[Opinion certified for partial publication.
The underlying dispute concerns a construction loan made to appellants by respondents, Great American Savings and Loan, and its subsidiary, Mountain South Corporation, for a residential condominium project in San Francisco. Appellants commenced the suit in January of 1989. Two months later, respondents responded with a cross-complaint for judicial foreclosure.
Appellants were initially represented by the firm of Rubin, Egan & Webster, but in September of 1989 they substituted as their counsel the law firm of Bartko, Welsh, Tarrant & Miller (Bartko).
From the inception of the suit until July of 1990 respondents were represented by the law firm of Hoge, Fenton, Jones & Appel (Hoge). One of
In July of 1990 the savings and loan respondents were placed into receivership by the Resolution Trust Corporation (RTC) and the Hoge firm was replaced as counsel by the firm of Tarkington, O'Connor & O'Neill. The Bartko firm continued to represent appellants.
In early June of 1991 Michael Welch of the Bartko firm notified opposing counsel that Peter Brock would be joining their firm as of June 24, 1991, and asked for a waiver of "any potential conflict with [their] continued representation of [appellants]." Responding that "an unquestionable conflict of interest [would] exist once Mr. Brock formally [joined the Bartko] firm," opposing counsel demanded that the Bartko firm "immediately withdraw as counsel" for appellants. The Bartko firm responded by requesting that respondents agree to an arrangement in which Brock "would be isolated from any discussions, work, contact, or involvement in any way" with the case. In the alternative, the firm requested respondents to make a formal motion to disqualify.
After Brock had joined the firm, respondents formally moved to disqualify the entire Bartko firm from representing appellants in the action. In opposition, appellants argued that it would "unfairly prejudice" their ability to try the "ready for trial" case and subject them to a "financial hardship in having to bring a replacement law firm up to speed." The Bartko firm alleged that it had and would continue to isolate Brock from any involvement in or discussion about the Henriksen litigation. Despite their attempts at building an ethical wall
A. Disqualification of Bartko Firm.
The trial court is vested with the power "[t]o control in furtherance of justice, the conduct of its ministerial officers." That power includes the disqualifying of an attorney. (Code Civ. Proc., § 128, subd. (d); Comden v. Superior Court (1978) 20 Cal.3d 906, 969 [145 Cal.Rptr. 9, 576 P.2d 971, 5 A.L.R.4th 562]; Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 299 [254 Cal.Rptr. 853].)
We start with the rules which would prohibit Brock from representing appellants.
The question is whether Brock's disqualification taints the entire Bartko firm. It does.
The California Rules of Professional Conduct do not specifically address the question of vicarious disqualification, and for that reason the vicarious disqualification rules have essentially been shaped by judicial decisions. As a general rule in California, where an attorney is disqualified from representation, the entire law firm is vicariously disqualified as well.
In Dill, an associate (Hale) of the firm representing the plaintiff joined the firm representing the defendant during the pendency of litigation. In the course of his employment with the plaintiff's firm Hale obtained confidential information concerning the dispute. After Hale switched sides, the plaintiff moved to disqualify both Hale and the entire firm from representing the defendants. The trial court granted the motion and the defendant appealed. In holding that Hale's employment vicariously disqualified his new firm from continuing representing the defendant, the Court of Appeal reasoned: "We are mindful of the right of parties to counsel of their choice, and of the financial burden imposed if disqualified counsel must be replaced. [Citation.] However, those interests must be balanced against the need to maintain high ethical standards of professional responsibility. [Citation.] Here, the compelling reason for disqualification from representation is Hale's former personal involvement on petitioner's behalf in the identical action. Under these circumstances, the law firm representing [defendant] also must be disqualified. [Citation.]" (158 Cal. App.3d at p. 306.)
