confidential information while she was employed with Law Firm H. Written notice of the screen must be given to Large Manufacturer and any other affected former client.

Rule 1.9(a) prohibits a lawyer who has formerly represented a client in a matter from thereafter representing an adverse party in the same or a substantially related matter unless the former client gives informed consent. This provision of the rule prohibits Attorney J from representing any workers’ compensation claimant on a claim for which she formerly defended Large Manufacturer and from representing any claimant on a claim that is substantially related to a matter upon which Attorney J formerly represented Large Manufacturer.

Comment [3] to Rule 1. 9 provides the following explanation of disqualification because of substantial relationship:

[m]atters are “substantially related” for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter... Information that has been disclosed to the public or to other parties adverse to the former client ordinarily will not be disqualifying. Information acquired in a prior representation may have been rendered obsolete by the passage of time, a circumstance that may be relevant in determining whether two representations are substantially related. In the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation; on the other hand, knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation.

The substantial relationship test serves as a proxy for requiring a former client to disclose confidential information to demonstrate that the lawyer has a conflict of interest:

A former client is not required to reveal the information learned by the lawyer to establish a substantial risk that the lawyer has information to use in the subsequent matter. A conclusion about the possession of such information may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.

Rule 1.9, cmt. [3].

Rule 1.9(b) prohibits a lawyer from representing anyone in the same or a substantially related matter in which a firm with which the lawyer was formerly associated had previously represented the adverse party and about whom the lawyer acquired confidential, material information, unless the former client gives informed consent. This provision of the rule prohibits Attorney J from representing a workers’ compensation claimant in a matter in which one of the other lawyers at Law Firm H defended Large Manufacturer and about which Attorney J acquired confidential information that is material to the matter.

If Attorney J is disqualified under any provision of Rule 1.9, Rule 1.10(c) permits screening of Attorney J to avoid imputing her disqualification to the other lawyers in her new firm. The rule provides:

[w]hen a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under Rule 1.9 unless:

(1) the personally disqualified lawyer is timely screened from any participation in the matter; and

(2) written notice is promptly given to any affected former client to enable it to ascertain compliance with the provisions of this Rule.

Comment [4] to Rule 1.9, which relates to lawyers moving between firms, elucidates the policy considerations justifying the use of screens in this situation:

[w]hen lawyers have been associated within a firm but then end their association, the question of whether a lawyer should undertake representation is more complicated. There are several competing considerations. First, the client previously represented by the former firm must be reasonably assured that the principle of loyalty to the client is not compromised. Second, the rule should not be so broadly cast as to preclude other persons from having reasonable choice of legal counsel. Third, the rule should not unreasonably hamper lawyers from forming new associations and taking on new clients after having left a previous association. In this connection, it should be recognized that today many lawyers practice in firms, that many lawyers to some degree limit their practice to one field or another, and that many move from one association to another several times in their careers. If the concept of imputation were applied with unqualified rigor, the result would be radical curtailment of the opportunity of lawyers to move from one practice setting to another and of the opportunity of clients to change counsel.

As long as a screen is implemented to isolate Attorney J from participation in these matters, the consent of Large Manufacturer to the representation of the claimants by a lawyer with Law Firm S is not required. See Rule 1.0(l) and 2003 FEO 8 (setting forth screening procedures).

Inquiry #2:

Large Manufacturer contends that any new workers’ compensation claims against Large Manufacturer that Attorney J handles at Law Firm S will be substantially related to her prior representation of Large Manufacturer because Attorney J was privy to information about Large Manufacturer’s defense of workers’ compensation cases and this information will materially advance the interests of any client with a workers’ compensation claim against Large Manufacturer.

May Attorney J represent claimants on new workers’ compensation cases against Large Manufacturer if the claimant did not seek representation from Law Firm S until after Attorney J’s employment?

Opinion #2:

It depends. If a new matter is not the same or substantially related to Attorney J’s prior representations of Large Manufacturer, she is not disqualified from the representation unless, during her prior employment with Law Firm H, she acquired confidential information of Large Manufacturer that is material or relevant to the representation of the new client, may be used to the disadvantage of Large Manufacturer, and is not generally known. Attorney J has a continuing duty under paragraphs (a) and (b) of Rule 1.9 to monitor any new matter involving Large Manufacturer to determine whether it is substantially related to her prior representation of her former client or she acquired confidential information from Large Manufacturer that is material to the matter. If so, she is personally disqualified and must be screened. See Opinion #1.

