Because there was elaborate screening, Bankruptcy Judge Christopher S. Sontchi, the chief bankruptcy judge in Delaware, declined to disqualify the plaintiff’s law firm after the head of the restructuring department in the plaintiff’s firm married a partner at the defendant’s firm. The partner at the defendant’s firm had worked on the case before leaving to join the plaintiff’s firm.
No surprise there. What’s interesting is this: The two lawyers were in an intimate relationship perhaps two years before disclosure to the defendant’s firm.
The Relationship Timeline
A large company confirmed a chapter 11 plan in 2016, creating a liquidating trust. In June 2018, the trust filed a $14 billion lawsuit against the debtor’s former parent.
The trust was represented by a large, international law firm with more than 2,000 lawyers. The restructuring department had about 250 lawyers, with 85 in the New York office. The defendant was represented by several other large firms.
A partner in the defendant’s firm left that firm and joined the plaintiff’s firm as a partner in October 2020. The departing partner had billed 300 hours to the case, including 200 in 2018 and 100 in 2019, but none in 2020.
The department head at the plaintiff’s firm evidently never billed any time to the matter. The departing partner was one of the senior partners but was not the lead partner on behalf of the defendant.
The plaintiff’s firm notified the defendant’s firm immediately after the move took place and set up elaborate screening.
According to Judge Sontchi’s April 6 opinion, the timeline for the relationship between the two was this: They “began dating intermittently in early 2017, the relationship became ‘exclusive’ in or around the fall of 2018, and they began to cohabitate in July 2019.”
We will refer to the department head at the plaintiff’s firm as Partner I. We will refer to the partner who left the defendant’s firm to join the plaintiff’s firm as Partner II.
Judge Sontchi said that Partner II “disclosed [the] relationship with [Partner I] to [the defendant’s firm] in 2018 and believes persons at [the defendant-client] were aware of the relationship in 2019. [The defendant’s inside general counsel], however, avers that he was not personally aware of the relationship until September 12, 2020.”
Partner II joined the plaintiff’s firm as a partner on October 1, 2020. Partner I and Partner II married in November 2020.
Naturally, Partner II disclosed her work for the defendant during the conflict screening process before joining the plaintiff’s firm. As Judge Sontchi said, elaborate screening procedures were erected immediately when Partner II joined the new firm on October 1, 2020. At the same time, the plaintiff’s firm formally notified the defendant’s firm and provided “extensive information” about the screen.
Judge Sontchi said that the defendant’s firm did not provide any comments on the screen, “even though they were invited to do so.” Instead, another firm representing the defendant filed a motion to disqualify the plaintiff’s firm and took the position that “no screen would be sufficient.”
Although Partner II had not led the defense, the defendant said that Partner II was “an integral part of [the] outside legal team.” Judge Sontchi said that Partner II “was one of the senior attorneys” on the team and, as such, “was privy to client confidences, and [the defendant’s] strategy and tactics in defending the suit.”
The Ethical Rules
Turning to the law and citing precedent, Judge Sontchi said that motions to disqualify must be reviewed with “extreme caution,” and disqualification should not be imposed except when “absolutely necessary.” In other words, disqualification is the remedy only in “exceptional cases” where “the circumstances show that no screening measures could adequately protect a client’s confidential information.”
Judge Sontchi saw “no serious question” about the plaintiff’s firm’s “adherence” to the American Bar Association’s Model Rules of Professional Conduct, in particular Model Rule 1.10(a)(2). The firm, he said, “implemented a thorough, robust ethical screen.”
Was it an “exceptional case?” In that regard, the defendant portrayed Partner II as “a key strategic advisor who was privy to the deepest and darkest [of the defendant’s] secrets.” Judge Sontchi said that the defendant’s declarations “are artfully drafted but they exaggerate every interaction to an implausible degree.”
Given that Partner II had billed only 300 hours in a $14 billion case, Judge Sontchi concluded that Partner II’s “involvement . . . was significant but not substantial.”
