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A former client seeking to disqualify an attorney who appears on behalf of his adversary need only to show that the matters embraced within the pending suit are substantially related to the matters or cause of action wherein the attorney previously represented him. This rule rests upon the presumption that confidences potentially damaging to the client have been disclosed to the attorney during the former period of representation. An attorney's ethical duty to preserve the confidences and secrets of a client, ABA Model Code of Professional Responsibility Canon 4 (1970), is broader than the evidentiary attorney-client privilege. The ethical precept, unlike the evidentiary privilege, exists without regard to the nature or source of information or the fact that others share the knowledge. ABA Model Code of Professional Responsibility EC 4-4 (1970).
A dispute developed over a family restaurant corporation. The corporation's stock was divided between two family groups. Appellee was owned by one group, and corporate appellants were owned by individual appellants. The general counsel to the family business continued to represent appellants and severed his connections with appellee and its shareholders. Both sides claimed ownership of service marks, and appellee filed suit for trademark infringement. Upon the filing of the suit, the general counsel retained another attorney to assist him. Appellee moved for the disqualification of both. The district court granted the motion, finding the suit was substantially related to matters in which the general counsel formerly represented appellee and the relationship with the other attorney created a significant likelihood of access to confidential disclosures by appellee. Appellants sought review.
Did the district court err in granting appellee’s motion to disqualify the general counsel and the outside attorney?
No, with respect to the general counsel. Yes, with respect to the outside attorney.
The court affirmed the disqualification of appellants' general counsel because the findings of prior representation and substantial relationship with appellee were not disputed. However, the court vacated and remanded the disqualification of the appellants' outside attorney, holding that it was not clear whether outside attorney had, in fact, represented appellee.