The inquirer is litigation counsel for Client X in a substantial number of patent infringement suits. In connection with these suits, Firm A has served as co-counsel. Firm A has expertise in patent law and patent prosecution procedures. Furthermore, Firm A has advised Client X on patent applications and license agreements.
Firm A has now merged with Firm B. Firm B represents one of the major defendants (Client Z) in a pending lawsuit where Client X is an adverse party. Firm B has stated that the attorneys formerly of Firm A who had entered their appearances in connection with this litigation, must now withdraw their appearances on behalf of Client X because of the conflict of interest which will not be waived.
The inquirer seeks an opinion from this Committee with respect to several issues which implicate Pennsylvania Rules of Professional Conduct 1.7, 1.9 and 1.10.
First, may Firm B (presumably through the lawyers that were formerly part of Firm A) serve as co-counsel in any future matter involving Client X? The inquirer reports that future litigation involving the same product which is the subject of the current litigation is probable and may potentially involve the suppliers of Client Z. The inquirer suggests that in the event of such future litigation, Firm B would likely be aligned with parties adverse to Client X (even if they did not represent them directly) and thus would be adverse to developing theories of damages that could impact on the industry as a whole.
Pennsylvania Rule of Professional Conduct 1.10 provides in part:
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2.
(b) When a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or a substantially related matter in which that lawyer, or a firm with which the lawyer was associated, had previously represented a client whose interests are materially adverse to that person and about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(b) that is material to the matter unless:
(1) the disqualified lawyer is screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(2) written notice is promptly given to the appropriate client to enable it to ascertain compliance with the provisions of this rule.
Pennsylvania Rule of Professional Conduct 1.9 provides:
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after full disclosure of the circumstances and consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information has become generally known.
Pennsylvania Rule of Professional Conduct 1.7(b) provides that:
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after full disclosure and consultation. . . .
Since any conflicts present for any of the lawyers in Firm B are imputed by Rule 1.10 to all the other lawyers in Firm B, co-counsel, now with Firm B, must determine if the future or "new" matter in which Firm B will serve with inquirer as co-counsel for Client X, is a matter substantially related to that for which Firm B, formerly represented Client Z (Rule 1.9a) and whether Client X's interests in connection therewith are materially adverse to those of Client Z or any other client of Firm B's. (Rule 1.7b.)
In the facts presented, inquirer posits that in the future litigation involving Client X, the same product and potentially the suppliers of Client Z will probably be involved. Based upon these facts, before Firm B can undertake the representation of Client X, consent of Client Z would be required after full disclosure of the circumstances. Even if consent were given by Client Z, Firm B in its representation of Client X must exercise caution that it does not use any information Firm B has gained while representing Client Z in the pending litigation to the disadvantage of Client Z in this "new" litigation. See, for example, Maritrans v. Pepper, Hamilton & Scheetz, 602 A.2d 1277 (Pa. 1992).
Firm B must also consider if the representation of Client X will be materially limited by the firm's own interests i.e., its alignment with other retailers and the development of damage theories inimical to those retailers during the course of representing Client X. If Firm B concludes that its representation of Client X would not be adversely affected, it could only represent Client X after full disclosure and consent by Client X.
Inquirer asks if he can continue to represent a client in the event that another conflict arises involving a client of Firm B. Should that occur, this Committee sees no conflict in inquirer's continued representation of a client. However, Firm B would be required to undertake an analysis of its obligations under Rule 1.10 (a), by implication Rule1.7, and Rule 1.9 (if the client were not then a client of Firm B). Absent more specific facts, this Committee is unable to provide greater guidance with regard to these potential issues.