Small may be beautiful, but when it comes to law firms, small can signal disqualification troubles that a bigger firm might sometimes be able to avoid, according to the reasoning of a recent opinion.
We’ve posted here before about screening non-lawyer personnel in order to avoid imputed disqualification when a secretary or paralegal arrives at your firm with a conflict.
In the recent case, Ullman v. Denco, a New Mexico federal court magistrate judge granted disqualification, booting defendants’ counsel from eleven consolidated employment cases after the firm hired a paralegal from the firm representing the plaintiffs.
The paralegal had worked extensively on the cases; she had interviewed most of the clients, and had detailed information about plaintiffs’ legal strategies and bottom line settlement numbers.
Under those circumstances, the side-switching paralegal clearly could not herself participate in the consolidated case. The question was whether her personal disqualification would be imputed to the entire six-lawyer defense firm — especially considering the fact that the defense firm had quickly put up an elaborate ethical screen.
Ethical screen terms
The screen isolated the paralegal’s office from the locked office where the files on the cases were kept; mail relating to the case was separately routed; electronic documentation was password protected; an office-wide “admonition” was issued against sharing confidential information and even speaking openly about the cases within the office.
The magistrate judge held that the paralegal’s disqualifying conflict would not be imputed to the rest of the firm. Comment  to New Mexico’s version of the conflict imputation rule, Model Rule 1.10, says that the disqualification rules do not “prohibit representation by others in the law firm where the person prohibited from involvement in a matter is a non-lawyer, such as a paralegal or legal secretary.”
However, the defense firm’s continued representation of its employer clients was doomed anyway, because the magistrate judge held that even the comprehensive screen the firm proposed “would not be effective” — in part because the firm was just too small.
Small firm — harder to make a screen work
The court recognized that screening, “if effective to protect any client confidences that the non-lawyer gained from prior employment, can avoid the harsh remedy of disqualification.”
But here, a factor that “weigh[e]d heavily” against the screen’s effectiveness was that the defense firm was “relatively small.” Three of the lawyers, or half the firm’s active attorney roster, were involved in the consolidated case; all lawyers and support staff worked in the same building; and the firm’s staffing needs were so pressing that they could not delay the paralegal’s start date even three weeks, until after a scheduled mediation of the case. The firm’s small size made it unlikely that the confidential information could actually be sealed off.
Other factors mandating DQ
In addition to the defense firm’s small size, the magistrate judge noted that the information the paralegal had was extremely sensitive and relevant, and that she had been very heavily involved on the other side of the case. Finally, there was a short time lag between the defense firm’s first contact with the paralegal and implementation of the screen. The gap was only two days — but combined with the other factors, it helped scuttle the defense firm’s representation.
Even a good screen…
The magistrate judge did not fault the firm’s screening procedures — in fact, he said they met and even exceeded measures endorsed in other disqualification cases. But combined with the firm’s small size and the other factors, even a good screen did not suffice.
And for firms large and small, this case is also a reminder about the importance of conflict checking everyone who joins the firm — even non-lawyers.