January 17, 1997
A lawyer who previously represented an insured and an insurer in an action brought by a health care provider for unpaid bills may not subsequently represent the insurer against the insured in an action for unpaid benefits arising out of the same accident and injury.
When ordered to do so by a tribunal, a lawyer shall continue the representation notwithstanding good cause for terminating the representation.
References: MRPC 1.0(b), 1.6, 1.9(a) and (c), 1.16(c); RI-51; MCR 2.003(C); Denby v Dorman, 261 Mich 500 (1933); Kubiak v Hurr, 143 Mich App 645 (1985); Anchor Packing Co v Pro-Seal Inc, 688 F Supp 1215 (ED Mich 1988); Cox v Am Cast Iron Pipe Co, 847 F2d 725 (CA11 1988).
A presiding judge has sought input from the Committee regarding an issue of disqualification of counsel pending before the judge. The Committee is not a fact-finder, but considers the facts which are set forth in the pleadings.
Plaintiff became a quadriplegic from an auto accident injury. Plaintiff's health care provider sued plaintiff's insurer, plaintiff, and plaintiff's parent for unpaid billings of health care services and for modifications to plaintiff's home. Lawyer represented all respondents in the health care action, and asserts that plaintiff and plaintiff's parent "had no financial stake in the litigation." The health care provider's claims were apparently denied, on the basis that its billings exceeded commercially reasonable rates and that the provider was not a licensed residential builder.
Subsequently plaintiff sued plaintiff's insurer for benefits arising out of the same accident. Lawyer represents insurer in the insurance benefits litigation. Part of the relief plaintiff is seeking is aide care. Plaintiff's counsel has brought a motion to disqualify lawyer.
Lawyer notes that lawyer's appearance in the insurance benefit litigation was entered on or about February 1995. Mediation was scheduled for March 14, 1996. A letter requesting disqualification was dated June 6, 1996. The Motion to Disqualify is dated September 13, 1996. Lawyer argues that the Motion to Disqualify is tactical.
Whether the movant bears the burden of proving the grounds supporting the Motion for Disqualification, or whether the challenged lawyer bears the burden of proving grounds do not exist, is a legal, not an ethical question. See, e.g., Kubiak v Hurr, 143 Mich App 645 (1985). The Committee has no authority to decide that issue.
There is no dispute that lawyer represented plaintiff in the health care litigation arising out of the same accident as the present litigation. MRPC 1.9(a) and (c) applies to representation adverse to former clients, and states:
"(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation.
". . .
"(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
"(1) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client, or when the information has become generally known: or
"(2) reveal information relating to the representation except as Rule 1.6 or Rule 3.3 would permit or requires with respect to a client."
In this inquiry the representation of the insurer is materially adverse to plaintiff, and plaintiff, the former client, does not consent to the representation. The remaining question under MRPC 1.9(a) is whether the two representation matters are substantially related. "The idea of a lawyer changing sides is at the heart of the prohibition," Annotated Model Rules of Professional Conduct, American Bar Association, 1996, p 151. The scope and subject matter of the former and present representations must be examined.
Both matters arise out of the same auto accident. Both matters involve payment of benefits under the insurance policy; in the former case the health care provider sought benefits unpaid by the insurer, and in the current case plaintiff seeks benefits unpaid by the insurer. It is irrelevant under the ethics rules that plaintiff "had no financial stake in the [health care benefits] litigation." Legal services are no less necessary just because the client will not be financially liable. There were undoubtedly other interests of plaintiff which needed protection, not the least of which was the consequence of being unrepresented in the health care benefits litigation. As lawyer notes, "my representation of [plaintiff] and her father eliminated the necessity of them retaining an attorney and paying that attorney from their own pocket."
Therefore MRPC 1.9(a) has been triggered.
The Brief in Support of the Motion to Disqualify states that in the course of the health care benefits litigation "[lawyer] had knowledge about the dynamics of the relationship between [plaintiff] and her father, about the way [plaintiff] interprets events, and about the way the family members who are involved in her care interpret events. This alone provides [lawyer] with information about [plaintiff's] emotional and psychological weaknesses, and her family situation, that can be used to [plaintiff's] disadvantage in cross examination at trial, case presentation to the jury and settlement negotiations."
