Kassis v. Teacher’s Insurance & Annuity Ass’n, 93 N.Y.2d 611 (1999)
When an attorney has actively represented a client in a matter and then moves to a firm representing the adversary in the same matter, the new firm is generally disqualified unless it can prove the attorney acquired no material confidential information during the prior representation; a “Chinese Wall” is insufficient if the attorney possessed such information.
Summary
This case addresses the imputed disqualification of a law firm when an attorney joins the firm after working on the opposing side of a case. Kassis hired Weg & Myers to represent them in a property damage case. Charles Arnold, an associate at Weg & Myers, worked on the case. Arnold then joined Thurm & Heller, the opposing counsel. Kassis moved to disqualify Thurm & Heller. The Court of Appeals held that Thurm & Heller should be disqualified because Arnold’s prior work on the case created a presumption that he possessed confidential information, which Thurm & Heller failed to rebut. The erection of a “Chinese Wall” was insufficient to cure the conflict.
Facts
Plaintiffs Kassis and North River Insurance Company retained Weg & Myers to represent them in a property damage action.
Charles Arnold, an associate at Weg & Myers, assisted with the case by conducting depositions, attending mediation sessions, appearing at a physical examination of the property, and communicating with the client.
Arnold joined Thurm & Heller, the firm representing the defendants, Teacher’s Insurance and Annuity Association and Cauldwell-Wingate Company, Inc.
Thurm & Heller implemented safeguards to prevent Arnold from discussing the Kassis matter, including keeping the file in a separate office and instructing Arnold not to discuss the case.
Procedural History
Plaintiffs moved to disqualify Thurm & Heller; the Supreme Court denied the motion.
The Appellate Division affirmed, finding that the “Chinese Wall” eliminated the danger of Arnold transmitting confidential information.
The Appellate Division granted leave to appeal to the Court of Appeals.
Issue(s)
Whether a law firm should be disqualified from representing a client when it hires an attorney who formerly worked for opposing counsel on the same matter, where the attorney had active involvement in the case, and the firm implements a “Chinese Wall” to prevent disclosure of confidential information.
Holding
Yes, because given Arnold’s extensive participation in the Kassis litigation and Thurm & Heller’s representation of the adversary in the same matter, defendants’ burden in rebutting the presumption that Arnold acquired material confidences is especially heavy, and the erection of a “Chinese Wall” in this case, therefore, was inconsequential.
Court’s Reasoning
The Court of Appeals emphasized that attorneys owe a continuing duty to former clients not to reveal confidences. This duty forms the basis for the rule against representing a client against a former client in the same or a substantially related matter.
The Court acknowledged that imputed disqualification is not an irrebuttable presumption, citing Solow v. Grace & Co., 83 N.Y.2d 303 (1994). A per se rule of disqualification is too broad and can be used for tactical advantages.
However, the Court clarified that the presumption of shared confidences must be rebutted by proving that the attorney acquired no material confidential information. If the presumption arises, the party seeking to avoid disqualification must prove that any information acquired by the disqualified lawyer is unlikely to be significant or material in the litigation. A “Chinese Wall” is sufficient only if the presumption is rebutted.
The Court found that Arnold’s active role in the Kassis litigation at Weg & Myers created a heavy burden for Thurm & Heller to rebut the presumption that he acquired material confidences. The firm’s conclusory averments were insufficient to rebut that presumption. As the Court stated, “Given Arnold’s extensive participation in the Kassis litigation and Thurm & Heller’s representation of the adversary in the same matter, defendants’ burden in rebutting the presumption that Arnold acquired material confidences is especially heavy.”
Because the presumption was not rebutted, the “Chinese Wall” was inconsequential, and disqualification was required.