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Although a law firm potentially jeopardized its own reputation and the fairness of sexual harassment litigation against Oppenheimer & Co. by allegedly obtaining “privileged and confidential information,” disqualification was not necessary, a Manhattan appeals court has ruled. A unanimous panel of the Appellate Division, 1st Department, ruled that Oppenheimer could not show that law firm Storch Amini & Munves had actually obtained any confidential information through its contact with a former paralegal and in-house counsel at the investment banking firm. “The harsh remedy of disqualification is not necessary under these particular circumstances,” Presiding Justice Jonathan Lippman wrote for the panel in Pellegrino v. Oppenheimer. “However, that is largely due to the specific facts of this case, where plaintiffs ultimately, but fortuitously, obtained no unfair advantage.” Lippman commented that with the consultations at issue, “counsel was walking a fine ethical line, potentially jeopardizing the viability and fairness of future litigation and the reputation, standing and well-being of the law firm itself.” The decision consolidated employment discrimination actions filed against Oppenheimer and its general counsel, Eric Shames, by Irina Alter, Christine Pellegrino and Andrea Bertoline. Alter, a paralegal who attended law school at night, began working at Oppenheimer in March 2002. Pellegrino and Bertoline worked with Alter in Oppenheimer’s legal department. Shames, Oppenheimer’s general counsel, allegedly made “unwelcome sexual comments and inquiries” and engaged in “sexually oriented physical contact” with Alter, according to her complaint. In early 2003, Alter spoke with in-house counsel Evelyn Bukchin about Shames’ behavior. Alter asked Bukchin that their conversation remain confidential and subject to the attorney-client privilege. Alter, Bukchin and Kathryn Gostinger, another Oppenheimer attorney, subsequently sought the advice of an employment discrimination lawyer at Storch Amini, with whom they explored the possibility of sending an anonymous complaint letter to the company. Bukchin testified at her deposition that she never told Storch Amini that she had experienced harassment. She also testified that Storch Amini informed her that she could incur liability for the harassment, since employees were complaining to her about Shames’ behavior. Alter testified that when she initially met with Storch Amini, she did not intend to bring an action against Oppenheimer. In September 2003, Alter was fired. Shortly afterward, Bukchin telephoned her and said that Shames’ decision to fire her was “not the right thing to do.” In December 2003, Alter sued Oppenheimer and Shames for sexual harassment and discrimination. Pellegrino and Bertoline brought similar actions. Alter and Bukchin stayed in touch, and at one point Bukchin told Alter that Shames had told her the harassment suits were emotionally taxing and a “source of embarrassment.” She also told Alter that Shames had said he thought Alter had the most meritorious claims against the firm. According to the decision, Alter testified at a deposition that she had an attorney-client relationship with Bukchin and refused to answer certain questions on the grounds of privilege. However, Alter changed her position in a second deposition, during which she failed to assert the privilege. Bukchin testified that while she agreed to Alter’s characterization of their discussions as confidential under the attorney-client privilege, she only did so because both employees were concerned about suffering adverse employment consequences. Bukchin said that Alter had approached her for general, not legal, advice and maintained that she never legally advised Alter. Oppenheimer moved to disqualify Storch Amini from representing any of the three plaintiffs, alleging that when Bukchin went with Alter to seek advice from the firm, the in-house counsel entered into an attorney-client relationship with the firm. Oppenheimer also contended that the firm benefited from disclosure of allegedly privileged communications with Shames obtained through Bukchin. In three separate rulings, acting Supreme Court Justice Judith J. Gische and Justices Rolando T. Acosta and Richard F. Braun denied the disqualification motions. The 1st Department affirmed the rulings. The panel noted that the Code of Professional Responsibility precludes an attorney from revealing “any confidences or secrets of a former client” in the representation of another client in “the same or substantially related matter” in which that client has adverse interests to the former client. An irrebuttable presumption that disqualification is required applies if a party shows a previous relationship with the opposing counsel, the new and old matters are substantially related, and the clients have adverse interests. This presumption is meant to “safeguard client confidences” and “avoid an appearance of impropriety,” the court noted, citing Solow v. Grace & Co. However, courts should “avoid the mechanical application” of the ethical rule forbidding an attorney from disclosing prior client confidences, Lippman wrote. Here, Oppenheimer could not show that an attorney-client relationship existed between itself and Storch Amini. Bukchin did not retain Storch Amini for herself and did not meet with the firm in her role as Oppenheimer’s in-house counsel, the court wrote. While an attorney-client relationship can ensue from a preliminary consultation, Bukchin did not intend to retain the firm. The court also rejected Oppenheimer’s contention that the firm was privy to privileged information through Bukchin’s alleged attorney-client relationship with Alter. Shames may have “unwisely” expressed his personal feelings to Bukchin, but these communications were not privileged, Lippman wrote. And the “unilateral” belief of Alter, a paralegal and law student, that her discussions with Bukchin amounted to an attorney-client relationship was not reasonable, he concluded, pointing out that “legal advice was neither requested nor provided in their conversations.” Thus, the court held that Oppenheimer had failed to show that the conversations were subject to the attorney-client privilege or that any confidential information was exchanged. Indeed, Lippman said that Oppenheimer had not demonstrated that any information Alter obtained from Bukchin could not have been obtained through discovery. But the court noted, “It is critical that attorneys be acutely alert to situations where the potential for adverse interests may arise,” particularly when “profound” consequences could result. Since it was “plainly foreseeable” that Bukchin and Alter could have “divergent” interests, this and similar situations should “set alarm bells ringing and be assiduously avoided for the good of all concerned.” Justices Richard T. Andrias, Eugene Nardelli, Luis A. Gonzalez and E. Michael Kavanagh joined the opinion. The case was argued on Oct. 24, 2007. Russell Bogart and Steven G. Storch, of Storch Amini, served as counsel to the plaintiffs. Storch maintained in an interview that his firm had “acted appropriately” and “would continue to adhere” to the ethics rules. Ellen M. Martin and Richard O. Jackson from Patterson Belknap Webb & Tyler represented Oppenheimer. Brian Maddox, a spokesman for Oppenheimer, said Wednesday that the company is reviewing the decision and not prepared for immediate comment. Shames was terminated from Oppenheimer in 2006. This article originally appeared in theNew York Law Journal, a publication of ALM. �

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