Legal Ethics Opinion No. 1459

Conflict of Interest--Former Client--Attorney Joining Firm Which
Represents Clients Adverse to Former Firm; Attorney Asserting
Financial Interest in Fees Received by Former Firm in Cases Other
than Those Being Defended by New Firm

You state that Law Firm A has represented plaintiffs in
litigation.  A partner of Firm A who worked on such litigation
has withdrawn from Firm A and joined Firm B which represents the
defendants in some of the cases initiated by Firm A. Firm B has
agreed to exclude the withdrawing partner from the pending
litigation by use of a Chinese Wall. The withdrawing partner,
however, continues to assert a financial interest in fees which
may be received by Firm A in certain cases other than those
defended by Firm B but which involve the same product.

You have requested that the committee opine as to the several
issues raised by the above-described factual situation. 

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 2-105(D), which enumerates the three
requirements which must be met in order to properly make a
division of fees between lawyers who are not in the same firm; DR
5-101(A), which states that a lawyer shall not accept employment
if the exercise of his professional judgment on behalf of his
client may be affected by his own financial, business, property,
or personal interests, except with the consent of his client
after full and adequate disclosure under the circumstances; DR
5-105(D), which provides that a lawyer who has represented a
client in a matter shall not thereafter represent another person
in the same or substantially related matter if the interest of
that person is adverse in any material respect to the interest of
the former client, unless the former client consents after full
disclosure; and DR 5-l05(E) which disqualifies, vicariously, from
such employment the firm of any lawyer who himself is
disqualified under DR 5-l05. 

With this background, the committee responds to your inquiries as
     l.   You have requested the committee's opinion as to
          whether the withdrawing partner's assertion of a
          financial interest in plaintiffs' litigation involving
          the same issues as litigation defended by Firm B
          precludes Firm B from continuing to represent
          defendants absent the consent of all parties after full

          The committee opines that as to fees owing from cases
          completed before the withdrawing partner joined Firm B,
          the assertion of a financial interest by the
          withdrawing partner would not constitute a personal
          interest as articulated in DR 5-101(A).  Thus, Firm B
          would not be precluded from continuing to represent
          defendants as a result of the attorney's receipt of
          those fees provided that Firm B's clients consent after
          full disclosure. 

          As to fees owing from cases completed by Firm A afterthe withdrawing partner joined Firm B, the committee
          believes that DR 2-105(D) and DR 5-101(A) are
          controlling.  The committee is of the opinion that it
          would be improper for the withdrawing partner to assert
          a financial interest in such cases unless: (1) the
          lawyer can qualify under DR 2-l05(D) as, and the
          clients (of Firm A) consent to the employment of,
          additional counsel; (2) both Firm A and the withdrawing
          partner are in a position to, and expressly assume
          responsibility to the clients; and (3) the terms of the
          division of the fee are disclosed to the clients and
          the clients consent thereto.  The committee believes,
          as a practical matter, that the withdrawing partner is
          precluded from expressly assuming responsibility to the
          clients because of his new affiliation with Firm B. 
          Thus, the committee believes that it would be improper,
          and violative of DR 2-105(D), for the withdrawing
          partner to assert a financial interest in fees for
          legal services provided by Firm A on cases subsequent
          to his departure from Firm A.  Therefore, the committee
          opines that Firm B is also precluded from representing
          defendants in those cases which continue following the
          attorney's move from Firm A to Firm B.  See also LEO

     2.   As to what constitutes "full disclosure", the committee
          directs your attention to prior LEOs #187, #1097,
          #1198, and #1254 which concludes that disclosure is
          adequate if it is such that the attorney's client is
          able to make an informed decision as to whether or not
          to give consent.  The committee also opined that all
          doubts regarding the sufficiency of the disclosure must
          be resolved in favor of the client.

     3.   With regard to your question as to the efficacy of a
          "Chinese Wall", the committee believes that the clear
          language of DR 5-105(D), which requires the client's
          consent, would dictate that such device would not be
          effective here.  The facts presented indicate that the
          withdrawing partner worked on continuing litigation on
          the other side of cases which continue in Firm B. 
          Under these circumstances, the committee opines that
          absent the consent of the withdrawing partner's former
          clients (various defendants in the litigation) after
          full disclosure, it would be improper for the attorney
          to personally represent plaintiffs and similarly
          improper for his new firm to continue any such
          representation.  Such conduct would be improper whether
          Firm A currently represented parties adverse to those
          represented by Firm B or was subsequently contacted
          about a claim against a manufacturer which had been
          previously represented by the attorney who has moved
          from Firm A to Firm B.  The committee opines that the
          only cure to such impropriety is the former clients'
          consent, as described by DR 5-105(D), and that no cure
          would be effected simply by a unilateral agreement
          within Firm B to exclude the attorney from the pending
          litigation by use of a "Chinese Wall".  See LEO #1428.  

Committee Opinion
April 28, 1992