Making no attempt whatsoever to distinguish Dill, appellants claim that the trial court abused its discretion in failing to consider that Bartko had screened Brock from participating in the case since the moment he arrived at the firm. The record does not reflect a refusal on the part of the trial court judge to consider either Bartko's evidence or its legal argument. It does reveal the court believed it had no choice but to disqualify the entire firm. The trial court was right.
We recognize that the ethical wall concept has had some limited acceptance in California as a method to avoid what might be the unduly harsh result of vicarious disqualification of an entire firm. But that acceptance has been in a very different arena — that of former government attorneys now in private practice — and has involved a situation in which the former government attorney has not had access to confidential information concerning the subject matter of the litigation. (See, e.g., Chambers v. Superior Court (1981) 121 Cal.App.3d 893, 903 [175 Cal.Rptr. 575].)
But, the ethical wall concept has not found judicial acceptance in California on our facts: a nongovernmental attorney armed with confidential information who switches sides during the pendency of litigation. Certainly the
Not satisfied that Dill should be the last word on the subject, appellants seek refuge in the following line from a more recent case, Klein v. Superior Court, supra, 198 Cal.App.3d 894. The line is this: "California law clearly prohibits continued representation in a situation such as this, where a partner in a law firm has been disqualified from representation because of his prior receipt of confidential information, and where there has been no attempt to screen him from the litigation at hand." (Id. at pp. 913-914.) Because the Bartko firm attempted to screen Brock from participation in this litigation, appellants argue Klein supports their view that the firm may continue to represent them in this litigation. We wonder whether appellants are reading the same case we are.
Klein is factually inapposite in that the former representation reviewed there was not in the identical lawsuit. Thus, to the extent the court in Klein was attempting to create a rule of law, that rule would not govern the factual situation at hand. Nor did the court in Klein intend that it should.
The Klein court exhaustively reviewed the California cases which addressed vicarious exclusion and the ethical wall doctrine. (See 198 Cal. App.3d at pp. 908-913.) Included within that review was Dill. With respect to Dill the Klein court specifically noted that Dill had rejected the
In sum, we believe the rule to be quite clear cut in California: where an attorney is disqualified because he formerly represented and therefore possesses confidential information regarding the adverse party in the current litigation, vicarious disqualification of the entire firm is compelled as a matter of law. (Dill v. Superior Court, supra, 158 Cal. App.3d at pp. 305-306; see also Klein v. Superior Court, supra, 198 Cal. App.3d at p. 912.) The trial court did not abuse its discretion in disqualifying the Bartko firm from continuing in its representation of appellants in the instant proceeding.
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The order of disqualification is affirmed. Respondents to recover their costs on appeal.
Anderson, P.J., and Reardon, J., concurred.
The typical elements of an ethical wall are: physical, geographic, and departmental separation of attorneys; prohibitions against and sanctions for discussing confidential matters; established rules and procedures preventing access to confidential information and files; procedures preventing a disqualified attorney from sharing in the profits from the representation; and continuing education in professional responsibility. (See, e.g., Paul E. Iacono Structural Engineer, Inc. v. Humphrey (9th Cir.1983) 722 F.2d 435, 442, fn. 10; Employers Ins. of Wausau v. Albert D. Seeno Const. (N.D.Cal. 1988) 692 F.Supp. 1150, 1164-1165, fn. 17; Comment, The Chinese Wall Defense to Law-Firm Disqualification (1980) 128 U.Pa.L.Rev. 677, 706-713.)
The sole evidence of the screening procedure utilized by Bartko was a declaration by a Bartko partner to the effect that "[n]o one at this firm has discussed this case" with Brock and that the firm has "undertaken measures to ensure that Mr. Brock will not be subjected to our clients' confidential information." What "measures" Bartko had undertaken were not specified. The declaration did not spell out what Bartko had done to ensure that Brock did not violate or would not benefit from violating his duty to protect the confidentiality of the information he obtained while representing respondents. In short, Bartko did not establish that it had even begun to build a wall or a screen around Mr. Brock.