Ethics Opinions

Opinion No. 88-4

April 1988

Summary: A lawyer who leaves a law firm that represented Seller in a business transaction is not necessarily disqualified from representing Buyer in litigation against Seller with respect to that transaction. The critical questions are whether the lawyer possesses relevant confidences or secrets of Seller and whether Seller might reasonably fear that the lawyer possesses such information. When the representation of Seller occurred before the lawyer joined the firm and was done in a different branch of the firm from the one in which the lawyer worked, the representation of Buyer would be proper given that the lawyer does not possess any relevant confidences or secrets, and it would also not be reasonable for the Seller to fear that she did.

Facts: Lawyer was employed by a law firm that had seven branch offices. Her work consisted primarily of real estate closings. About one year before she began working at the firm, an attorney at a branch office other than the one where she later worked, represented Seller in a sale of a restaurant to Buyer. Buyer was not represented by counsel. Lawyer acquired no information concerning Seller or this transaction while employed at the firm. Lawyer is now a solo practitioner. A lawsuit has arisen between Buyer and Seller for breach of contract regarding the sale of the restaurant. Seller is no longer represented by the law firm, although the attorney there who represented him is the escrow agent in custody of the stock certificates. Buyer has asked Lawyer to represent him in the lawsuit. Seller's former attorney, who now acts as the escrow agent, has stated that he believes a conflict of interest prevents Lawyer from representing Buyer. Lawyer has asked for this committee's opinion.
Discussion: It is apparent that if Lawyer were still at her original law firm, she could not undertake to represent Buyer against Seller. In cases where a lawyer seeks to represent a client against a former client, this committee has consistently followed nationwide authority in adopting the "substantial relationship" test to determine whether representation is permissible. Under that test representation is not permissible if the new matter is substantially related to the subject matter of the prior representation. In Opinion 88-2, we have recently advised that we would continue to follow that test although the Supreme Judicial Court in Masiello v. Perini Corp., 394 Mass. 842, 848 n.5 (1985) stated that it had not yet decided whether it would follow it.
This inquiry presents a situation where the subject matter of the proposed representation of Buyer is litigation that arises out of the very transaction that was handled by the law firm for Seller. The original lawyer who handled the matter for Seller would be disqualified from now representing Buyer against Seller in a dispute arising out of that transaction. All his current partners and associates would also be disqualified by virtue of DR 5-105(D), which provides:
If a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner or associate or any other lawyer affiliated with him or his firm may accept or continue such employment.
DR 5-105(D), however, does not address the disqualification situation of a lawyer after she leaves her law firm, especially when, as here, Lawyer had left her former firm before Buyer came to her, had nothing to do with handling the matter for Seller while she was in the firm, and possesses no confidences or secrets of Seller.
In such a situation, our advice is that Lawyer may represent Buyer without violating our Disciplinary Rules or the associated common law rules of professional responsibility. Although some jurisdictions follow a strict rule stating that since Lawyer could not have represented Buyer while she was employed by her old firm, she carries that disqualification with her when she leaves even though she had no confidential information relating to Seller, the modern trend is to the contrary. A leading case is Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp., 518 F.2d 751 (2d Cir. 1975). In that case, a former associate of a law firm was permitted to represent a client in a suit against Chrysler, which had been a client of the former firm when the associate was there and was still a client. While the court applied the substantial relationship test, it viewed the issue, whenever an employee leaves a firm, to be whether the employee had personally been engaged in a representation of the client that was substantially related to the matter on which he was now bringing suit. In that case, the court found no such representation and no receipt of relevant Chrysler confidences despite the fact that the employee had worked in a minor way on some unrelated Chrysler matters. In this inquiry, the facts are even stronger since the representation of Seller was in a different branch office of the firm and lawyer had no confidences or secrets at all of Seller.
Silver Chrysler Plymouth has been widely followed as representing a wise accommodation of the principles protecting the confidences of a client and assuring loyalty to a client on the one hand and the principles of affording new clients access to counsel of their choice and of protecting the mobility of lawyers among law firms on the other. E.g., Freeman v. Chicago Musical Instruments Co., 689 F.2d 715 (7th Cir. 1982); Gas-A-Tron of Arizona v. Union Oil Co., 534 F.2d 1322 (9th Cir.), cert. den., 429 U.S. 861 (1976); and Cook v. Cook, 519 F.Supp. 213 (E.D. Pa. 1983). See also "Developments in the Law--Conflicts of Interest in the Legal Profession," 94 Harv. L. Rev. 1244, 1354-59 (1981). Indeed, the principle of Silver Chrysler Plymouth was codified in Rule 1.10(b) of the proposed Model Rules of Professional Responsibility. See paragraph 13 of the Comment to that Rule: "If a lawyer while with one firm acquired no knowledge or information relating to a particular client of the firm, and that lawyer later joined another firm, neither the lawyer individually nor the second firm is disqualified from representing another client in the same or a related matter even though the interests of the two clients conflict." It is our judgment that with one qualification, the Silver Chrysler Plymouth rule is a sensible limit on the principle of vicarious disqualification and one that would be followed by the Supreme Judicial Court in the circumstances of this case. The qualification is that we think that the interests of a client like Seller ought to prevail in a situation where the circumstances within the firm are such that a client would have a reasonable fear that the former partner or associate had acquired its confidences or secrets. A client ought to have the benefit of the principle of vicarious disqualification embodied in DR 5-105(D) in a circumstance where the client may not be able to rebut a lawyer's assertion of non-receipt of confidences or secrets but can show a substantial likelihood of exposure to such information.
On the facts presented to the committee, we believe that the Silver Chrysler Plymouth rule should be applied to permit Lawyer to represent Buyer. It is critical to our determination that the original work in the matter was done before Lawyer joined the firm and in a different branch of the firm. Those facts not only support the stated assumption that she possesses no confidences or secrets of Seller but also support our conclusion that it would not be reasonable for Seller to fear that she possessed its confidences or secrets.

Permission to publish granted by the Board of Delegates on June 28, 1988. As stated in the Rules of the Committee on Professional Ethics, this advice is that of a committee without official governmental status.