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The San Francisco city attorney’s office hopes to persuade the First District Court of Appeal to reverse the disqualification of the office from a multimillion-dollar fraud case by arguing that the trial court’s decision will affect far more than the case at hand. When the office files its appellate brief, which is expected to happen today, it plans to argue that the trial court’s ruling would have statewide implications, said Chief Deputy City Attorney Therese Stewart. An attorney on the other side of the case said the city attorney is straining to “exaggerate the breadth of impact.” The facts in the case strongly support the trial court’s decision, said G. Whitney Leigh, an associate at Keker & Van Nest who, along with partner Ethan Balogh, is representing two of the defendants in the underlying case. Sean SeLegue, who chairs the State Bar’s Committee for Professional Responsibility and Conduct, isn’t taking sides. But he calls the case “an example of the debate in California over whether the imputation rules can be taken too far and whether ethical walls should be allowed.” The city filed a fraud suit in the underlying case in February, alleging that certain vendors and Marcus Armstrong, former chief technology officer for the city’s Department of Building Inspection, subverted the public contracting process. The city claims the companies got contracts and payments for undelivered goods and services in exchange for illegal kickbacks to Armstrong. The suit alleges that Cobra Solutions Inc. was paid $2.4 million by the city during a 20-month period thanks to Armstrong, who got $240,500 in return. The city alleges that TeleCon Ltd. is Cobra’s “alter ego.” Armstrong, who resigned, has pleaded guilty to related federal criminal charges. The appeal stems from San Francisco Superior Court Judge Donald Mitchell’s decision to disqualify Herrera and his entire office from the case, at Cobra and TeleCon’s request. The judge found that Herrera had represented the defendants “personally” while in private practice before he became city attorney and that Herrera had, as a result, obtained confidential information from defendants “in matters related substantially to the issues raised” in the suit. Mitchell’s ruling rejected several arguments from the city attorney’s office. Herrera’s office says his law partner, Timothy Gill, did the bulk of the work for Cobra and TeleCon. The office also notes that the investigation of the alleged kickback scheme began before Herrera took office, and that as soon as Cobra was implicated — after the original suit was filed in February — the city attorney implemented an “ethical wall” and ceased to be involved in the case. “When Dennis Herrera took office, he immediately decided that in any matter involving a former client of himself or his law firm, he would wall himself off,” Stewart said. The city attorney names his chief deputy or chief assistant attorney as “de facto head of the office” for such cases, she said. “He doesn’t have access to the files, we don’t consult with him about it, he’s segregated from it,” she said. The city attorney’s appellate brief will have similar arguments to those made in a petition for writ of mandate filed by the office last month, Stewart said. A three-justice panel from the First District rejected the petition and directed the city attorney’s office to pursue an appeal instead. The writ argues that if upheld, Mitchell’s ruling will prevent government law offices statewide from electing or appointing attorneys with private practice experience. “You either don’t hire lawyers who have a lot of experience” in the private sector, Stewart said, “or you hire them but basically limit the office’s ability to handle a lot of cases. And that undercuts the law office’s effectiveness.” “The consequences of such a ruling are devastating to public law offices and taxpayers,” the writ says. Stewart said, “Our particular case is a good example of the kind of expense and the harm to the public that will occur.” Disqualifying government law offices imposes significant costs on taxpayers and deprives the public of lawyers with specialized skills, the writ says. For instance, the office argued in the writ, it would be “difficult and expensive” to get outside counsel up to speed on the case, and outside counsel unfamiliar with public corruption cases could not prosecute it as effectively. While California courts have automatically disqualified private firms based on one lawyer’s earlier adverse representation in substantially related matters, state courts have recognized an exception for lawyers moving between government and private practice, the writ says, citing Chambers v. Superior Court, 121 Cal.App.3d 893. Private firms generally can’t use an ethical wall to stop the rule of imputed disqualification under California case law, but Chambers established an exception for a public lawyer who enters the private sector, SeLegue said. The rationale behind the ruling is to encourage attorneys to go into public service by alleviating fears that they’d be undesirable hires for private firms down the road, he said. “There’s a policy debate about whether ethical walls should be allowed and under what circumstances,” SeLegue said. The conversation has become more complex as large firms and frequent job changes have become more commonplace, SeLegue said. And some people contend attorneys have increasingly used disqualification motions as a litigation tactic over the past decade, raising another issue, he said. Ironically, the city attorney’s office could prove prophetic on its predictions of statewide implications if the court of appeal issues an opinion backing Judge Mitchell’s ruling on the disqualification motion in San Francisco v. GCS Inc., A103659. Mitchell’s disqualification ruling alone wouldn’t carry the weight of formal legal precedent, Stewart acknowledged. But she said as word of mouth and publicity spread the word about the case, it starts to affect how other lawyers in public offices think about the issue. “If the court of appeal affirmed the decision, then that becomes a precedent,” Stewart said. “That’s hugely problematic.”

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