The Benefits Of Joint Representation

By on October 19, 2012

It is common in product liability litigation for the defendant company’s outside legal counsel to represent both employees and former employees of the company in deposition. In the absence of a claim of criminal conduct, which is rarely the case in civil tort litigation, there is generally no conflict of interest in having outside counsel represent both the company and its former employees, particularly where both parties have given their informed consent to be jointly represented. Therefore, it was peculiar for the issue to have been raised in a contact lens products case in Illinois.

In Kallal v. Ciba Vision Corp., (1:09-cv-03346), pending in the U.S. District Court for the Northern District of Illinois, the Hon. Rebecca R. Pallmeyer rejected an effort by plaintiff to disqualify Kelley Drye & Warren LLP, counsel for Ciba Vision Corporation. In ruling against plaintiff, it was reported in Law360 that Judge Pallmeyer advised the parties before ruling, “I don’t see a basis for why Ciba’s lawyers should be disqualified.” At issue was defense counsel’s appearance at the subpoenaed depositions of Dr. Scott Robirds, a former global head of clinical and regulatory affairs for Ciba, and William Schaeffer, a former director of global operations.

In denying plaintiff’s disqualification motion, the court agreed with the argument of defense counsel Catherine E. James that no conflict between Ciba and its former employees existed and that no ethical violation had been committed, which is a necessary perquisite for a disqualification motions to succeed.

In its opposition to plaintiff’s motion, Ciba recognized that the corporation and its individual employees admittedly may not have identical interests. Individuals are necessarily interested in their individual reputations, while a corporation is interested in its organizational reputation. However, Ciba argued that these different interests were hardly the basis for a conflict of interest. Citing Illinois Rule of Professional Conduct 1.7(a), which is modeled after the ABA Model Rule of Professional Conduct, Ciba argued that a conflict exists where the parties’ interests are “directly adverse” to each other, which was not the case here.

It is not altogether clear why the court did not award Ciba the sanctions it had requested for having to respond to a frivolous motion. However, there is no question that plaintiff’s chief motivation for filing the motion was to attempt to communicate informally with unrepresented former employees to advance their litigation interests. As such, the disqualification motion was a mere subterfuge. 

There are many good reasons for a single law firm to represent both the company and its employees, both present and former. Dual representation reduces legal fees and prevents duplicative preparation and litigation costs. Moreover, dual representation provides for litigation strategies that would not otherwise be available.

As one commentator, Janet A. Savage, noted in the employment law context, an attorney is able to plan and execute a joint defense, as well as present a united front to the jury. Moreover, “dual representation offers logistical advantages. It facilitates common access to all necessary facts and maintains contact between the defendant employee and the defendant employer,” according to Savage. Of course, potential conflicts of interest must be carefully analyzed in every case.
 

Filed under Conflicts of Interest, Hon. Rebecca R. Pallmeyer, Joint Defense, Kallal v. Ciba Vision Corp, Law360 Tagged with

Conflicts Of Interest Involving Corporate Affiliates

By on September 27, 2010

In GSI Commerce Solutions, Inc. v. BabyCenter LLC, No. 09-2790, the Second Circuit affirmed the ruling of SDNY Judge Jed S. Rakoff, who disqualified the Blank Rome law firm from representing a company adverse to a subsidiary of Johnson & Johnson, which was a client of Blank Rome.

The Second Circuit’s ruling is noteworthy because it addressed for the first time whether a law firm infringed on its duty of loyalty by taking on a representation adverse to an existing client’s corporate affiliate. In disqualifying Blank Rome, Judge Rakoff found that the overlap between BabyCenter LLC and Johnson & Johnson in effect made them a single company for various purposes. Judge Rakoff observed that BabyCenter LLC did not have a separate in-house legal department, but instead relied exclusively upon the in-house lawyers at Johnson & Johnson for legal advice.  Drawing upon extensive discussion by other courts as well as the ABA, the Second Circuit held that a law firm cannot take on a matter adverse to an affiliate if it diminishes the parent client’s level of confidence in its lawyers.

The Court first examined the ABA’s Model Rules of Professional Conduct, which provide that a “lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as parent or subsidiary.” ABA Model Rule of Prof’l Conduct 1.7 cmt. 34 (2006). This statement embodies what is often termed the “entity theory” of representation. However, the exception to this rule is that an attorney may not accept representation adverse to a client affiliate if “circumstances are such that the affiliate should also be considered a client of the lawyer.”

For its own part, Blank Rome argued that no conflict existed because: (1) the dispute between GSI and BabyCenter involved matters unrelated to Blank Rome’s Johnson & Johnson matters; and (2) Johnson & Johnson had waived any conflict by signing Blank Rome’s engagement letter. Both of these arguments proved unpersuasive to the unanimous appeals court. In particular, the Second Circuit observed that Blank Rome’s engagement letter contained provisions that might constitute a waiver by Johnson & Johnson of some, but not all, corporate affiliate conflicts. However, these conflict waivers were specifically limited to patent litigation and, even more specifically, to matters brought by generic drug manufacturers. Therefore, the Second Circuit held, Blank Rome failed to “contract around” the corporate affiliate conflict at issue. 

In a footnote, Judge Ralph K. Winter, Jr., writing for the Court, stated that the Circuit was not addressing issues that would arise if a blanket waiver had been executed and left open how it might rule in those circumstances.

Filed under ABA, Blank Rome, Conduct', conflict waiver, Conflicts of Interest, corporate affiliate, disqualification, entity theory" of representation, Hon. Jed S. Rakoff, Hon. Ralph K. Winter, Jr., Johnson & Johnson, Litigation Issues and Factors, Model, Professional, Rules, Second Circuit Tagged with ,