E-Ethics Vol. II, No. II (January 2003)
(c) 2003 by Professor David Hricik
www.Hricik.com/

You hire a new lawyer. He had previously been a summer clerk at another law firm, and while there personally represented an opponent of a client of your firm in an on-going matter. In many states, the knowledge of a lawyer is imputed to all lawyers in a firm, and thus absent an agreement obviating disqualification or recognition by applicable ethical rules of a "Chinese Wall" to prevent imputation of knowledge ñ the entire firm would be disqualified.

Courts and bar associations addressing the propriety of a law firm being adverse to a new employee's former firm's former clients have struggled with whether and if so how to treat transferring nonlawyers differently than transferring lawyers. In some states, knowledge of lawyers is imputed even if a screen or "Chinese Wall" is established, but imputation of knowledge of nonlawyers may be prevented by using such devices. In other states, lawyers and nonlawyers are treated the same: if screening won't work for lawyers, it won't work for nonlawyers, and vice versa.

All of which raises some interesting practical issues, particularly in the age of multi-state practice, where a firm which hires a person may litigate in many states, some of which recognize screening, and some of which do not. It also implicates some fundamental ethical issues: some courts have looked at the fact that screening of lawyers is not permitted, and thought it odd that screening of nonlawyers would be permitted, since in both cases clients are relying upon the truthfulness and integrity of the transferring person to keep the information sacrosanct. Why should the courts presume that a nonlawyer will be less likely to disclose information after transferring to a new firm than will be a lawyer?

The answer to that question, say some authorities, is the presumption that nonlawyers face greater need for job mobility than do lawyers: a nonlawyer who is treated as a lawyer for conflicts purposes will be less employable to other firms than is one who may be "walled off" from disqualifying the hiring firm. These courts find support in the fact that similar policies drove the drafters of the Model Rules (and their state counterparts) to permit screening of former government lawyers, judges, and the like. They also generally characterize nonlawyers as being less likely to understand the importance of any confidential information they acquired, and thus less likely to be able to misuse it.

In light of these competing views, it is not surprising that there is a split in the case law and bar authorities.. An apparent majority of courts and bar associations has endorsed screening as means to avoid imputing conflicts of nonlawyers. See Hayes v. Central States Orthopedic Specialists, Inc., 51 P.3d 562 (Okla. 2002) ("Thus before being disqualified for having hired a non-lawyer employee from its opponent, the hiring firm should be given the opportunity to prove that the non-lawyer has not revealed client confidences to the new employer and has been effectively counseled and screened from doing so. If such proof is made to the court's satisfaction, the court should deny the motion to disqualify the non-lawyer's new firm. We expressly decline to consider in this opinion whether the use of screening devices would be appropriate in cases involving lawyers who move to a firm that represents an opponent who the lawyers had represented."); In re American Home Prods., 985 S.W.2d 68 (Tex. 1998); Phoenix Founders, 887 S.W.2d 831, 834 (Tex. 1994); Grant v. Thirteenth Court of Appeals, 888 S.W.2d 466, 467 (Tex. 1994); ABA Comm. on Ethics and Professional Responsibility Informal Op. 88-1526 (1988) (paralegals and independent contractors may be screened); State Bar. of Mich Comm. on Professional and Judicial Ethics Op. 4-115 (1992); Smart Indus. Corp. v. Superior Court, 876 P.2d 1176 (Ariz. 1994) (firm can avoid imputation by following ABA Op. 88-1526 when hiring nonlawyers); N.J. Sup. Ct. Advisory Comm. on Professional Ethics Op. 665 (1992) ("Chinese Wall" may be used even where transferring nonlawyer worked for opposing party in open matter); N.C. State bar Ethics Comm. Op. 176 (1994) (no imputation if screening is used).

But there is a definite split. Several courts have rejected the reasoning of these opinions and cases. See, e.g., Ciaffone v. District Court, 945 P.2d 950 (Nev. 1997) (refusing to permit screening to rebut presumption where it would not do so with a lawyer); Kan. Bar. Ass'n. Prof. Ethics Advisory comm. Op. 90-005 (1991) (screening is not effective); Ethics Comm. of Bd. of professional Responsibility of Tenn. Sup. Ct. Op. 87-5-110 (1987) (screening ineffective for hiring nonlawyers).

One argument is textual: the ethical rules do not distinguish between lawyers and non-lawyers. As a Kansas court recently held:

As previously mentioned, nonlawyers are privy to a great deal of confidential information regarding the litigation in the office they work in. They are also often involved in legal strategy and planning. The client expects and our legal system requires the client's confidences to be protected. To treat nonlawyers in a different manner than lawyers would seriously erode the foundation of the KRPC and place at risk the public trust in the legal system. Because KRPC 1.10 does not allow for the implementation of a screening device or Chinese wall for lawyers, it likewise does not allow for the use of a screening device for nonlawyers.

Two of those courts that treat lawyers and non-lawyers alike for purposes of determining whether Chinese Walls may be used have articulated why, as a matter of policy and not as a matter of the text of the disciplinary rules, nonlawyers should be treated no differently than lawyers. The first seemed to believe that neither lawyers nor nonlawyers could be trusted with client information:

If information provided by a client in confidence to an attorney for the purpose of obtaining legal advice could be used against the client because a member of the attorney's nonlawyer support staff left the attorney's employment, it would have a devastating effect both on the free flow of information between client and attorney and on the cost and quality of the legal services rendered by an attorney. Every departing secretary, investigator, or paralegal would be free to impart confidential information to the opposition without effective restraint. The only practical way to assure that this will not happen and to preserve public trust in the scrupulous administration of justice is to subject these "agents" to the same disability lawyers have when they leave legal employment with confidential information.

