Clinard v. Blackwood ( 1999 )

FILED
October 28, 1999
Cecil Crowson, Jr.
Appellate Court Clerk
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
JOHN M. CLINARD and )
EDWARD CLINARD, )
)
Plaintiffs/Counter-Defendants/ )
Appellees, )
)
VS. ) Robertson Circuit
) No. 8674
C. ROGER BLACKWOOD and )
NANCY DODS BLACKWOOD, )
) Appeal No.
Defendants/Counter-Plaintiffs/ ) 01A01-9801-CV-00029
Appellants, )
)
VS. )
)
AMERICAN LIMESTONE CO., INC., )
)
Counter-Defendant/Appellee, )
)
and )
)
AUSTIN POWDER CO., INC., )
)
Counter-Defendant. )
APPEAL FROM THE CIRCUIT COURT FOR ROBERTSON COUNTY
AT SPRINGFIELD, TENNESSEE
THE HONORABLE WALTER C. KURTZ, JUDGE
For John M. Clinard and For C. Roger Blackwood and
Edward Clinard and Nancy Dods Blackwood:
American Limestone Co., Inc.:
Page 1
J. Clarence Evans
Ames Davis Winston S. Evans
Paula D. Walker Evans, Jones & Reynolds
Waller, Lansden, Dortch & Davis Nashville, Tennessee
Nashville, Tennessee
REVERSED AND REMANDED
WILLIAM C. KOCH, JR., JUDGE
Page 2
OPINION
This appeal involves the imputed disqualification of a Nashville law firm from
continuing to represent a client with interests adverse to those of two former clients
of one of the law firm’s lawyers. Soon after discovering that their former lawyer
had joined the law firm representing their adversaries, the former clients filed a
motion in the Circuit Court for Robertson County seeking to disqualify their
adversaries’ law firm. The law firm conceded that the lawyer was personally
disqualified but opposed disqualifying the entire firm by asserting that it had
instituted a screening arrangement intended to shield the disqualified lawyer and his
secretary from the rest of the firm. The trial court declined to disqualify the law firm
but permitted the former clients to pursue an interlocutory appeal. We have
determined that a screening arrangement will not prevent the disqualification of the
law firm in this case. The disqualified lawyer had at one time served as his former
clients’ primary lawyer in the very lawsuit before the trial court and, therefore, had
become heavily involved with the facts of the case and had directly received
confidential information from his former clients. Accordingly, we reverse the order
denying the motion to disqualify and remand the case with directions that the trial
court enter an order disqualifying the plaintiff’s law firm.
I.
In the late 1960s, Maclin P. Davis, Jr., then a partner in the Nashville law firm
of Waller, Lansden, Dortch & Davis, represented C. Roger Blackwood in a divorce
proceeding. Thereafter, Mr. Davis represented Mr. Blackwood in other matters.
After Mr. Blackwood married Nancy Dods Blackwood in 1973, Mr. Davis
represented Ms. Blackwood as well.1 In 1988, Mr. Davis joined the Nashville office
of Baker, Donelson, Bearman & Caldwell, a large law firm with offices in six cities in
Tennessee. 2 As far as this record shows, Mr. Davis continued to represent the
Blackwoods in various matters following his lateral move between firms.
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The Blackwoods own a farm in Robertson County that adjoins property
owned by John M. and Edward Clinard. For many years, the Clinards leased their
property to various companies that quarried limestone on the site. Two disputes
arose between the neighbors after the Blackwoods began building a new home on
their farm. First, Mr. Blackwood and John Clinard disagreed about the location of
their boundary line.3 Second, the Blackwoods asserted that blasting at the quarry
had damaged their new house and stable. According to Mr. Blackwood, American
Limestone Company, Inc. (“American Limestone”) moderated the blasting and
performed some clearing and excavation work for the Blackwoods after he
complained about the blasting. However, the Blackwoods later asserted that the
blasting at the quarry caused extensive damage to their house.
In February 1996, Mr. Blackwood repaired portions of the fence along Pepper
Branch Creek that had sparked his earlier disagreement with John Clinard over the
location of the boundary line. Two months later, the Clinards filed a declaratory
judgment action against Mr. Blackwood in the Chancery Court for Robertson
County seeking to establish the disputed boundary line. Mr. Blackwood retained
Mr. Davis to represent him in the lawsuit.
On May 16, 1996, Mr. Davis formally entered an appearance in the case on
behalf of Mr. Blackwood. Later, on June 24, 1996, Mr. Davis filed an answer and
counterclaim against the Clinards asserting that the fence was the proper boundary
line and requesting that the Clinards be enjoined from removing or damaging the
fence. Mr. Blackwood and Mr. Davis also discussed filing a counterclaim and
third-party claim against the Clinards and American Limestone for blasting damage
to their property. However, Mr. Davis eventually informed Mr. Blackwood that he
could not file a claim against American Limestone because the Baker, Donelson firm
represented American Limestone in an unrelated environmental matter and because
American Limestone had declined to permit Mr. Davis to represent interests adverse
to the company’s. Accordingly, on August 14, 1996, Mr. Davis withdrew as Mr.
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Blackwood’s lawyer and was replaced by Winston S. Evans.
On September 30, 1996, Mr. Evans filed an amended counterclaim and
third-party claim on behalf of the Blackwoods against the Clinards and American
Limestone. In this pleading, the Blackwoods sought damages from both the
Clinards and American Limestone for negligent blasting, dumping a large amount of
contaminated fill material on their farm, and polluting the air with dust from the
quarry operations. 4 On October 29, 1996, Ames Davis and Waller, Lansden, Dortch
& Davis entered an appearance on behalf of American Limestone. Approximately
one month later, Ames Davis and Waller, Lansden, Dortch & Davis replaced the
lawyer who had represented the Clinards from the outset of the litigation.
In June 1997, Mr. Davis left the Baker, Donelson firm and returned to Waller,
Lansden, Dortch & Davis as a non-equity member of the firm. By that time, the
Waller firm had grown to approximately one hundred lawyers. Upon Mr. Davis’s
return, the Waller firm implemented its “Conflict of Interest Screening Procedures”
to prevent Mr. Davis and his secretary from communicating information concerning
the Blackwoods’ case to the other lawyers and staff of Waller, Lansden, Dortch &
Davis. 5
On August 12, 1997, soon after discovering that Mr. Davis had returned to the
Waller firm, the Blackwoods’ lawyer mailed a letter to Ames Davis stating that the
Blackwoods did not assent to the Waller firm’s representation of either the Clinards
or American Limestone and requesting the Waller firm to withdraw from the pending
lawsuit. Thereafter, on September 22, 1997, the Blackwoods filed a motion in the
Circuit Court for Robertson County 6 seeking to disqualify Waller, Lansden, Dortch
& Davis from continuing to represent the Clinards and American Limestone. The
Waller firm opposed the motion. The trial court considered the motion based on
affidavits without conducting an evidentiary hearing. On December 16, 1997, the
trial court declined to disqualify the Waller firm but authorized the Blackwoods to
Page 5
seek an interlocutory appeal. On January 14, 1998, this court granted the
Blackwoods’ Tenn. R. App. P. 9 application.
II.
The practice of law has changed dramatically during the last half of the
twentieth century. Greater numbers of lawyers practice in firms rather than as sole
practitioners or in small associations. 7 The number and size of these law firms have
grown at an accelerating pace, 8 and much of this growth has been accomplished
through mergers and the lateral hiring of experienced lawyers. 9 In this environment,
the generation of revenue and the maximization of profit have become important, if
not primary, drivers of the law firm’s culture. 10
At the same time that the structure and size of firms have been changing, so
have the career goals and attitudes of lawyers themselves. As late as twenty years
ago, it was not uncommon for lawyers to spend their entire career with the law firm
that hired them right out of law school. Today, there is increased mobility among
lawyers, and it is not uncommon for associates and even partners to change firms
several times during their career because of mergers or firm restructuring or because
they desire to increase their personal income by creating new firms. 11 It is also
becoming common for law firms to hire temporary lawyers to work a particular
piece of business with no expectation of continued employment once the business is
completed.
