The rule allows law firms to avoid having a new hire\u2019s conflicts of interest affect the rest of the firm by preventing the attorney from working, discussing, or profiting from cases involving their former clients and notifying the former client in writing \u2014 rather than obtaining a conflict waiver, as previously required.<\/p>\n
But the Professional Ethics Committee wanted to clarify some key exceptions to the new rule that will save law firms complications in court.\n<\/p>\n
\u201cSince it\u2019s a change in the rules, we thought it would be useful to flesh out some of the issues so that people have some more guidance apart from the rule itself,\u201d said Committee Chair Michael E. Salzman. \u201cThe rule itself is sort of an exception, and then there are exceptions to the exception, so we\u2019re just trying to be useful in spelling that out.\u201d<\/p>\n
A keystone rule of professional conduct is that a lawyer ordinarily cannot work on both sides of a legal matter. When a lawyer switches firms, he may bring with him conflicts from his previous firm. <\/p>\n
If the lateral hire was working for one side of a negotiation, for instance, they cannot change firms, then start working for the other side in the same negotiation. That rule doesn\u2019t just apply to the hire but the entire law firm that he\u2019s joining.<\/p>\n
Up until last year, the only way around that conflict was through a waiver that the client would have to agree to, indicating that the firm can represent the other party as long as the lawyer promises not to reveal confidential information.\u00a0<\/p>\n
The new rule provides a shortcut, referred to as a \u201csafe harbor,\u201d in which the new hire alone is blocked from being involved with clients on the other side of a conflict of interest. That means they cannot work on a case, talk about it, have access to the case file, and\/or profit from it.\u00a0<\/p>\n
The idea is that waivers are more restrictive and harder to attain than merely screening the new hire. The safe harbor rule applies to conflicts arising from past work, except in scenarios where the attorney had high-level management of decision-making authority.<\/p>\n
For instance, a firm cannot use the new screening method and must ask for a formal conflict waiver if the matter involves an active litigation, arbitration, or a formal dispute process that the lawyer worked on before moving, and the lawyer had substantial, day-to-day management or decision-making responsibility over that litigation. If for instance, the lawyer was a lead partner as opposed to a junior associate doing basic document review, the firm would still have to file a waiver.<\/p>\n
When safe harbor applies, the law firm must notify the former client that it is screening its new hire within a \u201cprompt\u201d time frame.\n<\/p>\n
One goal of the notification process is to prevent conflicts of interest from arising in court and derailing litigation.\u00a0\n<\/p>\n
\u201cLet\u2019s say that the lateral did screen, but the other side says, \u2018Well, wait a second, you were in charge of this matter, so under the New York rule, you fall within the exception to the exception. You\u2019re not entitled to the safe harbor.\u2019\u201d Salzman said. \u201cThen, typically in a litigation context, the opponent would complain to the judge and move to disqualify the law firm, and then the judge would have to rule on whether the law firm ought to be disqualified or not.\u201d<\/p>\n