The reasoning of [cases holding nonlawyers may be screened] implicitly recognizes that a nonlawyer's employment opportunities or mobility must be weighed against client confidentiality before disqualification occurs. While this approach may appear fairer to the paralegal/secretary, it has been roundly criticized for ignoring the realities of effective screening and litigating that issue should it ever arise. For example, one commentator explained that a majority of courts have rejected screening because of the uncertainty regarding the effectiveness of the screen, the monetary incentive involved in breaching the screen, the fear of disclosing privileged information in the course of proving an effective screen, and the possibility of accidental disclosures. [Citation omitted.] Accordingly, we conclude that adherence to the existing SCR scheme [disallowing screening for lawyers moving from private firm to private firm] is the better rule. We, therefore, refrain from creating an exception to the imputed disqualification rule embodied in SCR 160.

The split is probably best illustrated by Florida, where, as a result of these competing policies and concerns, courts within even the same state are disagreeing on whether screening can be used. Two appellate courts hold that screening is effective to avoid imputed disqualification caused by nonlawyers, but two do not. Whether it is ethical or not depends upon where venue is proper, apparently. See First Miami Sec., Inc. v. Sylvia, ___ So.2d ___, 2001 WL 166984, * 2-3 (Ct. App. Fla. Feb. 21, 2001).

Perhaps reflecting this split, the Restatement takes an odd middle ground. It does not impute conflicts of nonlawyers, Restatement (Third) Law Governing Lawyers ß 12, cmt. f (2000). Thus, a screen is not even necessary. However, if the nonlawyer shows up working on a case that he was involved in at a prior firm, the firm is disqualified. Id.

Despite its unusual stance, the discussion of the Restatement is reflective of the discussion in the cases that permit screening of nonlawyers:

f. Imputed conflicts through nonlawyer employees. Nonlawyer employees of a law office owe duties of confidentiality by reason of their employment (see Restatement, Second, Agency ß 396). However, their duty of confidentiality is not imputed to others so as to prohibit representation of other clients at a subsequent employer. Even if the person learned the information in circumstances that would disqualify a lawyer and the person has become a lawyer, the person should not be regarded as a lawyer for purposes of the imputation rules of this Section.

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Some risk is involved in a rule that does not impute confidential information known by nonlawyers to lawyers in the firm. For example, law students might work in several law offices during their law-school careers and thereby learn client information at Firm A that could be used improperly by Firm B. Experienced legal secretaries and paralegal personnel similarly often understand the significance and value of confidential material with which they work. Incentives exist in many such cases for improper disclosure or use of the information in the new employment.

On the other hand, nonlawyers ordinarily understand less about the legal significance of information they learn in a law firm than lawyers do, and they are often not in a position to articulate to a new employer the nature of the information gained in the previous employment. If strict imputation were applied, employers could protect themselves against unanticipated disqualification risks only by refusing to hire experienced people. Further, nonlawyers have an independent duty as agents to protect confidential information, and firms have a duty to take steps designed to assure that the nonlawyers do so (see s 60, Comment d). Adequate protection can be given to clients, consistent with the interest in job mobility for nonlawyers, by prohibiting the nonlawyer from using or disclosing the confidential information (see Sec. 124) but not extending the prohibition on representation to lawyers in the new firm or organization. If a nonlawyer employee in fact conveys confidential information learned about a client in one firm to lawyers in another, a prohibition on representation by the second firm would be warranted.

Now that we know that the split exists, let's turn back to our hypothetical. In the hypothetical above, the new lawyer is now a lawyer, but wasn't when he acquired the information. Is he a "lawyer" or a "nonlawyer?"

A late 2002-Texas case addressed this question and raises serious issues for firms which rely upon screens to prevent imputation from summer clerks and the like. The facts were simple: Nonlawyer is working for a firm, and acquires information. Then she gets a law license and is hired by a firm. If she is treated as a lawyer, the firm is disqualified by imputation; if she is treated as a nonlawyer, the jurisdiction allows rebuttal through a Chinese Wall. What is the result?

Here's what the court said:

Because Mortola-Strasser worked as a nonlawyer for [where she acquired the information] and as an attorney for [the firm which has since hired her], we must first determine whether the rebuttable presumption for nonlawyers -- or the irrebuttable presumption for attorneys -- applies. Mortola-Strasser is an attorney. Thus, the concern of restricted mobility noted above does not apply to her.

Though the respect for precedent is hard to fault, the case creates some enormous issues for law firms hiring new lawyers who have previously worked as summer clerks. If this case is correct, then every new lawyer who has worked as a summer clerk disqualifies the hiring firm just as if the summer clerk had been a lawyer all his life. It also, perhaps, gives lie to the whole distinction between lawyers and nonlawyers when it comes to migration.

It is unclear what position the Restatement takes on this, which provides:

Law students who clerk in firms, like other nonlawyer employees, typically have limited responsibilities and thus might acquire little sensitive confidential information about matters. Absent special circumstances, they should be considered nonlawyer employees for the purposes of this Section. Persons who have completed their legal education and are awaiting admission to practice at the time of providing services to a client of a law firm typically have duties comparable to admitted lawyers and accordingly should ordinarily be treated as lawyers for purposes of imputation.