The changes in the legal profession have also been accompanied by changes
in the relationships between law firms and their clients. In today’s competitive,
cost-conscious environment, clients wield more power than they once did. Clients
are now more conscious of the cost of legal services. Rather than remaining with a
single lawyer or law firm as they once did, 12 clients today will frequently shop around
for legal services or will look to in-house attorneys to provide these services.
Because of the increased complexity of the legal matters facing clients and the
growing specialization among lawyers, it is also quite common for clients to be
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represented by more than one lawyer or law firm at any given time.
These changes in the legal landscape, whether they be lamented or welcomed,
have had a tendency to generate more conflict of interest problems than ever before.
13
These problems have placed a strain on the ethics rules governing the conduct of
lawyers. The bench and the bar have realized that the traditional rules must be
adapted to provide practical solutions for the problems currently facing lawyers and
clients. The profession is now engaged in the process of formulating functional
rules that give proper weight to the differing, and sometimes competing, interests of
all parties concerned. Thus, the traditional core professional values of client loyalty,
the preservation of a client’s confidences and secrets, 14 and the avoidance of the
appearance of professional impropriety 15 are being re-examined in light of
prospective clients’ interest in retaining a lawyer of their choice and the legitimate
prerogative of lawyers to enhance their ability to earn a livelihood in their chosen
profession. 16 Agreement concerning the proper way to balance these potentially
competing interests has proven to be elusive, and, even today, the legal profession
has yet to reach a consensus on many important issues. 17
Among the most intransigent ethics issues currently confronting the profession
involves the use of screening arrangements to avoid the imputed disqualification of
an entire law firm because of a single member’s conflict of interest with a former
client. For the past twenty-five years, lawyers and judges have debated whether and
in what circumstances screening arrangements should be allowed. This case
requires us to revisit this issue at a time when the organized bar in Tennessee is
exerting increasing pressure on the courts to permit the use of screening
arrangements to avoid the seemingly harsh effects of imputed disqualification. 18
The propriety of using screening arrangements has precipitated a pointed
debate among practicing lawyers, judges, and academicians. Those favoring the use
of screening arrangements insist that they are an appropriate way to protect clients’
free access to lawyers of their choice and to facilitate lawyer mobility without
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sacrificing client confidentiality. 19 Those opposing the use of screening arrangements
insist that the profession’s ancient obligation to protect a former client’s confidences
should not be diluted by lawyers’ pragmatic business interests. 20 Even the most
cursory examination of the literature on the subject reveals that the debate over the
use of screening arrangements by lawyers in private practice is far from settled and
that the prospects of an early consensus are guarded.
The Tennessee Supreme Court has yet to provide an authoritative
interpretation of Tenn. S. Ct. R. 8, DR 5-105(D), and the Tennessee Bar Association
has yet to present its proposed rules to the Court. Thus, Tennessee’s bench and
bar must await the Court’s definitive guidance concerning the viability of screening
arrangements by lawyers in private law firms. Based on the facts of this case, we
have determined that the screening arrangement employed by Waller, Lansden,
Dortch & Davis for Mr. Davis and his secretary cannot prevent the disqualification
of the entire firm. Mr. Davis became deeply involved in the facts of this case when
he served as the Blackwoods’ primary lawyer. Accordingly, it is virtually certain that
Mr. Davis obtained significant confidential information from the Blackwoods while
he was representing them and that this information could, if divulged either
purposefully or accidentally, cause material adverse effects on the Blackwoods in the
present litigation.
III.
We recognize at the outset that the most authoritative sources for the
principles needed to decide this case are the rules and opinions of the Tennessee
Supreme Court. The Court has the exclusive power to regulate the conduct of
lawyers in Tennessee. See In re Petition of Burson, 909 S.W.2d 768, 773 (Tenn.
1995); Smith County Educ. Ass’n v. Anderson, 676 S.W.2d 328, 333 (Tenn. 1984);
see also Restatement (Third) of the Law Governing Lawyers § 1 cmt. c (Proposed
Final Draft No. 2, 1998). All lawyers, upon admission to the bar, become officers of
Page 8
the Court, see Andrews v. Bible, 812 S.W.2d 284, 291 (Tenn. 1991); Ward v. Alsup,
100 Tenn. 619, 739, 46 S.W. 573, 574 (1898), and thereby become subject to the
power of the Court to prevent and punish professional misconduct. See Memphis
& Shelby County Bar Ass’n v. Vick, 40 Tenn. App. 206, 214, 290 S.W.2d 871, 875
(1955).
Early in our history, the courts fashioned the rules governing both the practice
of law and the conduct of lawyers from common-law principles and from their own
understanding of the practice of law and the role of lawyers in litigation. In the early
part of this century, however, the organized bar, motivated to some degree by
self-interest 21 began to play a more active role in regulating the conduct of lawyers by
adopting ethics codes for the profession. 22 These codes, for the most part, reflected
the rules and principles that had been fashioned by the courts over the years. 23
Accordingly, the rules in the organized bar’s early ethics codes virtually mirrored the
judicial decisions regarding lawyer conduct.
As time went by, the courts began to cite the organized bar’s ethics codes as
authority for their decisions regulating the conduct of lawyers. In time, the judiciary’
s reliance on ethics codes thoroughly blurred the line between the use of ethics
codes for disciplinary purposes and the use of ethics codes to regulate lawyers’
conduct during litigation.24 Eventually, some courts adopted a restrained approach
leaving the enforcement of ethics codes to the bar’s existing disciplinary machinery.
See, e.g., Armstrong v. McAlpin, 625 F.2d 433, 445-46 (2d Cir. 1980), vacated on
other grounds, 449 U.S. 1106 (1981). Other courts have rejected this “hands off”
approach in favor of addressing directly unethical conduct occurring in connection
with pending litigation. See, e.g., In re American Airlines, 972 F.2d 605, 611 (5th
Cir. 1992). Tennessee’s courts have not hesitated to rely on ethics code provisions
to protect the integrity of the judicial process or the rights of litigants when an ethical
violation taints or threatens to taint a trial’s fairness. See Woodside v. Woodside,
No. 01A01-9503-PB-00121, 1995 WL 623077, at *8 (Tenn. Ct. App. Oct. 25, 1995)
(Koch, J., concurring), perm. app. denied concurring in results only (Tenn. Jan. 8,
Page 9
1996) (describing the judicial resolution of five issues using the Code of Professional
Responsibility).
Ethics codes were never intended to supplant the court-created principles of
professional conduct or to prevent the courts from continuing to refine and apply
these principles. For the good of the profession, the courts have a continuing
obligation to safeguard the attorney-client relationship and to maintain the public’s
confidence in the integrity of the legal system. See Panduit Corp. v. All States
Plastic Mfg. Co., 744 F. 2d 1564, 1576 (Fed. Cir. 1984); Freeman v. Chicago
Musical Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982); In re Estate of Waters,
647 A.2d 1091, 1098 (Del. 1994); Ciaffone v. Eighth Judicial Dist. Court, 945 P.2d
950, 953 (Nev. 1997); Kala v. Aluminum Smelting & Refining Co., 688 N.E.2d
258, 262 (Ohio 1998).
