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An Illinois judge said Duane Morris & Heckscher did not violate the rules of professional conduct by hiring a Chicago lawyer who briefly helped investigate lawsuits that an insurance company was contemplating bringing against the firm and several clients in connection with business transactions. Judge Dorothy Kinnaird of the Circuit Court of Cook County, Ill., granted summary judgment in favor of Duane Morris and its partner, Michael A. Reiter, on all counts in a suit brought by Jackson National Life Insurance Co. following the opening of the firm’s Chicago office in July 1999. Jackson National was trying to stop Reiter and others from joining Duane Morris. Last year, Kinnaird denied Jackson’s request for a temporary restraining order to prevent Reiter and his 10 partners from Chicago’s Holleb & Coff from joining Duane Morris, and the Appellate Court of Illinois upheld that earlier ruling. In the Chicago lawsuit, Jackson also alleged that Duane Morris had not erected an ethical screen with all the features required by the rules of professional conduct in Illinois to prevent Reiter from disclosing confidential information to his then-new Duane Morris colleagues. In response, Kinnaird found that Duane Morris had in fact erected an effective ethical screen that met all applicable rules and guidelines. “The case law is clear that the ethical screens are evaluated on a case-by-case basis,” Kinnaird said in her ruling from the bench late last month. “They will be deemed to be effective so long as they accomplish the central purpose of preventing the conflicted lawyer from transmitting client confidences to the rest of the firm.” The Jackson National case dates back to 1996, when Michael Kennedy, principal shareholder in Benchmark Holdings Inc., with the aid of Duane Morris attorneys, sold the company’s assets. Jackson National was a preferred shareholder in Benchmark at the time of the transaction. Jackson National sued Kennedy and Ratner Holdings for a violation of fiduciary duty in Chicago. Jackson was represented by Holleb & Coff. According to Kinnaird, Reiter performed 21.75 hours of work on the Jackson National case out of a total 4,462 hours that Holleb & Coff billed. The judge said Reiter was removed from the litigation during the early stages. The fiduciary-duty case was later transferred to Delaware, where Jackson National replaced Holleb & Coff with Delaware counsel. Jackson National also sued Duane Morris for legal malpractice, seeking $61 million, in Philadelphia Common Pleas Court. Kinnaird said that Duane Morris partner and general counsel Gene E.K. Pratter began the screening process in May 1999 when her firm entered discussions with the Holleb lawyers, who opened a Duane Morris office in Chicago, and determined that none of the candidates for lateral hire had appeared as counsel of record or were otherwise involved in the case in question. The following month, she instructed the Holleb lawyers not to discuss any Jackson National matters with Duane Morris personnel. And in July, after the lawyers joined the firm, Pratter sent out a firmwide e-mail confirming that no one from Duane Morris was to discuss Jackson National matters with the new hires. Kinnaird said that Jackson National did not cite “any case where an attorney has been prohibited from associating with a law firm based upon an alleged ethical violation. All of the authorities cited deal with the disqualification of attorneys from litigation.” Duane Morris was represented by Dechert’s Joseph A. Tate and David Howard as well as Richard Phelan and Dean Jeske of Foley & Lardner. “Jackson and its counsel knew full well it had no basis for this lawsuit. Duane Morris acted in accord with the highest levels of professional ethics and responsibility,” Tate said in a prepared statement. “Judge Kinnaird saw through the transparent effort by Jackson to harass and assault Duane Morris. Hopefully, this will put an end to a frivolous, unfounded piece of litigation.” But Jackson National’s attorney, Jay Eisenhofer of Wilmington, Ill.’s Grant & Eisenhofer, said Kinnaird’s ruling made several mistakes of law that have his client leaning toward appealing the judgment. “I think this is the first decision where a judge said you have to have proof of disclosure of client confidences in order to be successful against your former lawyer who switched sides,” Eisenhofer said. “The only rulings I’ve seen say that an effective screen keeps the lawyer in question away from witnesses in the case and the lawyers in the case. Reiter met with witnesses and with lawyers from Dechert, who are representing Duane. No, I can’t prove disclosure, but the burden of proof shouldn’t be that high.” In June, a Philadelphia Common Pleas judge denied a motion from Jackson National in the legal malpractice suit to disqualify Tate because of alleged communications the attorney had with Reiter. Judge Allan Tereshko took eight days after Tate filed a response claiming the motion was “factually and legally baseless” to enter his June 8 order. Since that time, Duane Morris has filed for summary judgment in that case, and Tereshko heard oral arguments last week. The lawsuit, filed in Philadelphia Common Pleas Court last July, alleges that Duane Morris helped Kennedy loot the Wayne, Ill.-based Benchmark of all its assets and seeks at least $61 million in damages. Local counsel for Jackson National in the Philadelphia case, captioned Benchmark Holdings v. Duane Morris & Heckscher, is Dana Pirone Garrity of James C. Schwartzman & Associates.

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