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Judicial tinkering with attorney-client relationships is a sure way to get a lawyer’s attention. Lobbing a hand grenade at them is quite another matter. Some defense attorneys, and even prosecutors, are worried that a recent decision by the 9th U.S. Circuit Court of Appeals does just that, and many say members of the defense bar will have to tighten up their practices to avoid getting bumped off a case. Joint defense agreements, common in civil and criminal cases, are used to pool resources and share information, and have long been recognized by courts as a valuable legal tool that brings efficiency and order to complex cases. The problem is that the agreements create attorney-client relationships among the various defendants and their lawyers. That can complicate things when one defendant decides to enter a plea or otherwise becomes adverse to the remaining defendants. The 9th Circuit’s decision last August in United States v. Henke, 222 F. 3d 633, overturned convictions against two former California Micro Devices executives after their lawyers argued that they should have been allowed to step away from the case because they could not cross-examine a former defendant who testified for the prosecution. A government request for clarification prompted another round of briefing but ultimately fell on deaf ears, with the 9th Circuit refusing last month to grant rehearing. One judge, D. Lowell Jensen, has already cited Henke in excusing Morrison & Foerster from a case, and posited in open court that defendants involved in such agreements may now need them explained by a second lawyer — a Henke lawyer, if you will. Another judge, Charles Legge, has wondered aloud if Henke applies to civil defense agreements as well. Legge said that he doesn’t see why it would not — and many lawyers agree. Significantly, the 9th Circuit said that all attorneys involved in a joint defense agreement have ethical obligations to all defendants, a point that seemingly opens up a Pandora’s box of practical problems. Chan Desaigoudar and Steven Henke, two former top executives of California Micro Devices Corp., were convicted in 1999 for securities fraud and insider trading. The convictions were based, in large part, on the testimony of the company’s former president, Surendra Gupta. Gupta had been indicted along with Desaigoudar and Henke, but shortly before trial agreed to testify for the government under a plea agreement. Because of the joint defense agreement, the remaining defense attorneys sought to withdraw from the case, arguing that they could not effectively cross-examine Gupta, who had become the government’s key witness. U.S. District Judge Vaughn Walker denied the motion, holding that there was no harm because the defendants’ new lawyers, if the motion were granted, would not know about the impeaching information anyway. In other words; no harm, no foul. Gupta was never cross-examined. Several issues were raised on appeal. While the court tried to minimize the potential impact of its ruling — “Nothing in our holding today is intended to suggest … that joint defense agreements are in and of themselves disqualifying,” the court’s unsigned opinion noted — several defense attorneys say the impact is significant and still to be resolved. Similarly, the government has its concerns about the decision. “We intend to raise the issue as early as possible in front of judges,” said Assistant U.S. Attorney David Shapiro, head of the criminal division. In its petition for rehearing, the government laid out some of the potential problems with Henke. “This court’s ruling has the potential to disrupt every case in which defendants agree to cooperate with the government,” wrote Assistant U.S. Attorney Douglas Wilson. “Under the court’s ruling, any attorney who learns confidential joint defense information may face disqualification if he finds himself in a position where it might be useful to his client to use that information.” But Henke and Desaigoudar’s new appellate counsel argues that lawyers, and not judges, can solve the problems identified in Henke. “Future agreements will doubtless be guided by the panel’s decision to incorporate enhanced conflict-avoidance and waiver provisions,” wrote Doron Weinberg in court papers. Sanford Svetcov, the Milberg Weiss Bershad Hynes & Lerach partner who helped argue the case on appeal, said it will only trip up lawyers who are “not as careful as they should be.” Others agreed. “Lawyers who are doing their job are not going to get bitten by Henke,” said defense attorney Nanci Clarence of Clarence & Snell, who had no role in the case. The several recommended solutions come down to this: Be careful. Make sure the defense agreements are thorough and preferably contain a provision that if a defendant testifies for the government, the attorney-client privilege is waived. Attorneys also recommend thorough, independent investigations that don’t rely on the statements of co-defendants. And, most important, don’t bring your clients to defense meetings. Still, if lawyers aren’t careful, any number of scenarios could trigger a Henke problem, and the 9th Circuit didn’t provide much guidance. “Everybody’s afraid they’re going to get bumped out of the case,” said sole practitioner Jerrold Ladar. And under federal law, there is no recourse. Once a judge rules a lawyer is off the case, there is no appeal. The potential pitfalls run the gamut. Shapiro points out there are scenarios that could trigger a Henke problem even without a defendant cooperating with the government. Say one defendant’s testimony implicates another defendant. Can he be cross-examined by other members of the defense team? “What happens in that case?” Shapiro asks. “Do you have to declare a mistrial? That’s a problem. That’s a serious problem.” Or take this scenario: Henke is invoked and a defendant’s new lawyer calls the ex-lawyer to testify about what was said at a joint defense meeting. If the two parties disagree, the only way to get to the truth may be to call to the stand every other defense lawyer present at the meeting in question. “Then it becomes a battle of all these lawyers about what really happened at a meeting,” Shapiro said. Henke’s former lawyer, Patrick Hallinan, agrees that a condition of testifying for the government should be the loss of the joint attorney-client privilege. But he goes one step further, recommending a kind of “don’t ask, don’t tell” policy in which the government and the cooperating witness would be prohibited from discussing information learned through joint defense meetings. “They [the witnesses] can’t disclose and the government can’t ask,” Hallinan said. The ultimate solution will doubtless be shaped in the coming months as lawyers and judges sort through the aftermath of the decision. “The answer to the decision in Henke is that lawyers shouldn’t shy away from joint defense agreements but should be careful about how to handle them and how to construct them,” Svetcov said. “You can’t put yourself in a position of obtaining confidential information and then going to testify for the government without accounting for that.”

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