In 1908, the American Bar Association adopted its first ethics code known as
the Canons of Professional Ethics. The Tennessee Bar Association adopted the first
thirty-two of these canons in 1909, 25 but the Tennessee Supreme Court did not place
its imprimatur on these canons until 1938. 26 Even since 1938, the Tennessee
Supreme Court has patterned its rules governing the conduct of lawyers after the
ethics codes drafted by the American Bar Association. 27
The Code of Professional Responsibility, as adopted by the Tennessee
Supreme Court, has the force and effect of law. See Gracey v. Maddin, 769
S.W.2d 497, 504 (Tenn. Ct. App. 1989) (Koch, J., dissenting); King v. King, No.
89-46-11, 1989 WL 122981, at *11 (Tenn. Ct. App. Oct. 18, 1989) (Koch, J.,
concurring) (No Tenn. R. App. P. 11 application filed). 28 However, the Code of
Professional Responsibility is itself divided into Canons, Ethical Considerations, and
Disciplinary Rules, and each of these divisions has different authoritative weight.
The Canons are “statements of axiomatic norms” that “embody the general concepts
from which the Ethical Considerations and the Disciplinary Rules are derived.” The
Ethical Considerations are “aspirational in character and represent objectives toward
Page 10
which every member of the profession should strive.” Finally, the Disciplinary Rules
are “mandatory in character” and state “the minimum level of conduct below which
no lawyer can fall without being subject to disciplinary action.” See Tenn. S. Ct. R.
8, Preamble.
The Tennessee Supreme Court is the chief arbiter of the meaning of its own
rules. See In re Gant, 937 S.W.2d 842, 846 (Tenn. 1996). However, in 1981, the
Court reluctantly empowered 29 the Board of Professional Responsibility and its
disciplinary counsel to issue formal and informal advisory ethics opinions construing
the Court’s own ethics rules. See Tenn. S. Ct. R. 9, § 26, West Publishing Co.,
Tennessee Decisions 609-614 S.W.2d at cxxxv. The formal ethics opinions, which
only the Board may issue, “constitute a body of principles and objectives upon
which members of the bar can rely for guidance in many specific situations.” Tenn.
S. Ct. R. 9, § 26.4(a). 30 However, even though formal ethics opinions are binding on
the Board and the person requesting the opinion, 31 they are not binding on the courts.
See In re Youngblood, 895 S.W.2d 322, 325 (Tenn. 1995); State v. Jones, 726
S.W.2d at 519-20. Nonetheless, formal ethics opinions can provide guidance to the
courts because they reflect the legal profession’s considered opinions regarding the
appropriate standards of practice. See King v. King, 1989 WL 122981, at *12
(Koch, J., concurring).
IV.
The parties have presented starkly different portrayals of the legal profession’
s current attitude regarding screening arrangements. On one hand, Waller, Lansden,
Dortch & Davis asserts that screening arrangements in the private sector have
become generally accepted and are currently being widely used; while the
Blackwoods assert that screening arrangements have fallen into disfavor. Both
parties are, at least in part, correct. There is, however, currently no consensus
among the members of the legal profession concerning the necessary ingredients of
screening arrangements or the circumstances in which a screening arrangement may
Page 11
be used to avoid the consequences of the imputed disqualification doctrine.
A.
The Conflict of Interest Rules
The fiduciary relationship between a lawyer and a client requires the lawyer to
exercise the utmost good faith to protect the client’s interests. See Alexander v.
Inman, 974 S.W.2d 689, 693-94 (Tenn. 1998); Fitch v. Midland Bank & Trust Co.,
737 S.W.2d 785, 789 (Tenn. Ct. App. 1987). Lawyers must preserve their client’s
confidences and secrets, exercise independent judgment on their client’s behalf, and
represent their client zealously within the bounds of the law. See Tenn. S. Ct. R. 8,
Canons 4, 5 & 7; Dyer v. Farley, No. 01A01-9506-CH-00229, 1995 WL 638542, at
*5-6 (Tenn. Ct. App. Nov. 17, 1995) (No Tenn. R. App. P. 11 application filed).
They must also avoid serving two clients whose interests are adverse to each other.
See State v. Locust, 914 S.W.2d 554, 557 (Tenn. Crim. App. 1995).
The prohibition against serving two masters is enforced using conflict of
interest rules developed by the courts long before the organized bar began adopting
ethics codes. See Restatement (Third) of the Law Governing Lawyers § 1 cmt. b, at
3 (Proposed Final Draft No. 2 1998). Many of the conflict of interest rules have
now been incorporated into the organized bar’s ethics codes. See Henriksen v.
Great Am. Sav. & Loan, 14 Cal. Rptr. 2d at 186; Hamilton & Coan, supra note 20,
at 66; Restatement (Third) of the Law Governing Lawyers, Forward, at xxiii-xxiv
(Proposed Final Draft No. 1, 1996).
A conflict of interest arises whenever a lawyer is placed in a position of
divided loyalties - a circumstance in which a lawyer’s regard for the duty owed to
one client tends to lead to disregard of the duty owed to another client. See State v.
Tate, 925 S.W.2d at 552. To avoid conflicts of interest, lawyers are prohibited from
undertaking to represent a client whose interests are adverse to those of one of the
lawyer’s other clients. See State v. Phillips, 672 S.W.2d 427, 430-31 (Tenn. Crim.
Page 12
App. 1984); Autry v. State, 1 Tenn. Crim. 95, 98, 430 S.W.2d 808, 809 (1967).
These conflict of interest prohibitions continue to govern a lawyer’s conduct
after he or she is no longer representing a client. See Mills v. Crane, No. 66, 1987
WL 9165, at *4 (Tenn. Ct. App. Apr. 10, 1987), perm. app. denied (Tenn. July 27,
1987); American Nat’l Bank v. Bradford, 28 Tenn. App. 239, 262, 188 S.W.2d
971, 981 (1945); Tenn. S. Ct. R. 8, EC 4-6. 32 In fact, they continue after the death of
a client or former client. See Restatement (Third) of the Law Governing Lawyers §
112 cmt. 2, at 280 (Proposed Final Draft No. 1 1996). Therefore, a lawyer may not
represent interests materially adverse to those of a former client if the subject matter
of the new representation is substantially related to the subject matter of the previous
representation. See State v. Hoggett, No. 01C01-9003-CR-00073, 1990 WL
172632, at *2 (Tenn. Crim. App. Nov. 9, 1990) (No Tenn. R. App. P. 11 application
filed); Mills v. Crane, 1987 WL 9165, at *5.
The application of the conflict of interest prohibitions to individual lawyers is
relatively straightforward. A lawyer must not simultaneously represent two or more
persons who have adverse interests in the same subject matter. See Tenn. S. Ct. R.
8, DR 5-105(A), EC 5-15; State v. Tate, 925 S.W.2d at 552. Likewise, a lawyer
must not switch sides during an ongoing dispute. See Henriksen v. Great Am. Sav.
& Loan, 14 Cal. Rptr. 2d at 187; Straub Clinic & Hosp. v. Kochi, 917 P.2d 1284,
1290 (Haw. 1996); State ex rel. Freezer Servs., Inc. v. Mullen, 458 N.W.2d 245, 249
(Neb. 1990); Kala v. Aluminum Smelting & Refining Co., 688 N.E.2d at 266.
Finally, a lawyer cannot undertake to represent a client with interests adverse to
those of a former client. See Mills v. Crane, 1987 WL 9165, at *4.
B.
The Imputed Disqualification Doctrine
The growth in the number and size of law firms and the increased career
mobility of lawyers have created new dimensions to conflict of interest problems.
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In addition to the primary disqualification rules applicable to individual lawyers,
secondary or imputed disqualification rules became necessary to deal with lawyers
practicing in a firm setting. Developing and refining the principles for imputed
disqualification has not been an easy task.
