O Builders & Assocs., Inc. v. Yuna Corp. of NJ - 206 N.J. 109, 19 A.3d 966 (2011)

Rule:

A lawyer who has been consulted by a former prospective client will be disqualified if and only if two factors exist in combination: the matter of the consultation and the matter then adverse must be the same or substantially related, and the information the lawyer received during the consultation must be significantly harmful to the former prospective client in the now adverse matter. For future guidance, the Supreme Court of New Jersey defines the terms same or substantially related matters or significantly harmful information, respectively. In respect of the former, the question of whether matters are substantially related has been defined in a substantively analogous context as follows: Matters are deemed to be substantially related if (1) the lawyer for whom disqualification is sought received confidential information from the former client that can be used against that client in the subsequent representation of parties adverse to the former client; or (2) facts relevant to the prior representation are both relevant and material to the subsequent representation. The Supreme Court finds that definition appropriate for use in respect of the application of N.J. R. Prof. Conduct 1.18 and, therefore, adopts it in that context also.

Facts:

In February 2008, defendant met with plaintiff's attorney to discuss his possible representation of defendant's principal and her business advisor over a then-current lawsuit in which they were experiencing problems with their attorney. It was undisputed that defendant never hired plaintiff's attorney. Several months later, plaintiff brought an action against defendant seeking payment for construction, renovation, and remodeling work performed in defendant's restaurant. Defendant moved to disqualify plaintiff's counsel, claiming that the lawsuit will implicate confidential information discussed during the prior consultation between defendant and plaintiff’s attorney. The trial court denied defendant’s motion, and the Appellate Division affirmed. Defendant was granted certification to appeal the judgment of the Appellate Division. 

Issue:

Under the circumstances, should the plaintiff’s counsel be disqualified? 

Answer:

No.

Conclusion:

The Court held that defendant’s motion to disqualify was correctly denied because defendant failed to satisfy its burden of proving that the matters disclosed during the February 2008 consultation were the same or substantially related to the underlying lawsuit, and that the information disclosed during that consultation was significantly harmful to defendant in the lawsuit.