Even if the matters are not substantially related, however, Attorney J has a continuing duty under paragraph (c) of Rule 1.9 to ensure that the representation will not result in the misuse of confidential information of Large Manufacturer. Rule 1.9(c) prohibits a lawyer who has formerly represented a client in a matter or whose former firm has formerly represented a client in a matter from thereafter using confidential information relating to the representation to the disadvantage of the former client except as allowed by the Rules or when the information has become “generally known.” A screen must be promptly implemented to isolate Attorney J from participation in any such case. See Opinion #1.

Comment [8] to Rule 1.9 explains the exception for information that is “generally known” as follows:

…the fact that a lawyer has once served a client does not preclude the lawyer from using generally known information about that client when later representing another client. Whether information is “generally known” depends in part upon how the information was obtained and in part upon the former client’s reasonable expectations. The mere fact that information is accessible through the public record or has become known to some other persons does not necessarily deprive the information of its confidential nature. If the information is known or readily available to a relevant sector of the public, such as the parties involved in the matter, then the information is probably considered “generally known.”

Similarly, the Restatement (Third) of The Law Governing Lawyers adopts an access approach to the determination of what information is “generally known”:

Whether information is generally known depends on all circumstances relevant in obtaining the information. Information contained in books or records in public libraries, public-record depositaries such as government offices, or in publicly accessible electronic-data storage is generally known if the particular information is obtainable through publicly available indexes and similar methods of access. Information is not generally known when a person interested in knowing the information could obtain it only by means of special knowledge or substantial difficulty or expense. Special knowledge includes information about the whereabouts or identity of a person or other source from which the information can be acquired if those facts are not themselves generally known.

Restatement (Third) of the Law Governing Lawyer, §59, cmt. d.

Attorney J’s general knowledge of Large Manufacturer’s workers’ compensation case management, settlement, and litigation policies and practices may be sufficient in some matters to disqualify her. As observed in the discussion of “substantial relationship” in comment [3] to Rule 1.9, “[i]n the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation; on the other hand, knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation.”

When evaluating whether a representation is substantially related to a prior representation of an organizational client or whether a lawyer acquired confidential information of a former organizational client that is substantially relevant to the representation of a client and may be used to the disadvantage of the former client, the following factors, among others, should be considered: the length of time that the lawyer represented the former client; the lawyer’s role in representing the former client, including the lawyer’s presence at strategy and decision-making sessions for the former client; the relative authority of the lawyer to make decisions about the representation of the former client; the passage of time since the lawyer represented the former client;1 the extent to which there are material factual and legal similarities between former and present representations; and the substantial relevance of the former client’s litigation policies, strategies, and practices to the new matter.

Inquiry #3:

May the other lawyers in Law Firm S represent claimants on new workers’ compensation cases against Large Manufacturer?

Opinion #3:

Yes, if Attorney J is screened from those matters for which she acquired confidential information of Large Manufacturer that is disqualifying. See Opinion #2.

Inquiry #4:

Should Attorney J be screened from participation in workers’ compensation cases against Large Manufacturer that were defended by lawyers from Law Firm Y while Attorney J was employed by Law Firm H?

Opinion #4:

Yes, if she acquired confidential information of Large Manufacturer that is disqualifying. See Opinion #2.

Inquiry #5:

Large Manufacturer has many long-term employees who over time may file multiple workers’ compensation claims against Large Manufacturer. If Lawyer J or another lawyer with Law Firm H defended Large Manufacturer against a particular employee while Attorney J was employed by the firm, it is contended that there is a substantial risk that Attorney J will have specific confidential information of Large Manufacturer that would be relevant and useful to the representation of the particular claimant. For example, a manager’s thoughts and opinions regarding the claimant could be information that would not be generally known and which might be used to the disadvantage of Large Manufacturer.

May Attorney J represent a claimant on a new workers’ compensation case against Large Manufacturer if the claimant had previously filed a workers’ compensation case against Large Manufacturer that was defended by a lawyer from Law Firm H while Attorney J was employed by the firm?

Opinion #5:

As stated in Opinion #2, Attorney J has a continuing duty to monitor any matter involving Large Manufacturer to be sure that the representation will not result in the use of confidential information of Large Manufacturer that has not become generally known to the disadvantage of Large Manufacturer in violation of Rule 1.9(c). A screen must be promptly implemented to isolate Attorney J from participation in any such matter.

End Notes

• For an example of a timeframe deemed to be sufficient to manage post-employment conflicts of interest for federal government employees, see the Ethics in Government Act of 1978, 18 U.S.C.§207(c).