Simply stated, the doctrine of imputed disqualification provides that if the
conflict of interest rules require the disqualification of an individual lawyer, then all
that lawyer’s professional colleagues are likewise disqualified. See Laskey Bros. of
W. Va., Inc. v. Warner Bros. Pictures, Inc., 224 F.2d 824, 826 (2d Cir. 1955);
Bateman, supra note 8, at 254; Hamilton & Coan, supra note 20, at 73; Lee A.
Pizzimenti, Screen Verite: Do Rules About Ethical Screens Reflect the Truth About
Real-Life Law Firm Practice?, 52 U. Miami L. Rev. 305, 310 (1997). This
principle is based on common sense assumptions concerning the way lawyers work
in a firm setting, including the personal and financial relationships among members of
a law firm and the motivations for firm members to share information and to support
each other’s efforts. 33 It is also premised on the common-law rule that partners are
deemed to be agents of one another. 34
The essential component of the imputed disqualification doctrine is the
presumption that lawyers associated in a law practice, as agents of one another,
know what the other lawyers in the firm know. See Penegar, supra note 9, at 848.
Thus, it is presumed that information regarding a client that has been imparted to one
member of a law firm has been shared with, and is known by, the other members of
the firm. See State v. Claybrook, 1992 WL 17546, at *8. When a client’s
confidence and secrets are involved, this presumption is commonly referred to as
the presumption of shared confidences.
By 1969, the doctrine of imputed disqualification had become so widely
accepted that the American Bar Association included it in the Code of Professional
Responsibility. 35 See Model Code of Professional Responsibility DR 5-105(D)
(1969). The American Bar Association broadened the 1969 version of DR 5-105(D)
in 1974 to require imputed disqualification of affiliated lawyers whenever an
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individual lawyer becomes disqualified under any disciplinary rule. See Model Code
of Professional Responsibility DR 5-105 (1974). 36 The 1974 version of DR 5-105(D)
is currently part of Tennessee’s Code of Professional Responsibility. See Tenn. S.
Ct. R. 8, DR 5-105(D). 37
The imputed disqualification doctrine in both the 1969 and 1974 versions of
DR 5-105(D) did not directly address conflicts of interest arising when a personally
disqualified lawyer joins a firm that would not otherwise be disqualified. However,
when this issue reached the courts, most state and federal courts invoked the
imputed disqualification doctrine, citing DR 5-105(A) & (D), DR 4-101 (the
preservation of a client’s confidences and secrets), and Canon 9 (the avoidance of
an appearance of impropriety). These decisions were not well received in some
quarters of the legal profession who believed that the 1974 version of DR 5-105(D)
was much too broad and that it gave too much leeway to the courts. 38 Accordingly,
these lawyers set out to find a remedy for their predicament and eventually decided
that internal screening arrangements similar to those used by financial institutions to
prevent internal communication between departments could be adapted for use by
the legal profession. 39 In theory, these internal screening arrangements would insulate
the rest of the firm from the personally conflicted lawyer and would thereby provide
evidence sufficient to rebut the presumption of shared confidences.
One year after the 1974 amendment to DR 5-105(D), the American Bar
Association, following intensive lobbying by Washington and New York law firms, 40
modified its traditional stance regarding imputed disqualification. Citing the
government’s need for competent lawyers, the ABA’s Committee on Ethics and
Professional Responsibility approved the use of screening arrangements for former
government lawyers even though the Code of Professional Responsibility did not
mention the use of screening arrangements. See ABA Committee on Ethics and
Professional Responsibility, Formal Op. 342 (1975). Two years later, the United
States Court of Claims followed Formal Op. 342, see Kesselhaut v. United States,
555 F.2d 791, 793 (Ct. Cl. 1977), and within several years, the federal courts began
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to view Formal Op. 342 as an amendment to the Code of Professional
Responsibility. See Fields, supra note 11, at 243.
Even though the reasoning of Formal Op. 342 and Kesselhaut v. United
States has been questioned, 41 the approval of the use of screening arrangements for
former government lawyers emboldened the proponents of screening arrangements,
and they continued to press forward on two fronts to gain approval of screening
arrangements for lawyers in private practice. First, they continued their efforts to
persuade the courts that evidence of the prompt use of screening arrangements
should rebut the presumption of shared confidences. Second, they set out to amend
the ethics rules to include provisions explicitly approving the use of screening
arrangements in the private sector. As matters currently stand, the efforts to amend
the ethics codes have borne more fruit than the efforts to convince courts that
screening arrangements are the panacea for imputed disqualification problems.
C.
Changes in the Ethics Codes
The first modern effort to rewrite the profession’s ethics codes began in 1977
when the American Bar Association created the Commission on the Evaluation of
Professional Standards (commonly known as the “Kutak Commission”) and ended
in 1983 with the adoption of the Model Rules of Professional Conduct. The Kutak
Commission eventually concluded that nothing less than a comprehensive
reformulation of the ethical standards of the legal profession was called for.
Between 1979 and 1982, the Kutak Commission produced four major drafts of new
ethics rules that entirely reworked the structure and substance of the Code of
Professional Responsibility. 42 Rather than reflecting consensus, these drafts
prompted controversy and dissent. In fact, two other professional organizations
produced competing ethics codes. 43 The range of opinions regarding the appropriate
standards for the profession reflected the ethical pluralism among the members of
the bar. 44
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Two matters taken up in the process of adopting the Model Rules of
Professional Conduct are relevant to this appeal. First, both the Kutak Commission
and the House of Delegates decided that Canon 9's “appearance of impropriety”
standard that had figured so prominently in the development of the imputed
disqualification rule was too indefinite. 45 Accordingly, the Model Rules of
Professional Conduct explicitly reject the “appearance of impropriety” standard as “
subjective” and “question-begging.” See ABA Model Rules of Professional Conduct
Rule 1.10 cmt. (Lawyers Moving Between Firms; third paragraph) (1983).
The second issue germane to this case involves the use of screening
arrangements by lawyers in private practice to avoid the consequences of the
imputed disqualification doctrine. The Kutak Commission’s initial discussion draft
issued in January 1980 did not explicitly address the imputed disqualification
doctrine or the use of screening arrangements; however, the draft considered at the
American Bar Association’s February 1983 meeting did. By this time, proposed
Rule 1.10 had been rewritten to address imputed disqualification directly. 46 The
Commission added Comment No. 11 to Rule 1.10 containing factors for the courts
to consider in determining whether imputed disqualification was required in a
particular case. One of the factors was “the nature and probable effectiveness of
screening measures.”47 Thus, this version of the proposed Code, at least implicitly,
allowed lawyers in private practice to use screening arrangements. 48
Proposed Rule 1.10 and its comments were rewritten between the House of
Delegates’ February 1983 and May 1983 meetings. The Commission replaced the
original Section 1.10(b) with a new Section 1.10(b) dealing with lawyers becoming
associated with a firm and with a new Section 1.10(c) dealing with lawyers
terminating their association with a firm. 49 The Commission also deleted the
comment containing the factors for determining whether to invoke the imputed
disqualification rule. 50
Page 17
The Model Rules of Professional Conduct adopted by the American Bar
Association’s House of Delegates in August 1983 differed significantly from the
original Kutak Commission proposals. Ultimately, both the Kutak Commission and
the American Bar Association rejected the use of screening mechanisms for private
lawyers but approved their use for former government lawyers, just as Formal Op.