Implications of the Relationship, If Any
Judge Sontchi ended his opinion by exploring the implications, if any, stemming from the fact that Partner I is the head of the firm’s reorganization practice. He “refuse[d] to presume that well-regarded married attorneys” could not help themselves from revealing client confidences. He “refuse[d] to inquire into [the] marriage in any manner whatsoever as their relationship is not relevant.”
“Moreover,” Judge Sontchi said, “even if [Partner II] were to reveal [defendant’s] confidential information to [Partner I] (and there is no reason to believe [Partner II] would), no harm would arise unless [Partner I] were, in turn, to betray [Partner II’s] confidences.”
Finally, Judge Sontchi dealt with the question of when and whether Partner II should have disclosed the dating relationship with Partner I.
Even assuming there should have been disclosure in the fall of 2018 and the defendant did not learn about the relationship until September 2020, Judge Sontchi said that “the argument that this has any bearing on the probity of whether [Partner II] will comply with the ethical screen is unavailing.”
Judge Sontchi found “no link whatsoever between the two points. . . . Rather, it is clear to the Court that the discussion of [the] marriage is solely offered by [the defendant] in a shabby attempt to embarrass [Partner I and Partner II] and/or to prejudice the Court in some manner. It has accomplished neither.”
Judge Sontchi denied the motion to disqualify.
Observations
When people come in contact, some will start dating, even lawyers. One cannot expect dating lawyers to carry around lists of their firms’ clients. Thus, this writer sees no ethical problem if lawyers are at firms that are adversaries but neither is working on a matter where the other is employed.
In this writer’s view, the ethics rules should take the following into consideration when two lawyers date:
Lawyer A will know if Lawyer B is at a firm that is an adversary in a matter on which Lawyer A works. When that happens, Lawyer A should tell Lawyer B, and both should report the fact to their firms. The firms then should make disclosure to both clients.
Here’s the rub: One firm may attempt to use the disclosure to disqualify the other firm. That’s not right.
In this writer’s opinion, the proper ethical response is for Lawyer A’s firm to give written instructions to Lawyer A that she/he not ever discuss the matter with Lawyer B, in addition to notification to the clients.
Assuming instructions are given, the disclosures should not be grounds for disqualification.
People will meet and date. That can’t be avoided or barred just because they work at adversary firms. If there was no disclosure and no instructions about client confidentiality, a client will be justifiably upset because there will have been an appearance of impropriety.
What if dating lawyers don’t disclose their relationship but there was no breach of client confidences? Is disqualification appropriate?
This writer believes the answer is “no.” Reprimands or warnings might be in order, however.
Here’s a tougher question: What if adversary lawyers start dating? That’s a toughie. I leave it to the ethics experts, but it doesn’t look good.
Because there was elaborate screening, Bankruptcy Judge Christopher S. Sontchi, the chief bankruptcy judge in Delaware, declined to disqualify the plaintiff’s law firm after the head of the restructuring department in the plaintiff’s firm married a partner at the defendant’s firm. The partner at the defendant’s firm had worked on the case before leaving to join the plaintiff’s firm.
No surprise there. What’s interesting is this: The two lawyers were in an intimate relationship perhaps two years before disclosure to the defendant’s firm.
The Relationship Timeline
A large company confirmed a chapter 11 plan in 2016, creating a liquidating trust. In June 2018, the trust filed a $14 billion lawsuit against the debtor’s former parent.
The trust was represented by a large, international law firm with more than 2,000 lawyers. The restructuring department had about 250 lawyers, with 85 in the New York office. The defendant was represented by several other large firms.
A partner in the defendant’s firm left that firm and joined the plaintiff’s firm as a partner in October 2020. The departing partner had billed 300 hours to the case, including 200 in 2018 and 100 in 2019, but none in 2020.
The department head at the plaintiff’s firm evidently never billed any time to the matter. The departing partner was one of the senior partners but was not the lead partner on behalf of the defendant.
The plaintiff’s firm notified the defendant’s firm immediately after the move took place and set up elaborate screening.