We previously discussed the lawsuit by 3M Co. against Covington & Burling over its alleged conflict of interest and violation of its duty to 3M in representing the state against 3M in an environmental case. In a major conflicts decision (and a major embarrassment for Covington), a court has found that the firm betrayed its former client and “exhibited a conscious disregard for its duties of confidentiality, candor, full disclosure, and loyalty to 3M by failing to raise its conflicts arising from the fact that it previously advised and represented 3M.”

Agreeing that 3M Co. had been betrayed by a major law firm’s decision to help the Minnesota attorney general pursue an environmental suit against its former longtime corporate client, a judge has disqualified Covington & Burling from continuing to represent the state in the litigation against 3M.

In a Thursday order and opinion (PDF), Hennepin County District Court Judge Robert A. Blaeser wrote: “Covington has exhibited a conscious disregard for its duties of confidentiality, candor, full disclosure, and loyalty to 3M by failing to raise its conflicts arising from the fact that it previously advised and represented 3M on FC [fluorochemical] matters. Additionally, Covington is disqualified in order to protect 3M’s confidential information Covington obtained during its representation of 3M, which is relevant to the issues at the heart of the state’s case.”

Fundamental to the disqualification issue, the judge states, is the fact that Covington & Burling failed to obtain required informed written consent to the conflicts from its former client, as required under Minn. Rule Prof. Conduct 1.9.

“Covington did not notify 3M of its conflicts,” Blaeser wrote, “nor did it seek 3M’s informed consent to represent the state in this action. Covington claims that its conflicts check did not identify a conflict and that, as a result, it did not raise its conflicts with 3M to obtain informed consent. Because Covington’s representation of the state in this action is substantially related to the FC matters on which it previously advised and represented 3M, and because the court must presume that Covington received relevant confidential information from 3M and shared it among all attorneys in the firm, Covington is prohibited from representing the state in this action pursuant to Rule 1.9.”

In a written statement emailed to the ABA Journal by a Covington spokeswoman, the chairman of Covington’s management committee, Timothy Hester, said that the law firm felt it appropriately handled a matter involving two longtime clients.

“The state of Minnesota has been a client of this firm on environmental matters since 1995.We respectfully disagree with the court’s ruling,” Hester said. “We believe 3M failed to identify an actual conflict of interest and its attempt to disqualify the firm should in any event be barred because it came 15 months after the case was filed. 3M is a former firm client, and the state of Minnesota’s current environmental case against 3M is not substantially related to a food packaging matter that we handled for 3M many years ago. Our client, the state of Minnesota, will be weighing its options, including an immediate appeal.”

Bickel & Brewer, which represented 3M in the disqualification matter, announced the disqualification decision in a law firm press release.

William A. Brewer III calls the judge’s ruling “a resounding victory for 3M” in the release and says it “underscores the importance of the ethical duties that are owed by lawyers to their clients. This order confirms,” he continues, “that Covington & Burling breached the most fundamental duties inherent in the attorney-client relationship – the duties of loyalty and confidentiality.”

3M previously filed a federal lawsuit against Covington & Burling over its representation of the state in the case, alleging breach of contract and breach of fiduciary duty. That suit, which was dismissed and refiled in state court in Ramsey County, is still ongoing there, according to Bickel & Brewer. The federal suit sought compensatory damages and disgorgement of all legal fees paid by 3M to the law firm since 1992. It also sought an injunction that would preclude the law firm from “further jeopardizing 3M’s confidential information.”

A Corporate Counsel article written before Blaeser’s ruling provides additional details. Because 3M’s general counsel hadn’t been at the company when Covington was representing 3M in matters related to the state’s environmental suit, Brewer told the legal publication, the company didn’t realize it had a problem until until Covington began deposing in-house lawyers in the environmental case on the same issues on which the firm had once represented them.

In a written statement (PDF) provided by Hester that is attached to the Corporate Counsel article, the law firm said it was confident it had fulfilled its ethical obligations to 3M, which was no longer a client at the time the law firm began representing the state on an unrelated matter.

“Our general view is that when longtime clients ask us to represent them on difficult matters, and we have no conflict, we should undertake the representation,” the firm explains in the statement. “In the situation here, we had no conflict when the state of Minnesota asked us to handle this matter. 3M was not a client; and in any event had agreed we could sue it in matters substantially unrelated to our work for 3M. The fact that we had previously handled a matter for 3M before the FDA did not create a conflict where the legal and factual issues in this new matter are fundamentally different from that prior work.

“We are confident that we have proceeded in a proper way that is fully consistent with our ethical obligations and our duties to our clients. We take those duties and obligations very seriously, and we see no basis for the claims that 3M began making 15 months after we had commenced the Minnesota matter adverse to 3M.”

The court agreed and found that Covington failed to meet the basis ethical duties toward its prior client:

“Covington did not notify 3M of its conflicts,” Blaeser wrote, “nor did it seek 3M’s informed consent to represent the state in this action. Covington claims that its conflicts check did not identify a conflict and that, as a result, it did not raise its conflicts with 3M to obtain informed consent. Because Covington’s representation of the state in this action is substantially related to the FC matters on which it previously advised and represented 3M, and because the court must presume that Covington received relevant confidential information from 3M and shared it among all attorneys in the firm, Covington is prohibited from representing the state in this action pursuant to Rule 1.9.”

Here is the full opinion: Covington Order

Covington sent me and others a statement yesterday on the decision:

Timothy Hester, chair of Covington’s management committee stated: “The State of Minnesota has been a client of this firm on environmental matters since 1995.We respectfully disagree with the court’s ruling. We believe 3M failed to identify an actual conflict of interest and its attempt to disqualify the firm should in any event be barred because it came 15 months after the case was filed. 3M is a former firm client and the State of Minnesota’s current environmental case against 3M is not substantially related to a food packaging matter that we handled for 3M many years ago. Our client, the State of Minnesota, will be weighing its options, including an immediate appeal.”

The state itself supported Covington and said that 3M implicitly waived any conflicts which the court rejects. Most damaging for Covington are findings like the following: “Covington’s failure to protect 3M’s confidential information raises a strong inference that 3M’s confidential information has been improperly accessed by Covington and will continue to. Covington has even gone so far to seek discovery on the very issues on which it previously counseled 3M.” That is a rather poor image for a firm that represents large corporations on a regular basis.

Here is the opinion: Covington Order