342 had done nine years earlier.51 However, the comments to the 1983 version of
Rule 1.10 imply that mandatory imputed disqualification is not the answer in every
case and that the courts should decide these questions on a case-by-case basis and
that the presumption of shared confidences should be tempered by the personally
conflicted lawyer’s actual role in the present and former firm and his or her actual
knowledge of privileged information. 52
The American Bar Association’s reconsideration of professional ethics did
not end with the adoption of the Model Rules of Professional Conduct. These rules
have been amended twenty-eight times since their adoption in 1983. See Ann. Model
Rules of Professional Conduct, supra note 45, at vii. Amendments adopted in 1989
moved several provisions in original Rule 1.10(b) and the corresponding comments
to Rule 1.09 and broadened Rule 1.9(c). See Ann. Model Rules of Professional
Conduct, supra note 45, at 579. In their present form, Rules 1.9 and 1.10 (and Rule
1.11 dealing with former government lawyers) depart significantly from the form and
substance of the Code of Professional Responsibility. They tailor the imputed
disqualification rules to particular conflicts of interest situations that require firm
disqualification because of a specific danger of conflicting representation by other
members of the firm. See Wolfram, supra note 33, § 7.6.2, at 395. They also
envision that a lawyer joining a firm should be deemed to carry his or her actual
knowledge only and that the new firm’s status should be decided accordingly. See
Hazard & Hodes, supra note 33, § 1.1:207, at 335-36.
The efforts to amend the ethics rules to include explicit approval for screening
arrangements proved to be more successful in the context of the drafting and
approval of the American Law Institute’s Restatement (Third) of the Law Governing
Page 18
Lawyers. Section 204(2) of the Restatement, approved on May 12, 1998, permits
private law firms to use screening arrangements to avoid the application of the
imputed disqualification doctrine. Following the final approval of the Restatement,
the American Bar Association announced the creation of the Commission on the
Evaluation of the Rules of Professional Conduct (popularly known as “Ethics
2000") to evaluate the Model Rules of Professional Conduct in light of the variations
in the rules as adopted at the state level and the provisions in the Restatement. 53 The
Ethics 2000 Commission has already circulated proposed revisions to the comments
associated with Rule 1.10 regarding the use of screening arrangements for
non-lawyer support personnel and lawyers. These proposals would permit the use
of screening arrangements for non-lawyer support personnel who change jobs and
for new lawyers who worked at an opposing law firm as law clerks but would not
permit the use of screening arrangements to cure conflicts of interest created when a
personally disqualified lawyer changes firms. See Current Reports, Laws. Man. on
Prof Cond. (ABA/BNA) 259 (June 9, 1999).
Even as the American Bar Association and the American Law Institute
considered the propriety of screening arrangements for lawyers in private practice,
several states amended their ethics rules to permit the use of screening arrangements.
To date, six jurisdictions have amended their ethics rules to approve the use of
screening arrangements by private lawyers. 54 One jurisdiction has approved the use
of screening arrangements by law students and lawyers affiliated with the law school’
s legal clinic. 55 Another jurisdiction has not specifically approved the use of the
screening arrangements but has adopted the draft comments to ABA Model Code of
Professional Conduct Rule 1.10 listing screening arrangements among the factors
that the court should consider when determining whether to invoke the imputed
disqualification doctrine. 56
In three jurisdictions that have not amended their ethics rules, administrative
disciplinary bodies have issued opinions approving the use of screening
arrangements. Like Tennessee Board of Professional Responsibility’s Formal
Page 19
Ethics Op. 89-F-118 (Mar. 10, 1989), the Ohio Board of Commissioners on
Grievances and Discipline has approved the use of screening arrangements by
members of the private bar. See Ohio Bd. of Comm’rs on Grievances and
Discipline Advisory Op. 89-013 (May 30, 1989), 1989 WL 535018(OhioBd.Comm.Griev.Disp.); Hamilton & Coan, supra note 20, at 82-83 n.105.
Another jurisdiction’s ethics advisory committee has approved the use of screening
arrangements but only when the former client has approved the former lawyer’s new
firm’s representation of the adverse party. See S.C. Bar Ethics Adv. Comm. Op.
92-23 (Oct. 1992), 1992 WL 810439 (S.C.Bar.Eth.Adv.Comm.).
D.
The Courts’ Response to the Imputed Disqualification Doctrine and to
Screening Arrangements
Most courts currently employ a three-step approach to imputed
disqualification issues. The first step involves determining whether a substantial
relationship exists between the subject matter of the former representation and the
subject matter of the subsequent adverse representation. The second step involves
determining whether the lawyer who has changed firms is personally disqualified
under the applicable conflict of interest rules. The third step involves determining
whether the lawyer’s new firm must also be disqualified from representing the party
with an interest adverse to the interests of the personally conflicted lawyer’s former
client.
The “substantial relationship” inquiry is universally accepted as the starting
point for the disqualification analysis. 57 While it has several formulations, the inquiry
examines (1) the scope of the former representation, (2) whether it is reasonable to
infer that confidential information would have been given to a lawyer representing a
client in such matters, and (3) whether the information is relevant to the issues being
raised in the litigation pending against the former client. See LaSalle Nat’l Bank v.
County of Lake, 703 F.2d 252, 255-56 (7th Cir. 1983). If the court finds that there is
Page 20
no substantial relationship between the subject matter of the former and present
representations, the inquiry ends because there can be no conflict of interest between
the lawyer and his or her former client or between the former client and the lawyer’s
new law firm. If, however, the court finds that a substantial relationship exists, then
the court must determine whether the lawyer should be disqualified.
There are two bases for disqualifying the lawyer if the court finds a substantial
relationship between the subject matter of the present and former representations.
First, the lawyer could be disqualified if he or she has a primary conflict of interest
resulting from the lawyer’s direct exposure to the former client’s confidential
information. Second, the lawyer , like the rest of the lawyer’s former firm, could be
disqualified if he or she has a secondary conflict of interest arising from the
presumption of shared confidences.
A majority of courts hold that the presumption of shared confidences with
regard to the information received by the lawyer’s former firm is irrebuttable once a
substantial relationship between the present and former representations has been
established. See Arkansas v. Dean Foods Prods. Corp., 605 F. 2d 380, 384-85 (8th
Cir. 1979), overruled on other grounds by In re Multi-Piece Rim Prods. Liab.
Litigation, 612 F.2d 377, 378 (8th Cir. 1980); Emle Indus. v. Pantentex, Inc., 478
F.2d 562, 570-71 (2d Cir. 1973); Koch v. Koch Indus., 798 F. Supp. 1525, 1536 (D.
Kan. 1992). 58 Other courts have held that the presumption can be rebutted if the
lawyer shows that he or she was not privy to any confidential information. This
approach is not widely accepted and has generally been followed only in cases
involving associates of large firms who performed minor tasks such as researching
points of law. See Silver Chrysler Plymouth, Inc. v. Chysler Motors Corp., 518
F.2d 751, 756-57 (2d Cir. 1975) (differentiating between lawyers who become
heavily involved in the facts of a particular matter and those who enter briefly on the
periphery); Ann. Model Rules of Conduct, supra note 45, at 157-59; Bateman,
supra note 8, at 253.
Page 21
Once the party seeking disqualification establishes a prima facie case, the
burden of proof shifts to the lawyer and the firm whose disqualification is sought to
demonstrate why they should not be disqualified. See SLC Ltd. v. Bradford Group
West, Inc., 999 F.2d 464, 468 (10th Cir. 1993); Norman v. Norman, 970 S.W.2d
270, 274 (Ark. 1998); Koulisis v. Rivers, 730 So. 2d 289, 292 (Fla. Dist. Ct. App.
