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A lawyer for Sheppard, Mullin, Richter & Hampton faced a string of tough questions from justices of the California Supreme Court Wednesday about the firm’s decision to keep client J-M Manufacturing Company Inc. in the dark about a conflict that led to the firm’s disqualification in a high-stakes whistleblower case.

J-M, the world’s largest maker of PVC pipe, hired Sheppard Mullin in 2010 to defend it in qui tam litigation involving more than $1 billion in claims related to allegedly substandard pipe the company provided to government entities. When hired, though, Sheppard Mullin didn’t disclose the firm previously handled labor and employment work for South Tahoe, one of the municipalities involved. Although an internal firm conflict check flagged the issue, J-M wasn’t informed until after South Tahoe sought to disqualify Sheppard Mullin.

The case has seen more than 50 major law firms line up as amici behind Sheppard Mullin, while companies across multiple industries and the Association of Corporate Counsel backed J-M. It underscores the tension between clients’ expectations of loyalty from their lawyers and Big Law’s economic incentives to pursue more business.

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Ross Todd

Ross Todd is the Editor/columnist for the Am Law Litigation Daily. He writes about litigation of all sorts. Previously, Ross was the Bureau Chief of The Recorder, ALM's California affiliate. Contact Ross at [email protected] On Twitter: @Ross_Todd.

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