Kirk v. First American Title Insurance Co.
183 Cal. App. 4th 776, 108 Cal. Rptr. 3d 620 (2010) (2010)
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Rule of Law:
When an attorney with material confidential information joins a law firm representing an adverse party, the disqualification of that attorney is not automatically imputed to the entire firm. The firm may rebut the presumption of imputed knowledge by demonstrating that it implemented a timely and effective ethical screen to prevent the sharing of confidential information.
Facts:
- In October 2007, counsel for plaintiffs in class actions against First American Title Insurance Company contacted attorney Gary Cohen to serve as a consultant.
- During a 17-minute phone call, plaintiffs' counsel disclosed material, confidential information to Cohen, including their legal theories, strategies, and case valuation.
- Cohen expressed interest but ultimately declined the consultancy due to a potential conflict of interest with his employer at the time, Fireman's Fund Insurance Company.
- On January 5, 2009, Cohen joined the law firm Sonnenschein Nath & Rosenthal LLP (Sonnenschein) as a partner in its San Francisco office.
- Plaintiffs' counsel again contacted Cohen about the consultancy, but he declined after a conflicts check revealed his new firm, Sonnenschein, represented First American.
- On February 2, 2009, the three attorneys primarily defending First American (the 'First American team') moved from their prior firm to Sonnenschein's Los Angeles and St. Louis offices.
- After the move, Cohen worked with the First American team and billed 3.35 hours on a separate, unrelated case for First American.
Procedural Posture:
- Plaintiffs filed four related class-action lawsuits in state trial court against First American Title Insurance Company.
- After First American's defense team moved from Bryan Cave LLP to Sonnenschein Nath & Rosenthal LLP, First American substituted Sonnenschein as its counsel of record.
- Plaintiffs filed a motion in the trial court to disqualify the entire Sonnenschein firm, arguing a conflict of interest based on their prior consultation with Sonnenschein partner Gary Cohen.
- The trial court granted the motion to disqualify, ruling that vicarious disqualification was automatic under California law and, alternatively, that the ethical screen Sonnenschein erected was ineffective.
- First American and Sonnenschein appealed the disqualification order to the California Court of Appeal.
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Issue:
Does an attorney's personal conflict of interest, arising from the possession of confidential information from an adverse party, automatically require the vicarious disqualification of the attorney's entire new law firm, or can the firm rebut the presumption of shared confidences by implementing an effective ethical screen?
Opinions:
Majority - Croskey, J.
No. An attorney's personal conflict of interest does not automatically require the vicarious disqualification of the entire law firm. The presumption of imputed knowledge is rebuttable, and a firm can avoid disqualification by proving it implemented an effective ethical screen, except in narrow circumstances where an attorney switches sides in the very same case after substantial involvement. The court reasoned that the modern legal practice, characterized by large, multi-office firms and increased attorney mobility, undermines the assumption that all attorneys in a firm share confidences. Adopting a flexible, case-by-case approach that balances competing policy interests—such as a client's right to their chosen counsel and the financial burden of disqualification—is more appropriate than a rigid rule of automatic disqualification. Because the conflicted attorney, Cohen, had left the Sonnenschein firm during the appeal, the court remanded the case for a retrospective analysis to determine if any confidential information was actually transmitted while he was at the firm.
Analysis:
This decision marked a significant shift in California law on vicarious disqualification, formally rejecting a rigid rule of automatic disqualification in favor of a rebuttable presumption. By authorizing the use of 'ethical screens' or 'walls' for private attorneys moving between firms, the court aligned California with the modern trend reflected in the ABA Model Rules and a growing number of states. This ruling provides a practical framework for large law firms to manage conflicts arising from lateral hires, thereby preserving client choice and mitigating the disruptive effects of disqualification. Future cases will focus on the specific elements and timeliness required for an ethical screen to be deemed effective.
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