1999); Heringer v. Haskell, 536 N.W.2d 362, 365 (N.D. 1995); Hazard & Hodes,
supra note 33, § 1.10:208, at 338.5. This rebuttal effort should not force either party
to reveal the former client’s confidential information. See Wolfram, supra note 33, §
7.6.3, at 399; Fields, supra note 11, at 237. Any doubts regarding the existence of
an asserted conflict of interest should be resolved in favor of disqualification. See
Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 225 (7th Cir. 1978);
Koulisis v. Rivers, 730 So. 2d at 292; Angleton v. Estate of Angleton, 671 N.E.2d
921, 928 (Ind. Ct. App. 1996); Dow Chem. Co. v. Mahlum, 970 P.2d 98, 123 (Nev.
1998); Herbert v. Haytaian, 678 A.2d 1183, 1189 (N.J. Super. Ct. App. Div. 1996);
Burkes v. Hales, 478 N.W.2d 37, 41 (Wis. Ct. App. 1991).
If there is a substantial relationship between the former and present
representations and if the lawyer who has changed firms is personally disqualified
from representing the present client because of a conflict of interest regarding the
former client, then the final step of the analysis is to determine whether the lawyer’s
new firm should be disqualified by implication. For those courts following the
traditional view that the presumption of shared confidences is irrebuttable, imputed
disqualification of the new firm is mandatory. See ABA Comm. on Ethics and
Professional Responsibility, Formal Op. 33 (1931); ABA Model Code of
Professional Responsibility DR 5-105(D); ABA Model Rules of Professional
Conduct § 1.10(b) (1983); Bateman, supra note 8, at 254, 266 n.105; Fields, supra
note 11, at 236-37 n. 36. Other courts, believing that mandatory imputed
disqualification casts an unnecessarily wide shadow, are reluctant to invoke the
doctrine to disqualify the new law firm except as a last resort. For these courts, the
presumption of shared confidences among the lawyer and his or her associates at the
new firm is rebuttable. See Freeman v. Chicago Musical Instrument Co., 689 F.2d
Page 22
715, 722-23 (7th Cir. 1982).
Courts viewing the presumption of shared confidences as rebuttable must
balance the former client’s legitimate right to be free from apprehension that its
confidential information will be revealed with the party’s interest in choosing his or
her own lawyer and with the former lawyer’s interest in following his or her career
path to its best advantage. See Barragree v. Tri-County Elec. Co-op, Inc., 950
P.2d 1351, 1357 (Kan. 1997); Gellman v. Hilal, 607 N.Y.S.2d 853, 855 (Sup. Ct.
1994). In this balancing process, the first client’s right to preserve its confidential
information is entitled to greater weight than the later client’s right to retain counsel
of its own choosing, see Donohoe v. Consolidated Operating & Prod. Corp., 691
F. Supp. 109, 118 (N.D. Ill. 1988); State ex rel. FirstTIER Bank, N.A., v. Buckley,
503 N.W.2d 838, 842 (Neb. 1993), as well as the employment and staffing interests
of the incoming lawyer and the new law firm. See Kala v. Aluminum Smelting &
Refining Corp., 688 N.E.2d at 267 (holding that a law firm may be required to
subordinate its desire to augment its staff to its duties to its clients).
Law firms seeking to avoid the effect of the imputed disqualification rule must
prove their case by clear and effective proof. See Schiessle v. Stephens, 717 F.2d
417, 420 (7th Cir. 1983); Freeman v. Chicago Musical Instrument Co., 689 F.2d at
723; Nelson v. Green Builders, Inc., 823 F. Supp. 1439, 1448 (E.D. Wis. 1993);
State v. Tate, 925 S.W.2d at 557-58. As a general matter, law firms have attempted
to rebut the presumption of shared confidences in two ways. In jurisdictions
governed by a version of the Model Rules of Professional Conduct, firms undertake
to prove that the moving lawyer did not have a primary conflict of interest resulting
from his or her direct receipt of confidential information from a former client of the
former firm. 59 See Trustco Bank of N.Y. v. Melino, 625 N.Y.S.2d 803, 806-07 (Sup.
Ct. 1995); Hazard & Hodes, supra note 33, § 1.10:208; Bateman, supra note 8, at
268. Law firms have also sought to avoid the effects of the imputed disqualification
rule through the use of screening arrangements. See Schiessle v. Stephens, 717 F.2d
at 421; Bateman, supra note 8, at 254; Penegar, supra note 9, at 859. Because
Page 23
screening arrangements are now generally accepted when a private firm employs a
former government lawyer, these law firms assert that there is no substantive
difference between lawyers moving from government to the private sector and
lawyers moving between private firms. See Manning v. Waring, Cox, James, Sklar
& Allen, 849 F.2d at 226; Ann. Model Rules of Professional Conduct Rule 1.9,
supra note 45, at 159.
The use of screening arrangements for lawyers moving from one private firm
to another remains highly controversial, see Hamilton & Coan, supra note 20, at 59,
and has not been approved by a majority of the courts that have been squarely
presented with the issue. Currently, United States Courts of Appeals for four
circuits, 60 five United States District Courts, 61 and courts in six states 62 have approved
the private sector use of screening arrangements. At the same time, United States
Courts of Appeal in five circuits have declined to approve screening arrangements. 63
Likewise, United States Court of Appeals in two circuits, 64 eight United States
District Courts, 65 and courts in ten states 66 have rejected the use of screening
arrangements for lawyers in private practice. Two state courts have declined to
approve screening arrangements. 67
V.
Imputed Disqualification in Tennessee
Tennessee is one of the few remaining jurisdictions whose ethics rules for the
legal profession are based on the American Bar Association’s Model Code of
Professional Responsibility. The Tennessee Supreme Court adopted an amended
version of this code in 1970. While the Court has amended the code on nine
occasions to accommodate developments such as IOLTA, legal specialization, and
lawyer advertising, the form and substance of the code has remained essentially
unchanged for the past thirty years.
While the provisions of the Code of Professional Responsibility applicable to
Page 24
this case have remained unchanged, the Board of Professional Responsibility’s
interpretation of them has not. In 1981, broadly construing Tenn. S. Ct. R. 8, DR
5-105(D), the Board opined that “[w]hen an attorney is barred from representation
on the ground of knowledge actually or presumably acquired from a former
representation, then the entire firm is similarly barred.” Tenn. Bd. of Professional
Responsibility, Formal Op. 81-F-5 (Apr. 17, 1981), 1981 WL 165063 (Tenn.Bd.
Prof.Resp). Six years later, the Board, citing its earlier opinion, disapproved of the
use of screening arrangements for paralegals who moved from one opposing firm to
another. See Tenn. Bd. of Professional Responsibility, Formal Op. 87-F-110 (June
10, 1987), 1987 WL 364064 (Tenn.Bd.Prof.Resp.). Three months later, the Board
appeared to apply a more relaxed rule to district attorney generals’ offices. In
keeping with the accepted recognition of differences between lawyers in public
service and those in private practice, the Board stated that imputed disqualification
should be considered on a case-by-case basis when a member of a district attorney
general’s staff formerly represented a defendant. See Tenn. Bd. of Professional
Responsibility, Formal Op. 87-F-111 (Sept. 16, 1987), 1987 WL 364065(Tenn.Bd.Prof.Resp.).
In 1988, the United States Court of Appeals for the Sixth Circuit held that
screening arrangements provided private law firms with the same protection from
imputed disqualification when they hired a lawyer in private practice that it provided
when they hired a former government lawyer. See Manning v. Waring, Cox, James,
Sklar & Allen, 849 F.2d at 225. Rather than finding support for its conclusion in the
provisions of Tennessee’s version of the Code of Professional Responsibility which
governed the conduct of the lawyers in the case, the court based its opinion on
provisions of the ABA Model Rules of Professional Conduct and on decisions by
the United States Court of Appeals for the Seventh Circuit.
