(NLJ/Diego M. Radzinschi)

Beware of inadvertently forwarded emails lingering in your clients’ files. If they contain an opponent’s privileged information and you wield them in litigation, it could cost you.

That’s the takeaway from a California Court of Appeal decision upholding a trial court ruling that disqualified Gibson, Dunn & Crutcher from representing McDermott Will & Emery and former McDermott partner Jonathan C. Lurie in a malpractice suit pending in Orange County Superior Court.

A divided three-judge Fourth Appellate District panel held on Wednesday that Gibson Dunn lawyers should have known the privilege applies to an email in Lurie’s files that contain an opposing lawyer’s notes on a messy inter-family dispute.

Wednesday’s 49-page opinion from Associate Justice Richard Aronson delves heavily into the ethical rule governing inadvertent disclosure of privileged documents, or the so-called State Fund rule laid out in the 1999 decision State Comp. Ins. Fund v. WPS, Inc.

Aronson wrote Monday that the rule applies regardless of when or how an apparently privileged document is received. The rule “requires the attorney to review the documents no more than necessary to determine whether they are privileged, notify the privilege holder the attorney has documents that appear to be privileged, and refrain from using the documents until the parties or the court resolves any dispute about their privileged nature.”

The email at the heart of the Gibson Dunn case contained notes that Richard Hausman Sr.’s personal lawyer took during a dispute with his children over M. Hausman Inc., or MHI, a holding company formed to manage his late wife’s multi-million dollar investment portfolio. The email ended up in the client files of Lurie, who represented MHI, after an unlikely string of events. Hausman, who was nearly 80, had tried to use his iPhone to forward the email to his secretary, but inadvertently sent it to his sister-in-law, who passed it along to others who were attempting to mediate the dispute.

The document has surfaced in two separate pieces of litigation, a probate case over MHI and the malpractice suit. Gibson Dunn’s James Fogelman has so far represented Lurie in both. Fogelman wielded the email at depositions in the malpractice suit and read portions into the record despite objections from Hausman’s counsel that the email was privileged.

According to the decision, Fogelman claimed that an attorney is only ethically obligated to hand over inadvertently disclosed documents when they’re produced during discovery—not those inadvertently disclosed prior to litigation. But at the trial court, Orange County Superior Court Judge Sheila Fell disagreed and disqualified Gibson Dunn, finding that the firm’s exposure to the email could affect the outcome of the case.

Wednesday’s Fourth Appellate District majority upheld Fell’s decision. “Although the State Fund rule originated in the context of one attorney inadvertently producing his client’s privileged documents to the opponent’s attorney during litigation, neither the statement of the rule nor the policy underlying it supports limiting the scope of the rule to that one circumstance,” wrote Aronson, who was joined in his opinion by Justice Kathleen O’Leary.

A spokesperson for McDermott didn’t immediately respond to an email Thursday afternoon. Lurie, who left McDermott last year with three other trusts and estates partners to join Venable’s Los Angeles office, referred a request for comment to Gibson Dunn.

“If you read Justice [David] Thompson’s incredibly well-reasoned dissent, you will understand why the majority just got this one wrong,” wrote Gibson Dunn’s Fogelman in an emailed statement.

Thompson’s 10-page dissent disagreed with the majority on every major point: whether the document was privileged, whether Gibson Dunn was obliged to hand it over, and whether the firm should be disqualified from the case. Thompson wrote that the State Fund rule didn’t apply in an instance such as this where counsel was so far removed from the initial inadvertent disclosure and had little reason to think that the email wasn’t voluntarily sent. “The majority is not just trying to put a square peg in a round hole,” Thompson wrote. They are trying to put a square peg in no hole at all.”


Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Beware of inadvertently forwarded emails lingering in your clients’ files. If they contain an opponent’s privileged information and you wield them in litigation, it could cost you.

That’s the takeaway from a California Court of Appeal decision upholding a trial court ruling that disqualified Gibson, Dunn & Crutcher from representing McDermott Will & Emery and former McDermott partner Jonathan C. Lurie in a malpractice suit pending in Orange County Superior Court.

A divided three-judge Fourth Appellate District panel held on Wednesday that Gibson Dunn lawyers should have known the privilege applies to an email in Lurie’s files that contain an opposing lawyer’s notes on a messy inter-family dispute.

Wednesday’s 49-page opinion from Associate Justice Richard Aronson delves heavily into the ethical rule governing inadvertent disclosure of privileged documents, or the so-called State Fund rule laid out in the 1999 decision State Comp. Ins. Fund v. WPS, Inc.

Aronson wrote Monday that the rule applies regardless of when or how an apparently privileged document is received. The rule “requires the attorney to review the documents no more than necessary to determine whether they are privileged, notify the privilege holder the attorney has documents that appear to be privileged, and refrain from using the documents until the parties or the court resolves any dispute about their privileged nature.”

The email at the heart of the Gibson Dunn case contained notes that Richard Hausman Sr.’s personal lawyer took during a dispute with his children over M. Hausman Inc., or MHI, a holding company formed to manage his late wife’s multi-million dollar investment portfolio. The email ended up in the client files of Lurie, who represented MHI, after an unlikely string of events. Hausman, who was nearly 80, had tried to use his iPhone to forward the email to his secretary, but inadvertently sent it to his sister-in-law, who passed it along to others who were attempting to mediate the dispute.

The document has surfaced in two separate pieces of litigation, a probate case over MHI and the malpractice suit. Gibson Dunn ‘s James Fogelman has so far represented Lurie in both. Fogelman wielded the email at depositions in the malpractice suit and read portions into the record despite objections from Hausman’s counsel that the email was privileged.

According to the decision, Fogelman claimed that an attorney is only ethically obligated to hand over inadvertently disclosed documents when they’re produced during discovery—not those inadvertently disclosed prior to litigation. But at the trial court, Orange County Superior Court Judge Sheila Fell disagreed and disqualified Gibson Dunn , finding that the firm’s exposure to the email could affect the outcome of the case.

Wednesday’s Fourth Appellate District majority upheld Fell’s decision. “Although the State Fund rule originated in the context of one attorney inadvertently producing his client’s privileged documents to the opponent’s attorney during litigation, neither the statement of the rule nor the policy underlying it supports limiting the scope of the rule to that one circumstance,” wrote Aronson, who was joined in his opinion by Justice Kathleen O’Leary.

A spokesperson for McDermott didn’t immediately respond to an email Thursday afternoon. Lurie, who left McDermott last year with three other trusts and estates partners to join Venable ‘s Los Angeles office, referred a request for comment to Gibson Dunn .

“If you read Justice [David] Thompson’s incredibly well-reasoned dissent, you will understand why the majority just got this one wrong,” wrote Gibson Dunn ‘s Fogelman in an emailed statement.

Thompson’s 10-page dissent disagreed with the majority on every major point: whether the document was privileged, whether Gibson Dunn was obliged to hand it over, and whether the firm should be disqualified from the case. Thompson wrote that the State Fund rule didn’t apply in an instance such as this where counsel was so far removed from the initial inadvertent disclosure and had little reason to think that the email wasn’t voluntarily sent. “The majority is not just trying to put a square peg in a round hole,” Thompson wrote. They are trying to put a square peg in no hole at all.”


Copyright The Recorder. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.