X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Michael A. Reiter, an attorney in Duane Morris & Heckscher’s Chicago office, can stay put, an Illinois appellate court has ruled. The decision in Jackson National Life Insurance Co. v. Michael A. Reiter and Duane Morris & Heckscher affirms the trial judge’s opinion that an ethical screen erected between Reiter — who at a previous firm had represented Jackson, which is suing Duane Morris for legal malpractice — and his new firm adequately protected the insurance company. The circumstances at issue in the underlying legal malpractice action started in 1995 when Duane Morris represented both Jackson and Michael T. Kennedy, the principal shareholder in Benchmark Holdings Inc., in the sale of the plastic utensil manufacturer’s assets. Jackson was a preferred shareholder in Benchmark. After the sale, Kennedy received $2 million in cash and a business with annual sales of $300 million, according to the opinion. Duane Morris received $1 million in fees. Jackson, however, received nothing. The company said it did not even know about the sale until six months after it had closed. Jackson hired the Chicago firm of Holleb & Coff to investigate any claims it might have against Kennedy and Duane Morris. During that time, Reiter was the senior litigation partner at Holleb and represented Jackson from April to mid-May 1996. DUANE MORRIS DEFECTION In July 1999, Reiter was one of five partners to leave Holleb for a position with Duane Morris when the Philadelphia firm opened an office in Chicago. Neither Reiter nor Duane Morris informed Jackson of the new relationship. When Jackson learned about it from other sources on July 20, 1999, the firm sent a letter to Duane Morris saying that the defecting Holleb attorneys could not “legally and ethically” join Duane Morris, because the attorneys had represented Jackson and Benchmark in the 1996 case. Although Duane Morris general counsel Gene E.K. Pratter responded to the letter, saying that Duane Morris had met its obligations under the Pennsylvania and Illinois Rules of Professional Conduct and that it had set up “an ethical wall or screen that precludes any discussion by or with the former Holleb & Coff lawyers about Jackson National,” Jackson filed an emergency temporary restraining order and a complaint for injunctive relief on July 29, 1999. The complaint alleged that, among other things, Jackson would suffer irreparable injury if Reiter affiliated with Duane Morris, because he had been privy to privileged and confidential information about Jackson while at Holleb. BILLING Jackson submitted billing records in support of the motion which showed that Reiter billed almost 22 hours for Jackson from April 1996 to May 1996 and a “privilege log” documenting correspondence between Reiter and Jackson counsel. Although Reiter had said he worked five hours or less on Jackson matters, when confronted with the Holleb billing records, he did not dispute the number of hours. Rather, Reiter said that the 21.75 hours recorded represented “approximately 1 percent” of his total hours worked in 1996. On Aug. 5, 1999, the court denied Jackson’s motion for a TRO, finding that Jackson failed to show irreparable harm, and that Reiter’s affidavit — which stated that he had not and would not disclose confidences — eliminated any threat necessary to justify a temporary restraining order. In July 2000, Duane Morris and Reiter filed a motion for summary judgment, with Reiter reiterating, “I have never and will never use or reveal any client confidence without the consent of the client.” The court granted the motion, finding no evidence that Reiter had disclosed any Jackson confidences or that he had used any information to Jackson’s disadvantage. Jackson filed a cross-motion for summary judgment, which was denied. The opinion filed Aug. 24 was a response to Jackson’s appeal. DECISION On appeal, Jackson argued the court erred when it denied Jackson’s discovery request and in refusing to consider “alternative relief” proposed by Jackson. “Contrary to Jackson’s assertion, there are no disputed questions of fact regarding whether the ethical screen imposed by [Duane Morris] was effective,” wrote Illinois Appellate Court Judge Michael J. Gallagher, who was joined in the opinion by Judges Calvin C. Campbell and Robert Chapman Buckley. “All the facts relating to how the screen was implemented and what it encompassed are not in dispute.” Gallagher said Jackson had not met its burden to show that Reiter’s continued affiliation with Duane Morris would violate the Illinois Rules of Professional Conduct. Unlike most other conflict cases, in which an attorney represents a party adverse to the attorney’s former client, the judge said, here, the adverse party was not a former client, but the law firm itself. “Reiter has, in essence, become an adverse party due to his partnership in [Duane Morris],” he wrote. “There is no ethical rule which prohibits an attorney from affiliating with a law firm that is being sued by a former client of the attorney.” Since there were no cases that gave authority for the Reiter situation, Gallagher applied the Illinois Professional Responsibility rule for disqualification since it was “the only rule that comes close to covering this situation.” The disqualification rule required an initial determination of whether the subject matter of prior representation was “substantially related” to the current representation; Gallagher said that it was. The “substantially related” matters create a rebuttable presumption that the attorney will intentionally or inadvertently share confidences with the attorneys at his new firm. “However, an effective ethical screen or ‘Chinese wall’ can be used to rebut the presumption that the confidences were shared with the other members of the new law firm,” Gallagher wrote. “As Jackson correctly states, the burden is on defendants to prove that Reiter did not and would not share Jackson’s confidences. We find that defendants did so here through use of an ethical screen.” ETHICAL SCREEN The court relied on the standard set forth in Cromley v. Board of Education of Lockport, a 1994 decision from the 7th Circuit, that an ethical screen within a law firm is effective “so long as [it] accomplish[es] the central purpose of preventing the conflicted lawyer from transmitting client confidences to the rest of the firm.” Cromley also stated that the presumption of shared confidences can be rebutted by showing that “specific institutional mechanisms” were implemented to “effectively insulate against any flow of confidential information from the ‘infected’ attorney to any other member of his present firm.” Here, Pratter had taken affirmative steps to determine whether there was a conflict of interest as soon as the Holleb & Coff attorneys were considered for hiring by Duane Morris, the panel said. She interviewed the attorneys and admonished them that they were not to discuss Jackson with each other. She later sent e-mails reminding the attorneys not to discuss Jackson. Additionally, Reiter and the other Holleb attorneys brought no files or electronic data with them to Duane Morris. Consequently, there was no need to have safeguards necessary to “lock out” access to such documents or files, the judges said. “Implicit in Jackson’s position is the contention that Reiter and the other [Duane Morris] affiants, who are members of the bar, intend to violate both their oath in the affidavit and their oath to uphold our ethical rules. We refuse to make such a leap of bad faith as to members of the bar,” the panel wrote. “Their uncontroverted affidavits are sufficient to rebut the presumption that Reiter would disclose Jackson’s confidences.” The panel affirmed the trial court decision, putting the collateral matter to rest. But in the meantime, the underlying legal malpractice case over the sale of Benchmark, Benchmark Holdings Inc., et al v. Duane Morris & Heckscher, marches on in Philadelphia Common Pleas Court. A pretrial conference in the case is reportedly scheduled for November. Both Pratter and Jay W. Eisenhofer of Wilmington, Del.’s Grant & Eisenhofer, who represents Jackson, were unavailable to comment at press time.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.