The Manning decision prompted another request for a formal ethics opinion
regarding the efficacy of screening arrangements by Tennessee lawyers. On this
occasion, the Board of Professional Responsibility reversed itself and overruled
Page 25
Formal Opinions 81-F-5 and 87-F-110. Without addressing Tenn. S. Ct. R. 8, DR
5-105(D), the Board found that the presumptions of shared confidences at an
attorney’s new firm could be rebutted by proof that the attorney’s new firm had
instituted appropriate screening arrangements. See Tenn. Bd. of Professional
Responsibility, Formal Op. 89-F-118. 68 The Board also stated that screening
arrangements could be used for lawyers, law clerks, paralegals, and legal secretaries.
Tennessee’s intermediate appellate courts have taken different paths with
regard to imputed disqualification and the efficacy of screening mechanisms. This
difference can be explained, at least in part, by the distinction between lawyers in
government service and those in private practice and by the difference between
criminal proceedings and civil proceedings. The cases reflect an understanding that
applying the imputed disqualification doctrine to district attorney generals’ offices in
the same way that it is applied to private law firms would seriously hamper the
prosecution of criminal cases. See State v. West, No. 01C01-9107-CC-00202, 1992
WL 62020, at *2 (Tenn. Crim. App. Mar. 31, 1992), perm. app. dismissed, (Tenn.
July 13, 1992).
In the earliest reported imputed disqualification case, the Tennessee Court of
Criminal Appeals declined to disqualify a district attorney general and his entire staff
because one assistant district attorney had peripherally represented the defendants
while employed as a staff attorney at the University of Tennessee Legal Clinic.
Without much discussion, the court held that while the assistant district attorney
general formerly employed at the legal clinic should be disqualified, the remaining
members of the district attorney general’s office were not disqualified. See Mattress
v. State, 564 S.W.2d 678, 679-80 (Tenn. Crim. App. 1977). Seven years later, the
court reversed a second degree murder conviction because the defendant’s former
lawyer switched sides and assisted the prosecution of the defendant as an assistant
district attorney general. In its remand order, the court disqualified not just the
assistant but also the district attorney general’s entire staff. See State v. Phillips,
672 S.W.2d at 436.
Page 26
In 1992, the Court of Criminal Appeals, adopting Formal Op. 89-F-118, held
that a district attorney general could avoid the imputed disqualification of the entire
office by proving “by clear and convincing evidence that the challenged attorney has
been sufficiently screened from the remainder of the staff and its work on the
pending case.” See State v. Claybrook, 1992 WL 17546, at *11. After the
Claybrook decision, the court has consistently declined to disqualify a district
attorney general’s entire staff when timely screening arrangements have been
instituted 69 and has reversed convictions when they have not. 70
The Court of Appeals has had less occasion to confront imputed
disqualification issues than the Court of Criminal Appeals. The first case presenting
the issue involved a divorce proceeding in which the secretary of a lawyer
representing the wife took a job with the lawyer representing the husband. The court
reversed the trial court’s disqualification of the husband’s lawyer on two grounds.
First, a majority of the court announced that “[n]o Supreme Court Rule or Statute is
cited or found which forbids a lawyer to hire a former secretary of a lawyer who
opposes him in a lawsuit.” Second, the court found that no evidence had been
presented that the secretary had shared any of the wife’s confidential information
with the husband’s lawyer. See King v. King, 1989 WL 122981, at *9. The
majority of the court downplayed the significance of both Formal Op. 89-F-118 and
screening arrangements by observing that the ethics opinion was not binding on the
courts and that use of screening arrangements had not been made part of Tenn. S.
Ct. R. 8. See King v. King, 1989 WL 122981, at *10.
The court never reached the issue of screening arrangements in the second
case raising the issue of imputed disqualification. The case was an encroachment
action in which one property owner moved to disqualify the lawyer representing the
neighboring property owner because one of the lawyer’s partners had represented
the moving party when she bought the property at auction. Both the trial court and
the appellate court declined to disqualify the lawyer after finding that there was no
Page 27
substantial relationship between the closing and the later encroachment action and
that the party seeking the disqualification had not divulged any confidential
information during or before the closing. See Lemm v. Adams, 955 S.W.2d 70, 75
(Tenn. Ct. App. 1997).
The most recent case considered by the Court of Appeals required the court
to consider the efficacy of screening arrangements established when a lawyer
representing one of the defendants in a medical malpractice action left his firm to
start a new firm with the lawyers representing the plaintiffs in the same case. Before
the lawyer left his old firm, he requested that he be insulated from any further
activities in the case. He also reached an understanding with his new partners that
they would institute screening arrangements to isolate him from the case. 71 Despite
these screening arrangements, the trial court disqualified the law firm representing the
plaintiffs because the small size of the firm rendered screening ineffective. The court
’s decision to affirm the trial court’s disqualification order rested on Tenn. S. Ct. R.
8, Canon 9. The court stated:
In the case before us, the lawyers carefully planned their
joinder – a calculated and deliberate act with full
knowledge that Pierce possessed the most intimate
confidence of his client concerning the case. They argue
that the screening procedures rebut the presumption of
Pierce sharing these confidences. The new firm is small,
and we hope the firm has the collegiality that typifies the
brotherhood 72 of the profession. In such an atmosphere, it
is certainly conceivable that at best inadvertent references
to the case could crop up from time to time. Who knows
what effects such references might have on plaintiffs’
lawyers in perhaps following some lead that was
innocently, perhaps, fostered by some comment made
without any improper motive. Leaving aside the possibility
of divulged confidences, we are still faced with the
appearance of impropriety. As in the Penn Mutual case, 73
the lawyers in the case before us “switched sides.”
We . . . believe that Canon 9 is essential to engender,
protect, and preserve the trust and confidence of the client.
In the case before us with these peculiar facts, we cannot
say that the trial court erred in disqualifying plaintiffs’
Page 28
lawyers from further participation in the case. The
profession demands, and the public deserves, no less.
Watson v. Ameredes, No. 03A01-9704-CV-00129, 1997 WL 772865, at *6-7 (Tenn.
Ct. App. Dec. 10, 1997) (No Tenn. R. App. P. 11 application filed).
VI.
Disqualifying a party’s lawyer is a drastic remedy that should be used
sparingly. See Lemm v. Adams, 955 S.W.2d at 74; Hilton v. Crawford, No.
03A01-9101-CV-00033, 1991 WL 261872, at *3 (Tenn. Ct. App. Dec. 13, 1991)
(No Tenn. R. App. P. 11 application filed). The courts should carefully and
critically scrutinize disqualification motions because of (1) their disruptive effect on
the trial process, 74 (2) their interference with a party’s right to retain counsel of their
own choosing, and (3) the legitimate concern that the motion is filed simply to gain a
tactical advantage at trial.75 Thus, the courts should be reluctant to disqualify a party
’s lawyer and should do so only when no other satisfactory remedy exists. See
Whalley Dev. Corp. v. First Citizens Bancshares, Inc., 834 S.W.2d 328, 331-32
(Tenn. Ct. App. 1992); In re Ellis, 822 S.W.2d at 605.
No bright-line tests exist for making disqualification decisions when a lawyer
has received confidential information. See In re Meador, 968 S.W.2d 346, 351
(Tex. 1998). These decisions should be made on a case-by-case basis in light of the
facts of the particular case. See Watson v. Ameredes, 1997 WL 772865, at *4; State
v. Tate, 925 S.W.2d at 557. Because these decisions are fact-driven, it is preferable
for the trial court to conduct an evidentiary hearing rather than making a decision
based only on affidavits. See Chrispens v. Coastal Ref’g & Mktg., Inc., 897 P.2d
104, 116 (Kan. 1995); Piette v. Bradley & Leseberg, 930 P.2d 183, 184 (Okla.
