Dodging the Conflict Bullet: Tough Issues and How to Resolve Them Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado History of company/company vision Who’s who Company policies Benefits Performance reviews Other resources Required paperwork Summary

SUBJECT MATTER OR “ECONOMIC ADVERSITY” CONFLICTS What is Direct Adversity? Rule 1.7 ABA Formal Op. 05-434 “Requires a conflict as to the legal rights and duties of the clients, not merely conflicting economic interests.” But, does not require overt confrontation between the clients. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

SUBJECT MATTER OR “ECONOMIC ADVERSITY” CONFLICTS ABA Formal Op. 05-435 Curtis v. Radio Representatives, Inc., 696 F. Supp. 729 (D.D.C. 1988) Maling v. Finnegan Henderson, 473 Mass. 336 (Dec. 23, 2015) Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

SUBJECT MATTER OR “ECONOMIC ADVERSITY” CONFLICTS What constitutes a “material limitation” that may prevent a lawyer from representing competitors even absent direct adversity? Comment [8] Cannot take action that advantages one client to the detriment of another Patent context/other contexts Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

SUBJECT MATTER OR “ECONOMIC ADVERSITY” CONFLICTS To make matters even more complicated…. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

SUBJECT MATTER OR “ECONOMIC ADVERSITY” CONFLICTS Take-Aways: Robust conflicts checking Engagement letter language In-firm resources for conflicts questions Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS: AVOIDING ACCIDENTAL RELATIONSHIPS Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Privity has been eroded California test Third party beneficiary test But privity’s not dead – see Baker v. Wood, Ris & Hames (Colo. 2016) Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Who is the client in the corporate context? Model Rule 1.13 Comment 34 to Model Rule 1.7 Lawyer who represents a corporation does not necessarily represent any constituent or affiliated organization, such as a parent or subsidiary, unless: Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Circumstances are such that the affiliate should also be considered a client of the lawyer, or There is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client’s affiliates, or The lawyer’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Remember those pesky guidelines? Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS ABA Formal Ethics Opinion 95–390 Lawyer’s work for a parent was designed to benefit all its subsidiaries, for example on a stock offering or other financing. Subsidiary’s in-house counsel reports to the parent’s general counsel, and that general counsel is represented by the lawyer. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Lawyer obtained confidential information from the parent relevant to a dispute with the subsidiary. Parent and subsidiary are so closely connected as to share an identity for purposes of the representation. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Many courts have reached the conclusion that the bar to concurrent representation applies “if a firm’s representation adverse to a client’s corporate affiliate reasonably diminishes the level of confidence and trust in counsel held by the client.” At the end of the day: It’s fact-specific . Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

CORPORATE AFFILIATES AND NON-CLIENTS Take-Aways: Watch out for situations where an affiliate could be deemed an implied or “de facto” client Engagement letter language Watch out for outside counsel guidelines Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE General Rule: One cannot turn a 1.7 current client conflict into a 1.9 former client conflict by firing one of the clients – i.e., one cannot drop a client like a “hot potato” to attempt to avoid conflicts Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Example 1: Law Firm is representing Client A in only one matter, the appeal of a $20,000 jury verdict arising out of a truck accident. The matter has been fully briefed, and the parties are awaiting a decision. Company B comes to Law Firm and asks it to represent Company B in a $1 billion patent infringement action against Client A. Company B wants to file immediately. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Example 1: Because the patent case is totally unrelated to the truck accident, Law Firm asks Client A to consent to Law Firm's handling the patent case. Client A refuses to consent. Law Firm then files a motion to withdraw from the appeal proceeding, which Client A, now highly miffed, does not oppose. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Example 1: After obtaining an order allowing its withdrawal, Law Firm files the patent case against former Client A. Client A now moves to disqualify Law Firm. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Example 2: Law Firm discovers that, because of a malfunction in its conflicts system, it has wound up representing Company A in the accident case and has opened a file for Company B. Law Firm begins work for Company B on the patent infringement case. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Example 2: Upon learning of the conflict, Law Firm moves to withdraw from the accident case, which is unopposed. Law Firm then files the infringement case, and Company A moves to disqualify Law Firm in that case. Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado

THE “HOT POTATO” DOCTRINE Freivogel on Conflicts: “With a handful of exceptions, all courts of which we are aware that have addressed the above fact patterns, have ordered the firm disqualified.” Exceptions “Thrust upon” exception No material adverse effect Erin Higgins; Carolyn Fairless; Chuck Lundberg September 30, 2016, Westin Denver Downtown, Denver, Colorado