A Philadelphia judge has disqualified Drinker Biddle & Reath from defending a pharmaceutical consulting company and its CEO in a battle over ownership of the company.
Drinker Biddle had been representing Excellis Health Solutions LLC and its CEO, Gregory Cathcart, in a dispute over Roger Saumure’s ownership interest in Excellis. In an order filed Oct. 18, Philadelphia Court of Common Pleas Judge Ramy Djerassi said allowing Drinker Biddle to continue representing them would violate Pennsylvania Rules of Professional Conduct 1.13 and 1.7.
“Because a lawyer retained by an organization represents that organization, a lawyer’s dual representation of an organization and a majority member who controls that organization may pose a conflict of interest,” Djerassi wrote, with regard to Rule 1.13. “Drinker’s dual representation of EHS and Cathcart presents such a conflict.”
Under Rule 1.7, the opinion said, Drinker Biddle cannot even represent one of the two parties.
“Either way, it is foreseeable that further discovery may prompt cross claims between Cathcart and EHS,” the opinion said.
It’s also possible that the Drinker Biddle lawyer who works with Excellis would be called as a witness, which would violate rule 3.7, Djerassi said.
Saumure and Cathcart started forming Excellis in 2010, and the company retained Drinker Biddle, which helped draft operating agreements for the company. According to Djerassi’s opinion, Cathcart sent an email to Saumure in 2011 that showed framework for the company in which Saumure would have an 18 percent membership interest in Excellis. That email and the draft operating agreements form the basis of Saumure’s argument that he should own 18 percent of the business, the opinion said.
But in 2013, the opinion said, Cathcart allegedly executed an operating agreement, prepared by Drinker Biddle attorneys, in which Saumure got no ownership interest and Cathcart got 100 percent.
In his complaint, filed in December 2016, Saumure alleges that Cathcart hid the 2013 agreement from him and that the 2013 agreement is void because it violates a 2011 oral agreement. Saumure also alleged self-dealing by Cathcart, claiming he awarded himself excessive compensation.
After Saumure filed the complaint, David Woolf and Dennis Mulgrew of Drinker Biddle entered their appearance for Excellis and Cathcart. Saumure filed a motion to disqualify.
King of Prussia lawyer Edward Robson, who is representing Saumure, said he is pleased with the court’s decision.
“It affirms that a limited liability company is a legal person that is separate from its owners and entitled to robust representation from independent counsel,” he said. “The conflict that the court addressed is a common one and we hope that the opinion will provide guidance in the future to counsel seeking to avoid ethically untenable representations.”
Woolf, of Drinker Biddle, said he disagrees with the judge’s decision, and noted that the lawyers who worked on the operating agreements were not involved with the litigation.
“The important thing from our perspective is, whether it’s through us or they get other counsel … it doesn’t impact the merits of the case. In the end it’s a very strong case for our client,” Woolf said.