1996).
Decisions regarding disqualification are discretionary and are thus entitled to
deference on appeal. See Rust v. Gerbman, No. 01A01-9608-CH-00361, 1997 WL
Page 29
266844, at *6 (Tenn. Ct. App. May 21, 1997) (No Tenn. R. App. P. 11 application
filed); State v. Tate, 925 S.W.2d at 549-50; State v. Phillips, 672 S.W.2d at 431.
However, when the facts are essentially undisputed, the trial courts are no better
suited than the appellate courts to construe the ethics rules. Thus, the appellate
courts are not required to defer to a trial court’s interpretation of the Code of
Professional Responsibility or to its decisions regarding the legal standards
applicable to a particular disqualification motion. See In re Ellis, 822 S.W.2d at
606.
Both intermediate appellate courts and the Board of Professional
Responsibility have determined that the three-part test fashioned by the United States
Court of Appeals for the Seventh Circuit in Schiessle v. Stephens is an appropriate
method for addressing imputed disqualification questions. See Lemm v. Adams, 955
S.W.2d at 74; State v. Tate, 925 S.W.2d at 557-58; State v. Claybrook, 1992 WL
17546, at *10; Tenn. Bd. of Professional Responsibility, Formal Op. 89-F-118.
This approach requires the courts to consider the three questions. The threshold
question is whether a substantial relationship exists between the present and the
former representation. If a substantial relationship exists, the second and third
questions are whether the presumption of shared confidences with respect to the
former representation has been rebutted and whether the presumption of shared
confidences with respect to the current representation has been rebutted. See
Schiessle v. Stephens, 717 F.2d at 420.
While courts in other jurisdictions differ concerning the criteria for determining
whether a substantial relationship exists between the former and present
representation, we need not address this issue in this case because the undisputed
facts lead to no conclusion other than that there is a substantial relationship between
the present and former representation. They are, in fact, the same case. An
affirmative answer to this threshold question would normally give rise to the
presumption that a lawyer was privy to the confidences and secrets of clients of his
or her former firm. However, under the facts of this case, we need not rely on the
Page 30
presumption because it is undisputed that Mr. Davis was the Blackwoods’ attorney
of record in this case and that he obtained privileged information from them in order
to prepare their answer and counterclaim against the Clinards. Accordingly, the
answers to the first two questions of the Schiessle analysis favor the Blackwoods’
recusal motion.
If the presumption of shared confidences were irrebuttable, our inquiry would
end here because Tenn. S. Ct. R. 8, DR 5-105(D) would require the imputed
disqualification of the entire Waller firm because of Mr. Davis’s direct, personal
conflict of interest. However, for the purposes of this appeal, we will assume that
the presumption of shared confidences at a lawyer’s new firm is rebuttable even
though the Tennessee Supreme Court has not yet decided the issue. Virtually all
intermediate appellate court decisions addressing the imputed disqualification issue
during the past ten years have held the presumption of shared confidences between a
lawyer and his or her new firm is rebuttable. Thus, the question becomes whether
evidence that a private firm has employed internal screening arrangements will suffice
to rebut the presumption in every case. The answer to this question is no.
Even though we share many of the expressed qualms regarding screening
arrangements, 76 we will assume for the sake of this opinion that a properly instituted
and maintained screening arrangement can provide evidence to rebut the
presumption of shared confidences in certain circumstances. Thus, the questions to
be answered are under what circumstances will screening arrangements have the
desired effect and for which lawyers may screening arrangements be used.
The prevailing view, and the view that most appropriately balances the
competing interests when an imputed disqualification issue surfaces, is that a
screening arrangement may be used to prevent the disqualification of a law firm only
when the personally conflicted lawyer was superficially involved with the former
client. In this circumstance, the risk of intentional or inadvertent disclosure of
confidential information that could materially prejudice a former client is greatly
Page 31
minimized. This view furthers clients’ legitimate expectations that their lawyer will
protect their confidences and secrets 77 and that their lawyer will represent them with
undivided loyalty within the bounds of the law.78 This view is also implicit in both
the ABA Model Rules of Professional Conduct Rules 1.09, 1.10 79 and Restatement
(Third) of the Law Governing Lawyers § 204(2) (Proposed Final Draft No. 1 1996). 80
Under the prevailing view, which is also consistent with Watson v. Ameredes,
the Waller firm’s use of a screening arrangement to shield the rest of the firm from
Mr. Davis and his secretary does not suffice to prevent the operation of the imputed
disqualification rule. Mr. Davis has not been on the periphery of representing the
Blackwoods. They were former clients whom he actively represented from 1973
through August 1996. He actually represented the Blackwoods in the very case in
which Waller, Lansden, Dortch and Davis is now representing their adversaries.
During Mr. Davis’s representation of the Blackwoods in this case, which lasted from
March through August 1996, the Blackwoods provided Mr. Davis with confidential
information directly relevant and material to both their defense against the Clinard’s
boundary line complaint, their counterclaims against the Clinards and their third-party
claims against American Limestone.
The Blackwoods were the ones required to retain a new lawyer in 1996 when
Mr. Davis withdrew after another client of his firm declined to permit him to continue
to pursue the Blackwoods’ legal remedies. After they retained a new lawyer, they
discovered that Mr. Davis had joined the law firm that was representing their
adversaries in the same case in which he had once been their attorney of record. Mr.
Davis never informed the Blackwoods that he was negotiating a return to the Waller
firm, made no effort to obtain their consent, and provided them with no assurance in
advance that his return to the Waller firm would not materially affect their claims and
defenses in the dispute with the Clinards and American Limestone. Under these
circumstance, the Blackwoods’ perception that Mr. Davis had essentially “switched
sides” in the litigation is not unfounded or unreasonable.
Page 32
Our resolution of this appeal must track the Code of Professional
Responsibility as enacted in Tennessee rather than the provisions of the ABA Model
Rules of Professional Conduct which have not yet even been considered by the
Court. Thus, Tenn. S. Ct. R. 8, Canon 9, even if disfavored by some factions of
the organized bar, remains an important factor when addressing imputed conflict of
interest issues. See Watson v. Ameredes, 1997 WL 772865, at * 6-7; State v. Tate,
925 S.W.2d at 555. 81 As one experienced federal trial judge recently noted, “[i]n an
age of sagging public confidence in our legal system, maintaining confidence in that
system and the legal profession is of utmost importance.” Roberts & Schaefer Co.
v. San-Con, Inc., 898 F. Supp. at 363. This settled purpose was recently echoed by
Judge Crawford when he noted that it is essential for the courts to “engender,
protect, and preserve the trust and confidence of the client.” Watson v. Ameredes,
1997 WL 772865, at *7.
Based on the facts of this case and for the reasons stated herein, we find that
the Waller firm’s use of screening arrangements with regard to Mr. Davis and his
secretary was not sufficient to rebut the presumption of shared confidences between
Mr. Davis and the other members of the Waller firm with the regard to the pending
litigation between the Blackwoods and the Clinards and American Limestone.
Accordingly, the trial court erred by denying the Blackwoods’ motion to disqualify
the Waller firm from continuing to represent the Clinards and American Limestone in
this case.
VII.
We vacate the order denying the Blackwoods’ motion to disqualify the firm of
Waller, Lansden, Dortch & Davis in this case and remand the case to the trial court
with directions to enter an order disqualifying the firm. We tax the costs of this
appeal to Waller, Lansden, Dortch & Davis for which execution, if necessary, may
issue.
Page 33
______________________________
WILLIAM C. KOCH, JR., JUDGE
CONCUR:
________________________________
BEN H. CANTRELL, JUDGE
________________________________
WILLIAM B. CAIN, JUDGE
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