Lansing-Delaware Water District v. Oak Lane Park, Inc.
1991 Kan. LEXIS 77, 808 P.2d 1369, 248 Kan. 563 (1991)
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Rule of Law:
Under Kansas's Model Rules of Professional Conduct, if an attorney acquires material and confidential information regarding a matter while at one private firm, and then moves to a firm representing an opposing party in the same or a substantially related matter, the new firm is vicariously disqualified. This imputed disqualification cannot be cured by implementing a screening device or 'Chinese Wall'.
Facts:
- Gary A. Nelson began working as an associate attorney at the law firm Chapman & Waters in August 1988.
- At Chapman & Waters, it was common for attorneys to have access to and discuss all of the firm's files.
- Douglas D. Sutherland, a friend of Nelson's, joined Chapman & Waters as an associate in July 1989 and was assisting in litigation concerning alleged water diversion by defendants' trailer park.
- Sutherland and Nelson frequently discussed cases, and Sutherland testified that he discussed the pending litigation with Nelson in detail at least five times, covering damages calculations, burdens of proof, and legal theories.
- Sutherland also recalled discussing with Nelson the results of an accounting analysis of plaintiff's financial information performed by Nelson's wife for the case.
- Nelson resigned from Chapman & Waters on February 18, 1990.
- On February 24, 1990, Nelson began working for the law firm Davis-Beall, which was representing the defendants in the same water diversion litigation.
Procedural Posture:
- Plaintiff, represented by Chapman & Waters, sued defendants, represented by Davis-Beall, in Kansas district court.
- After Davis-Beall hired former Chapman & Waters associate Gary Nelson, Chapman & Waters demanded Davis-Beall withdraw from the case, which Davis-Beall refused.
- Plaintiff filed a motion in the district court to disqualify the Davis-Beall firm.
- The district court initially held a hearing and denied the motion.
- Plaintiff filed a motion for reconsideration, submitting the deposition of attorney Douglas Sutherland.
- Upon reconsideration, the district court reversed its ruling, found Nelson had acquired confidential information, and granted the motion to disqualify Davis-Beall.
- The district court certified the disqualification order for an immediate interlocutory appeal, which Davis-Beall filed with the Kansas Supreme Court.
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Issue:
Under Model Rule of Professional Conduct 1.10, is a law firm vicariously disqualified from representing a client when it hires an attorney from an opposing firm who possesses material and confidential information about that case, and can a screening device or 'Chinese Wall' prevent this imputed disqualification?
Opinions:
Majority - Allegrucci, J.
Yes, the law firm is vicariously disqualified, and a screening device cannot prevent it. Under Model Rule of Professional Conduct (MRPC) 1.10(b), a firm is disqualified if it hires an attorney who acquired material information protected by MRPC 1.6 and 1.9(b) at their previous firm while representing an adverse party. Following the precedent set in Parker v. Volkswagenwerk, the court held that a trial court must conduct a full evidentiary hearing and make a specific factual finding that the attorney acquired such knowledge. Here, the trial court's finding that Nelson acquired material and confidential information, based on Sutherland's deposition testimony, was supported by substantial competent evidence. The court explicitly rejected the use of a 'Chinese Wall' as a remedy, reaffirming its decision in Parker that the model rules do not permit screening to cure the taint for attorneys moving between private firms.
Analysis:
This decision solidifies Kansas's strict application of imputed disqualification rules for attorneys moving between private law firms. By flatly rejecting 'Chinese Walls' as a curative measure, the court prioritized the protection of client confidences over lawyer mobility and a client's choice of counsel. The ruling establishes a bright-line rule: once a migrating attorney is found to have acquired material confidential information, the entire new firm is tainted and must be disqualified, removing any need for courts to evaluate the effectiveness of internal screening procedures. This places a significant due diligence burden on firms during the hiring process to identify and avoid such conflicts.
