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Cinema 5, Ltd. v. Cinerama, Inc. - 528 F.2d 1384 (2d Cir. 1976)


The "substantial relationship" test does not set a sufficiently high standard by which the necessity for disqualification should be determined. That test may properly be applied only where the representation of a former client has been terminated and the parameters of such relationship have been fixed. Where an attorney-client relationship is a continuing one, adverse representation is prima facie improper, and to avoid disqualification, the attorney must be prepared to show, at the very least, that there will be no actual or apparent conflict in loyalties or diminution in the vigor of his representation.


The corporation's counsel was a partner in two New York state law firms and divided his time between the offices. One firm was retained to represent defendants in an antitrust action. The corporation brought a district court action alleging a conspiracy among defendants to acquire control of the corporation through stock acquisitions, with the intention of creating a monopoly and restraining competition. Because the corporation's attorney's firm represented one defendant on the antitrust matter as well, that defendant filed a motion to disqualify the attorney in the conspiracy action. The district court found that there was a sufficient relationship between the two law firms and the controversies to inhibit future confidential communications between defendants and their attorneys and that disqualification was required to avoid even the appearance of professional impropriety. The corporation appealed, arguing that the substantial relationship test was appropriate.


Taking into consideration the circumstances of the case at hand, was the “substantial relationship test” appropriate?




Traditionally, the courts apply the “substantial relationship test” in order to determine whether a lawyer may accept employment against a former client. However, in the case at bar, the suit is not against a former client, but an existing one. The propriety of this conduct must be measured not so much against the similarities in litigation, as against the duty of undivided loyalty which an attorney owes to each of his clients.

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