U.S. Magistrate Judge Jacqueline Corley, Northern District of California U.S. Magistrate Judge Jacqueline Corley, Northern District of California

Ignorance is no excuse.

In Ropes & Gray’s case, it’s not ignorance of the law, but ignoring a client’s ultimatum that led to the firm’s disqualification this week in a false advertising action.

U.S. Magistrate Judge Jacqueline Scott Corley disqualified Ropes & Gray on Monday from litigation over cancer diagnostics between Guardant Health Inc. and Foundation Medicine Inc. Corley found that Ropes & Gray breached its duty of loyalty by representing Redwood City, California-based Guardant in a patent prosecution matter while defending Cambridge, Massachusetts-based Foundation Medical (FMI) from Guardant’s false advertising suit.

Here’s Ropes & Gray’s side of the story: The firm spun out its patent prosecution practice to a stand-alone firm, Haley Guiliano, in June. A Guardant attorney had warned that if Ropes & Gray senior counsel James Haley didn’t finish an opinion letter by May 1, 2017, Guardant would have to find new counsel. When Haley didn’t respond, that confirmed that the attorney-client relationship was over, Ropes & Gray argued in its brief opposing the DQ motion.

Corley did not agree. “An attorney cannot just ignore his or her client and then assume that the client terminated the relationship,” she wrote in a Nov. 6 order. “This is grounds for referral for disciplinary action, not grounds for deeming the attorney-client relationship over.”

Guardant is a biotechnology company that specializes in DNA sequencing and cancer diagnostics, according to Corley’s opinion. The company acquired a patent, No. 7,700,286, on blood-based “liquid biopsies” and began prosecuting a new version known as a continuation. Guardant’s outside counsel at Wilson Sonsini Goodrich & Rosati were having trouble getting the continuation approved, so Guardant added Haley and Ropes & Gray to the team. The retention letter included a potential appeal to the Patent Trial and Appeal Board and, if unsuccessful, to the Federal Circuit.

Ropes & Gray’s engagement letter stated that representation will end “when we have completed our work on the matters for which you have engaged us, or when either of us informs the other that the representation has ended,” including by presentation of a final bill.

Guardant and Ropes & Gray got into a dispute over a bill that went over budget, and Ropes & Gray agreed to allocate some of the overage to future work on a 2016 PTO hearing and an opinion letter. In the meantime, FMI had sued Guardant for patent infringement in Texas. FMI was an existing Ropes & Gray client, though a different firm represented FMI in the Texas case.

From January through April 2017, Guardant attorney John Storella pressed Haley for the opinion letter. “Please confirm that you can provide Guardant with an opinion letter by May 1,” he wrote on April 1. “If not, I’ll have to find another firm to work on it.”

Ropes & Gray had already announced it was exiting the patent prosecution business. In June it entered its appearance for FMI in the Guardant false advertising action. Six days later Ropes & Gray announced that Haley would form Haley Guiliano. “Although there were news articles to this effect, there is no evidence regarding how this information was communicated to clients or Guardant,” Corley wrote.

The continuation patent application remains pending at the PTO, she wrote, and appeals remain a possibility, so the work described in the engagement letter hasn’t ended, Corley wrote.

Ropes & Gray argues that Guardant sought disqualification to deprive FMI of knowledgeable counsel just as Guardant was moving to enjoin FMI from telling oncologists that Guardant’s product is inferior.

Appeals aren’t part of the representation any more because the resolution of the fee dispute narrowed the scope of representation to the PTO hearing and the opinion letter, Ropes & Gray argued. By not responding to Storella’s email by May 1, Ropes & Gray was “discharged” from further representation, the firm argued in a filing signed by Ropes & Gray general counsel Eric Hubbard.

Corley found that the email outlining the fee resolution was sufficient. “The email identified particular work to be performed for a particular price,” she wrote, and “does not suggest that this is the only work Ropes & Gray would perform.”

“If Ropes & Gray intended to terminate its representation,” she added, “it needed to affirmatively withdraw from representation by sending a disengagement letter, final bill, returning Guardant’s file or more informally through a follow-up email or phone call. Absent its doing so, its representation continued.”

Guardant was represented by James Murphy and Geoffrey Macbride of Murphy Pearson Bradley & Feeney and Saul Perloff of Norton Rose Fulbright US.