MRPC 1.9(c) prohibits a lawyer from using or revealing confidences and secrets of a former representation except as permitted under MRPC 1.6. We note that in the former representation lawyer provided legal services to the insurer, plaintiff and plaintiff's parent jointly. Generally a client has no reasonable expectation of confidentiality vis-a-vis other joint clients in the same matter. See Denby v Dorman, 261 Mich 500 (1933); see generally, Rice, Paul R., Attorney Client Privilege in the United States, Lawyers Cooperative Publishing, 1993, §4:30-4:31. To the extent that plaintiff shared any confidences or secrets with lawyer in the health care benefits litigation, while the insurer was also a client of lawyer, plaintiff cannot now object to lawyer and insurer having that knowledge.
We now turn to the question of using motions to disqualify counsel as tactics. MRPC 1.0(b) states:
"Failure to comply with an obligation or prohibition imposed by a rule is a basis for invoking the disciplinary process. The rules do not, however, give rise to a cause of action for enforcement of a rule or for damages caused by failure to comply with an obligation or prohibition imposed by a rule. In a civil or criminal action, the admissibility of the Rules of Professional Conduct is governed by the Michigan Rules of Evidence and other provisions of law."
The Comment Preamble to MRPC 1.0 states in part:
"[T]he purposes of the rules can be subverted when they are invoked by opposing parties as procedural weapons, The fact that a rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the rule. Accordingly, nothing in the rules should be deemed to augment any substantive legal duty of lawyers or the extra disciplinary consequences of violating such a duty."
The Comment to MRPC 1.7 furthers this point:
"Resolving questions of conflict of interest is primarily the responsibility of the lawyer undertaking the representation. In litigation, a court may raise the question when there is reason to infer that the lawyer has neglected the responsibility. In a criminal case, inquiry by the court is generally required when a lawyer represents multiple defendants. See MCR 6.101(C)(4). Where the conflict is such as clearly to call into question the fair or efficient administration of justice, opposing counsel may properly raise the question. Such an objection should be viewed with caution, however, for it can be misused as a technique of harassment. See Scope, ante, in the Preamble."
Cases considering disqualification have taken into account the timing of the motion to disqualify. If the objecting party or the party's counsel had the information giving rise to the motion from the beginning of the case but the motion was filed only a few days before trial, it could be argued that the delay in bringing the motion effectively waived the objection to the conflict or that the motion is being brought merely to delay the proceedings. Kubiak v Hurr, 143 Mich App 645 (1985); Anchor Packing Co v Pro-Seal Inc, 688 F Supp 1215 (ED Mich 1988), raising ethical issue after litigation commenced indicates tactical objectives. See also, Cox v Am Cast Iron Pipe Co, 847 F2d 725 (CA11 1988), "a litigant may not delay filing a motion to disqualify in order to use the motion later as a tool to deprive the opponent of counsel of choice after substantial preparation of the case has been completed." We note, by way of analogy, that MCR 2.003(C) in addressing motions to disqualify judges requires that a motion be filed within 14 days of discovery of the grounds for disqualification.
A determination that MRPC 1.9(a) has been triggered does not necessarily resolve the issue of disqualification. Since the client's case is in litigation, the lawyer cannot withdraw without the permission of the presiding adjudicator, MRPC 1.16(c); MCR 2.117(C)(2). Even if the judge agrees that an ethics rule has been violated, the judge need not order disqualification. MRPC 1.16(c) states, "[w]hen ordered to do so by a tribunal, a lawyer shall continue the representation notwithstanding good cause for terminating the representation." As noted in RI-51, there are three interests at stake: those of the two parties and the interests of the tribunal in preserving the tribunal's resources and efficiency. In accord, Hazard and Hodes, The Law of Lawyering, 1988 Supplement, Prentice-Hall, p. 297, "The balance should be struck by the judge or judicial officer, and the lawyer should abide by the decision . . . ."
In conclusion, the lawyer's representation in the insurance benefits matter contravenes MRPC 1.9(a). Whether the plaintiff has in effect "waived" the conflict, or whether some other acceptable reason exists to explain the delay in filing the Motion to Disqualify, is a question for the presiding judge to determine.