A large law firm was disqualified from defending a client in a large qui tam action because it was simultaneously representing one of the 200 plaintiffs in unrelated matters. The firm sued for unpaid fees, and the former client argued the firm was not entitled to payment and that the firm was required to disgorge fees already paid.
The firm asserted that its engagement letter allowed it to engage in conflicting representations “provided the other matter is not substantially related to our representation of [the client] and in the course of representing [the client] we have not obtained confidential information of [the client] material to representation of the other client.”
The court rejected that argument and held that the firm was precluded from receiving compensation from the day that the conflict arose.
Rogers correctly notes that
the decision casts doubt on firms’ reliance on broad advance waivers as a viable method of overcoming conflicts when clashing interests ultimately develop among a law firm’s current clients.
Indeed, “biolerplate waiver” provisions in engagement letters will likely have no real bearing on conflict analysis, so why use them.