Second DCA says plaintiff’s law firm must be disqualified when it also represents defendant’s former lawyer in a related legal malpractice action

Hello everyone and welcome to this JACPA Ethics Alert.  This Alert will discuss the September 21, 2011 Second District Court of Appeal opinion which granted a writ of certiorari and remanded the denial of the disqualification of the law firm stating that the law firm must be disqualified since it also represented the defendant’s former lawyer in a related legal malpractice action.  The case is Ironstone Bank v. Frye, — So.3d —-, 2011 WL 4375025, 2011 WL 4375025 (Fla. App. 2 Dist.).

The law firm (Henderson Franklin) represented the plaintiff/bank in an action alleging that the defendant, Frye, breached the terms of a loan guaranty.  The law firm also represented Frye’s former lawyer in defending a legal malpractice action which included claims for matters directly related to the former lawyer’s representation of Frye in the defense of the Bank’s claims against him.

According to the opinion, the pending legal malpractice action included allegations related, in part, to the former attorney’s representation of Frye in the same action in which the law firm was currently representing the Bank. The allegations of the malpractice complaint also concerned the former lawyer’s representation of Frye on estate and asset planning matters, during which Frye alleged that his former lawyer gained detailed knowledge of his financial circumstances, which could be invaluable to the Bank in collecting a judgment against Frye.

Mr. Frye filed a motion to disqualify the law firm, which was denied.  The judge stated at the end of the hearing that “the basic problem with [Mr. Frye’s] position is there is no attorney/client relationship between Mr. Frye and Henderson Franklin.  Therefore, there is no irrefutable presumption because you’ve not established an attorney/client relationship.”  The judge also said that Frye failed to meet his burden to establish “the procedural and substantive requirements for disqualification because, number one, Frye and Henderson Franklin never shared an attorney/client relationship, and, number two, there has been no evidentiary showing that the matter in which Henderson Franklin is representing … Trupp and [the Arnstein firm] … are the same or substantially related matters.” (emphasis supplied).  The written order denying the motion made similar findings and conclusions and cited to the Second DCA’s decision in Kaplan v. Divosta Homes, L.P., 20 So.3d 459 (Fla. 2d DCA 2009).

The opinion framed the issue as follows:  “whether Henderson Franklin’s access to confidential communications between Frye and his former lawyer through its representation of the lawyer in the legal malpractice action is sufficient to require the disqualification of Henderson Franklin from continued representation of the Bank in the action against Mr. Frye on the guaranty.”

“We conclude that the unfair informational advantage accruing to Henderson Franklin through its representation of Mr. Frye in the legal malpractice action disqualifies it from further representation of the Bank in its action against Mr. Frye on the guaranty. The decision of the Third District in a case involving similar facts, Adelman v. Adelman, 561 So.2d 671 (Fla. 3d DCA 1990), guides our decision on this point.

After analyzing the Adelman decision, the opinion concluded that the trial judge erroneously relied on Kaplan in requiring an attorney/client relationship between Frye and the law firm and a showing that the matters were the same or substantially related matters since the motion was not based on a conflict of interest but on the unfair informational advantage the law firm obtained from its access to confidential communications to the former lawyer through its representation of him and his law firm in the legal malpractice action.

“Because the Bank’s counsel has access to confidential communications between Mr. Frye and his former lawyer concerning the action on the guaranty by virtue of its representation of the former lawyer in the malpractice action, we conclude that the Bank’s counsel is disqualified from representing the Bank in the action on the guaranty.”  The opinion granted the petition for a writ of certiorari and remanded the case to the trial judge to grant the motion.

Bottom line:  The Second DCA opinion followed the Third DCA’s decision in Adelman and found that a party moving to disqualify a lawyer is not required to show that an attorney/client relationship or that the matters are the same or similar if the current lawyer/law firm has gained an unfair informational advantage.  In this case, the unfair advantage was gained by representing another party’s former lawyer in a legal malpractice action involving certain allegations which were related the same action and where the former lawyer gained detailed knowledge of the financial circumstances of the party which could be used in collecting a judgment against the former client.

…be careful out there!

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

My law firm focuses on review, analysis, and interpretation of the Rules Regulating The Florida Bar, advice and representation of lawyers in Bar disciplinary matters, defense of applicants for admission to The Florida Bar before the Board of Bar Examiners, defense of all Florida licensed professionals in discipline and admission matters before all state agencies and boards, expert ethics opinions, and practice management for lawyers and law firms.  

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