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In re Guaranty Insurance Services, Inc.

The Texas Supreme Court has held that when a paralegal works on a case at one firm, and then moves to another firm on the opposing side of that litigation, two presumptions come into play. The second presumption, that the paralegal shared confidential information about the case with members of the new firm, may be rebutted by a showing "that sufficient precautions have been taken to guard against any disclosure of confidences." Because the firm's screening procedure was ineffective to prevent the paralegal at issue here from actually working on both sides of the same litigation, the trial court did not abuse its discretion in granting the motion to disqualify. Accordingly, the petition for writ of mandamus is denied. Austin Court of Appeals, No. 03-09-00640-CV, 04-16-2010

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OPINION

Relator Guaranty Insurance Services (“Guaranty Insurance”) has filed a petition for writ of mandamus seeking to vacate the trial court’s order disqualifying its counsel. On October 12, 2009, the trial court granted a motion to disqualify Guaranty Insurance’s counsel, Strasburger & Price (“Strasburger”), on the ground that a paralegal who had performed work on behalf of Guaranty Insurance while working for Strasburger had also performed work on behalf of the opposing party, Trans-Global Solutions, Inc. (“Trans-Global”), during his previous employment at the law firm of Godwin Pappas Langley Ronquillo, LLP (“Godwin”).

The Texas Supreme Court has held that when a paralegal works on a case at one firm, and then moves to another firm on the opposing side of that litigation, two presumptions come into play. See Phoenix Founders, Inc. v. Marshall, 887 S.W.2d 831, 834-35 (Tex. 1994). First, there is a conclusive presumption that the paralegal acquired confidential information during his work on the case at the first firm. Id. at 834. Second, there is a rebuttable presumption that the paralegal shared confidential information about the case with the members of the new firm. Id. at 835. This second presumption may be rebutted by a showing “that sufficient precautions have been taken to guard against any disclosure of confidences.” Id.

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