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Ethics Opinion

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RI-285

December 11, 1996

SYLLABUS

    A lawyer, employed in a paralegal position in the legal department of a business both before and after being admitted to practice law, who seeks employment as a lawyer with a law firm which is in frequent litigation against the business must comply with ethics rules governing transferring lawyers. The new employer must also comply with those rules.

    When a lawyer has acquired protected information during prior employment, whether that protected information was obtained as a lawyer or as paralegal, the lawyer may not represent the adverse interests of a person in the same or substantially related matter as that handled by the lawyer's prior employer, without the consent of the former employer's client.

    Where a lawyer employed as a paralegal has had access during prior employment to confidential or secret information concerning a legal matter substantially related and materially adverse to a matter in which the new law firm employer is representing a client, the law firm must promptly and adequately screen the nonlawyer from the matter in order to avoid disqualification.

    References: MRPC 1.6, 1.9(b), 1.10(b), 5.3; R-4; RI-8, RI-35, RI-55, RI-115, RI-125.

TEXT

The inquirer has been employed in the capacity of a paralegal for a manufacturer since March 1990, first in the employer's consumer litigation activity unit, which section focuses on lemon law and breach of warranty problems, and after September 1993 in the general litigation unit. In the first assignment, the inquirer handled aspects of many lawsuits filed by a particular plaintiff's counsel practicing in the locale.

While thus employed, the inquirer attended law school, graduated, and after passing the bar examination was admitted to the practice of law in the state. The inquirer has been offered an opportunity to associate in the practice of law with the plaintiff's counsel previously referenced, who anticipates continuing to initiate a large number of lawsuits against the manufacturer on lemon law and breach of warranty theories. The inquirer asks about the ethics ramifications of the proposed position.

  1. Do the conflict rules of the Michigan Rules of Professional Conduct apply to paralegals who leave firms and become lawyers at adversary firms?

  2. Is a licensed lawyer who works as a paralegal for a corporate legal staff considered a lawyer for purposes of the Michigan Rules of Professional Conduct?

  3. Is screening necessary for a lawyer in possession of confidential information, who leaves a firm to join an adversary firm?

  4. Would it be a conflict of interest, or in any way unethical, for a paralegal who handled lemon law suits for a corporate legal department to associate (after becoming a lawyer) with the very same plaintiff's lawyer who filed lemon law suits when the paralegal handled them?

Although the inquirer was not a lawyer during the first assignment which brought the inquirer into contact with plaintiff's counsel, the inquirer was under the supervision of a lawyer. Pursuant to MRPC 5.3 the supervisory lawyer was responsible for ensuring that the inquirer's conduct complied with ethics rules, and for purposes of this inquiry we presume that occurred. Further, since the inquirer is now a lawyer, although employed as a paralegal, the lawyer is directly accountable for compliance with ethics rules. Therefore, although the Michigan Rules of Professional Conduct do not regulate nonlawyers, the inquirer is now a lawyer and is contemplating conduct now, and the ethics rules apply.

See also, Makita Corp v. United States, 819 F Supp 1099 (Ct Int'l Trade 1993), disqualification warranted when lawyer formerly participated in the matter as a paralegal.

Here, the manufacturer chose to continue to employ a newly admitted lawyer as a paralegal. Therefore, the inquirer's relationship with the employer remained at all times that of a paralegal, not one of lawyer and client. In RI-55 a lawyer was employed by an organization to represent clients in hearings before certain administrative agencies which allow claimants to be represented by a lawyer or by other nonlawyer agents. The Committee concluded, in pertinent part, that ethics rules reach lawyer activities in addition to those which involve the "practice of law" and extend to the handling of "any legal matter," which is a broader and more inclusive category. Even though nonlawyers could appear before administrative agencies, the inquirer was in fact a lawyer and was bound by ethics rules.

In the current inquiry, the inquirer's assignments supported litigation and other services delivered to the manufacturer by its legal staff. The inquirer's work product and the files and materials from which the inquirer worked is property in the custody of the manufacturer's lawyers, and, to the extent it relates to the representation of the client, it is protected by MRPC 1.6. Again, since the inquirer is now a lawyer and is contemplating conduct now, the ethics rules apply. See RI-125.

The question of screening is one relevant to the prospective employer. Screening is addressed in R-4 and RI-115, where, discussing MRPC 5.3(c), it was recognized that, whether the firm is augmenting its staff by adding a lawyer or a nonlawyer from another firm, screening is necessary to prevent any possible disclosure or use of confidential information. The change of capacity, from paralegal to lawyer, that would attend such an employment transfer thus does not insulate the acquiring firm from its responsibilities. MRPC 1.9(b) states:

    "(b) Unless the former client consents after consultation, a lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated has previously represented a client

      "(1) whose interests are materially adverse to that person, and

      "(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter."

MRPC 1.10(b) states:

    "(b) When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or a substantially related matter in which that lawyer, or a firm with which the lawyer was associated, is disqualified under Rule 1.9(b), unless:

      "(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and

      "(2) written notice is promptly given to the appropriate tribunal to enable it to ascertain compliance with the provisions of this rule."

The inquirer likely "acquired protected information" in the former employment, whether the acquisition was as a lawyer or as a paralegal. Therefore, the limitations of MRPC 1.9(b) are triggered regarding assignments the inquirer may undertake at the new employment, and the new employer must have adequate screening in place to avoid imputed disqualification.

The information provided is inadequate to definitively resolve the issue of conflict of interest. Certainly, because paralegals are not subject to any restriction imposed by the Michigan Rules of Professional Conduct, it is not unethical per se for the inquirer to accept this employment opportunity. However, as a lawyer in this new employment situation, possessed of information protected by lawyer-client privilege, the inquirer clearly cannot use such information to the former employer's detriment. MRPC 1.6.

A review of RI-35 is relevant here. In that opinion a lawyer served a corporate client as private lawyer and inside counsel for over 30 years, then served the corporation on retainer for another five years. Several administrative departments reported to the lawyer as inside counsel. The lawyer represented the corporation in its relations with distributors, participated in board meetings, supervised disciplinary actions of individual distributors, drafted rules of conduct for distributors, and was principal coordinator of all corporation litigation matters. While the retainer contract was running the lawyer was approached by the distributors association for legal representation.

The Committee concluded that it was improper for a lawyer to enter into an attorney-client relationship with a business that is in constant, and often adverse, interaction with the lawyer's former client and employer of many years and where:

  1. the subject matter of the new representation is certain to be substantially related to the subject of the former representation;

  2. the former client has not consented to the new representation; and

  3. the lawyer's representation and knowledge of the former client was so broad and intimate as to make an unintentional breach of confidences of the former client inevitable.

The last factor in RI-35 is significant in this inquiry. Having had, as a paralegal, a lesser stature than a lawyer associated with the office of corporate legal counsel, which in turn is to be contrasted with the equivalent to partnership in a firm, such as chief corporate counsel or division heads, the inquirer will not be presumed to have had contact with anything but the discrete files assigned by the former employer. The inquirer's assignments for the manufacturer were not "so broad and intimate as to make an unintentional breach of confidences inevitable." See R-4. Hence, assuming proper screening measures, there is no reason that MRPC 1.9 should trigger disqualification of the new employer. RI-8.

 
     

 

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