The short answer is the attorney may represent the new client against his old client when the new case does not involve matters substantially related to the prior representations. A “substantial relationship” exists where ” the attorney had a direct professional relationship with the former client in which the attorney provided legal advice and services on a legal issue closely related to the legal issue in the present representation. ” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 710, 711.) More specifically, the focus is on “the legal and factual similarities of the two representations.” (Farris v. Fireman’s Fund Ins. Co. (2004) 119 Cal.App.4th 671, 679.) In Farris, the attorney had worked as coverage counsel for Fireman’s Fund for over 10 years handling coverage claims and assisting the client in shaping the company’s practices and procedures. Six months after his last representation of that client, counsel filed a bad faith claim against it in representing Farris. The appellate court reversed the trial court’s denial of Farris’ disqualification motion, finding disqualification was required. (Id. at pp. 685, 688.)
Against this backdrop, the Court of Appeal, Second District, Division Four, reviewed the disqualification of attorney Shahian in the recent case of Khani v. Ford Motor Company (publication ordered 4/25/13) 2013 DJDAR 5399. The motion to disqualify Shahian from representing Khani in Khani’s lemon law action against Ford came in an action filed about 4 years after Shahian’s last representation of Ford. A partner in Shahian’s former law firm declared that Ford was a client of the law firm, Shahian had worked on 150 cases of this client, and Shahian was privy to confidential communications with Ford and information with respect to defense, prelitigation strategies and tactics in the handling of lemon law cases brought against client Ford. The trial court granted the disqualification motion.
The appellate court in Khani reversed the disqualification order. The court cited the above Jessen and Farris opinions approvingly for their legal analysis; but the court saw differences in their facts from the Khani case. For example, the attorney in Farris had “shaped the company’s practices and procedures in handling California coverage case.” These practices and procedures in Farris were said to likely be at issue in the bad faith case the attorney was now bringing against his former client some six months after he had stopped working for it.
By contrast, noted the Khani court, there was no evidence that Shahian was exposed to any information that was material to his representation of Khani in this case (involving the allegation that a 2008 Lincoln Navigator was defective)–that there was no evidence that any of the particular policies or practices that he learned of in the prior representations were the same as those in the present representation. Accordingly, it found that the trial court abused its discretion in disqualifying Shahian from representing his present client’s action against his former client.
Before attorneys run out and decide to sue former clients, I have some words of caution. Appellate opinions, like Kahni, often state reasoning in a brief, summarial fashion. A review of a trial record for abuse of discretion involves much more than can be expressed in an opinion. The court here found NO substantial evidence to support the trial court’s factual determination–that the trial court abused its discretion. Rarely does an appellate court essentially decide that no reasonable judge could find sufficient facts to justify the disqualification where the fact of the prior direct representation is itself clear. The issue raised by the appellate court here is how closely the cases are related. While an appellate court may disagree on the factual finding of close relationship, it should not reweigh the facts.
Troubling is the appellate court’s reasoning implying that the Farris facts create a standard of minimum evidence needed to disqualify. Farris reversed the trial court’s failure to disqualify because the evidence of participation of the attorney in the prior representation was so “pervasive” that no reasonable judge could find otherwise. This hardly sets a minimum standard for disqualification. The legal standard set forth in the opinion makes it clear that a less pervasive participation involving less detailed knowledge could still justify disqualification.
Both Jessen and Farris note that where the prior relationship is direct, inquiry into the actual state of the knowledge is prohibited, and presumptions may be drawn from closeness with the former client, and similarity of the subject matter of prior representation to the present case. That the Khani case is likewise a lemon law case might normally be sufficient similarity; a possible question is whether a 4-year time lapse between representations defeats a presumption Ford’s practices and policies remain similar. That would seem to be a question of fact: the ruling of the trial court should prevail unless no substantial evidence supports that ruling.