We previously discussed the finding of a Minnesota judge that the leading firm of Covington & Burling committed a serious conflict of interest in representation in a large environmental case against 3M corporation. Now, a state appellate court has upheld the disqualification — an embarrassing blow for the law firm, which continues to generate bad publicity in the litigation for its current and future clients.

The lawsuit by 3M Co. against Covington & Burling challenged its alleged conflict of interest and violation of its duty to 3M in representing the state against 3M in an environmental case. The trial 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.

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.”

Here is the lower court opinion: Covington Order

The appellate court ruled that the law firm lacked standing to bring the action:

The right of a client to appeal the disqualification of the client’s chosen attorney is well established. See In re Estate of Janacek, 610 N.W.2d 638, 642 (Minn. 2000) (holding that order disqualifying party’s attorney of choice is a final order in a special proceeding appealable under Minn. R. Civ. App. P. 103(g)). The supreme court reasoned that a party has “a substantial right to be represented by its attorney of choice.” Id. But an attorney does not have the same substantial right to continue representing a client. See, e.g., Trenti, Saxhaug, Berger, Roche, Stephenson, Richards & Aluni, Ltd. v. Nartnik, 439 N.W.2d 418, 420-21 (Minn. App. 1989) (noting that a client may discharge an attorney with or without cause at any time, although the client may still be liable for quantum meruit payment), review denied (Minn. Jul. 12, 1989). This makes it difficult to conclude that a disqualified attorney suffers “an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136 (1992) (discussing minimum requirements of concept of standing) (quotations and citations omitted). If Covington is subject to discharge by the state at any time, it does not have a legally protected right to continue representing the state.

As many of you know, I have long been critical of standing rules that bar judicial review. I am therefore sympathetic to the firm’s standing claim even if I am less sympathetic on the conflicts issue. However the court did address the conflicts question and even expressed skepticism over 3M’s position in the case:

The timing of 3M’s motion to disqualify, 15 months after the admission of Covington’s attorneys, after production of several million pages of documents and more than 50 depositions, and shortly before the discovery deadline, might well be perceived as tactical maneuvering. And 3M’s claim that it only realized at that late date that there may be a conflict is contradicted by the record. But 3M’s knowledge of the conflict, by itself, is not sufficient to avoid disqualification. Covington had the duty to avoid conflicts and to obtain the informed consent of its former client, and it failed to obtain this consent.

Thus the appeal was dismissed on standing grounds but the court also held that a true conflict existed in the case for Covington.

This is the type of ruling that can hurt a firm like Covington in creating concern by clients that the firm could discard its interests in favor of a more lucrative client or case. Covington insists (as reflected in the opinion) that it did not abandon a client, but the optics could not be worse. It will be interesting if the firm now appeals this decision, which is well-constructed and well-reasoned.

Source:ABA