Firm Representing Partner Against Former Client May Be Liable

• Pages: 8-8
• Date: 01 July 2024
• Author: Kelso L. Anderson
• Subject Matter: Derecho Civil

federal court has ruled that a

law f‌irm and two lawyers that

represented a f‌irm part-

ner in an adverse action

against a former f‌irm cli-

ent may have committed legal malprac-

tice and breached their duty of loyalty

to that client. In considering a motion

for summary judgment, the court con-

cluded that genuine issues of material

fact were presented as to whether the

f‌irm’s representation of the partner

and former client were “substantially

related.” ABA Litigation Section leaders

conclude that Smith v. Glover & Davis,

et al. should remind law f‌irms of the

importance of clarifying the scope of

client representation and avoiding rep-

resenting clients with interests adverse

to former clients.

In Smith, the defendant law f‌irm rep-

resented the plainti in personal and

business matters for over 40 years. In

2013, the plainti had a property dis-

pute with her neighbor, who was also a

partner at the defendant law f‌irm. The

parties reached an agreement to settle

their dispute—which concerned the

plainti’s construction of a driveway

across the partner’s property. Prior to

settling the dispute in 2013, the plain-

ti had a conversation with a dier-

ent partner at the defendant law f‌irm,

ostensibly concerning the property

dispute.

In 2017, the plainti sued her neigh-

bor (the law f‌irm’s partner) alleging

various state law claims, which the

opinion refers to as the “driveway liti-

gation,” including promissory estoppel,

fraud, and bad faith. The law f‌irm rep-

resented the neighbor in the driveway

litigation. The plainti moved to dis-

qualify the f‌irm and its attorneys in the

driveway litigation on three grounds.

First, the plainti alleged that cur-

rent conf‌licts of interest exist from the

f‌irm’s representation of her and her

neighbor. Second, the plainti argued

that she was a former client and the

current dispute with the neighbor was

Firm Representing Partner Against

Former Client May Be Liable

“substantially related” to the f‌irm’s prior

representation of her. Third, the plainti

claimed that the law f‌irm used conf‌i-

dential information gained from their

past representation of her in the drive-

way litigation. The state court denied

the plainti’s motion to disqualify.

In a subsequent suit in the U.S.

District Court for the Northern District

of Georgia, the plainti alleged breach

of f‌iduciary duty and legal malpractice

by the law f‌irm and the two law part-

ners that represented the plainti’s

neighbor in the state court driveway

litigation. The defendants moved for

summary judgment.

The court concluded that genuine

issues of fact existed as to whether the

defendants breached their f‌iduciary

duty of loyalty to the plainti based

on the defendants’ prior representa-

tion of the plainti being “substantially

related” to the driveway litigation.

Specif‌ically, the court identif‌ied two

prior property disputes in which the

f‌irm had represented the plainti—one

involving a driveway dispute on the

same parcel of land that was at issue

in the driveway litigation. The court

held that the two prior disputes may be

“substantially related” for purposes of

Georgia Rule of Professional Conduct

1.9. The court also held that issues of

fact remained as to whether the defen-

dants improperly used conf‌idential

information learned in the scope of

their representation of the plainti.

The district court also denied sum-

mary judgment on the legal malprac-

tice claim. The court made favorable

inferences for the plainti on the fact

that the plainti’s adavit noted that

she “consulted” a partner at the defen-

dant law f‌irm prior to signing the 2013

agreement with her neighbor. Quoting

Georgia law, the court noted that an

“attorney-client relationship . . . may be

implied from the conduct of the par-

ties.” The court explained that a jury

could f‌ind an attorney-client relation-

ship even though the plainti was not

By Kelso L. Anderso n, Litigation News Associ ate Editor

billed for the conversation and did not

sign an engagement letter, given the

parties’ past practices.

Litigation Section leaders observe

several key takeaways from the case.

“The main lesson is to avoid becoming

involved in outside disputes involving

one of the f‌irm’s lawyers, especially in

a matter in which the adversary is a

present or former client,” advises Alan

R. Jampol, Los Angeles, CA, cochair of

the Attorneys’ Liability Subcommittee

of the Section’s Professional Liability

Litigation Committee. “A legal mal-

practice claim is something no f‌irm

wants to deal with,” adds Tiany A.

Rowe, Washington, D.C., cochair of

the Section’s Professional Liability

Litigation Committee. “Without know-

ing the value of plainti’s claims,

it would have served the f‌irm well

to try and settle the matter out of

court.Sometimes standing on princi-

ple—for a few yards of grass—does not

lead to the most favorable outcome,”

she continues.

“The facts certainly suggest that

the client believed she had an ongo-

ing engagement with the f‌irm and that

the f‌irm possessed conf‌idential infor-

mation related to the property dis-

pute,” observes John S. Austin, Raleigh,

NC, cochair of the Section’s Ethics &

Professionalism Committee. “If the

same evidence had been presented in

the [state court] action, I believe the

court should have disqualif‌ied the f‌irm

and its attorneys,” Austin concludes.

SUMMER 2 024 • VOL. 49 NO. 4

8 | A BA LITIGATION SECTION

ETHICS STRU GGLES IN THE LEGAL WORL D