CONSTRUCTION LAW FIRM HIRING OF LAWYERS AND NON-LAWYERS: RISKS AND REWARDS

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Franklin Hensley
6 years ago
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2 Hypothetical 1 Over the past twenty years you have gained a national reputation as a construction litigator. This morning you received a call from the general counsel of your firm's largest client (a chemical company). The general counsel wants you to represent the chemical company in a large construction case brought by a general contractor. The general counsel tells you that this is the most important case her company has ever faced, and that the amount at stake exceeds $100 million. You immediately order a conflicts check, and you just discovered that six months ago an associate you have never met (or even heard of) who works in a firm office you have never visited began representing the general contractor in an unrelated collection case involving $500. The collection matter is still very active. May you accept the representation of the chemical company in the construction case without the general contractor's consent? 1

3 Hypothetical 2 A small firm in your town is on the verge of breaking up. You think that this presents an opportunity for you to hire three associates now practicing with that firm. You canvass your colleagues to see what active matters you have against the other firm's clients, and you discover that there are only two active matters. One is a contentious lawsuit involving a mechanic s lien (your firm represents the owner) and the other is an acrimonious non-compete case (your firm represents the former employer). Your very brief discussions with the three associates working at the other firm reveal the following: (1) one associate has had no involvement with either case and does not know anything about them; (2) one associate has worked on the mechanics lien dispute for about six months; and (3) one associate has not worked on either matter, but has participated in the normal kind of "office gossip" about the non-compete case. You want to make sure that hiring these associates will not jeopardize your firm's role in either the mechanics lien or the non-compete case (you think there is a possibility that neither the other side in the mechanics lien case nor the hiring employer in the non-compete case would consent to your continued representation of their adversaries if you need their consent). 2

4 (a) If you hire the associate who has had no involvement in either matter, may your firm continue to represent the owner and the former employer without their adversaries' consent? (b) If you hire the associate who has been involved in representing the other side in the mechanics lien case, may you continue to represent the owner without the adversary s consent? (c) If you hire the associate who has engaged in "office gossip" about the noncompete case, may you continue to represent the former employer without the hiring employer s consent? (d) May you cure any possible conflict by creating an "ethics screen" before hiring the associates? 3

5 Hypothetical 3 You just received a call from your largest client, who wants you to file a case this afternoon against a local hospital. The matter involves a new emergency room addition to the hospital, which you know had many problems during construction. Your conflicts check reveals that six months ago, one of your partners opened a matter for the hospital, involving the very emergency room extension issues that your client wants to raise in its lawsuit against the hospital. That partner left your firm three months ago, and took the hospital with her as a client. May you represent your client against the hospital in the matter involving the emergency room extension? 4

6 Hypothetical 4 You serve on a state bar committee charged with considering possible ethics rules changes. Last week you were asked to consider the following question: Should the ethics rules governing a law firm's hiring of a lawyer leaving government service be different from the rules governing a firm's hiring of a lawyer from another private law firm? Your committee's meeting is set for this afternoon -- how would you vote? 5

7 Hypothetical 5 With recent state and city government down-sizing, you think you will have a good opportunity to hire a number of lawyers now practicing in the government. You want to address any conflicts ahead of time. You have asked your firm's "ethics guru" about the following scenarios: (a) First, one government lawyer has played a major role in resisting a challenge to your city's construction regulations. Your largest client is also helping defend the regulations, and you would like the government lawyer to work for your client on this matter after joining your firm -- because there is no adversity between your client's interests and the government's interests. If you hire this lawyer, may he work on this matter without obtaining your client's and the government's consent? (b) Second, one government lawyer has played a fairly minor role in a construction dispute in which your firm represents the general contractor (adverse to the government). Her only work on this matter involved reading and summarizing newspaper columns and Letters to the Editor about the construction dispute, and sending the summaries to her boss. If you hire this lawyer, may she work on the construction dispute without obtaining your client's and the government's consent? 6

8 (c) Third, one government lawyer has been in charge of your city's implementation of very strict construction requirements for apartments -- a regulation that your firm is challenging in a lawsuit. If you hire this lawyer, may she work on the apartment matter without obtaining your client's and the government's consent? (d) If the answer is no, may you avoid disqualification of your entire firm by setting up an "ethics screen" around this new lawyer? 7

9 Hypothetical 6 Your firm is looking to hire a lawyer who can help with your construction law practice, and you have your eye on a promising candidate who currently works in the city attorney s office of your jurisdiction. She is representing the city in two matters in which your firm represents private developers. You and she have spoken very preliminarily about the possibility of her leaving the government for private practice, but now you would like to offer her a job. Because she is a single mother, you suspect that she will not want to advise the city she is leaving until she has nailed down a job in the private sector. May you offer a job to the lawyer working in the city attorney s office? 8

10 Hypothetical 7 One of your largest clients was just served with a complaint and extensive document requests filed by one of its competitors. Your firm is stretched thin as it is, and you wonder how you will be able to staff this large effort. The head of your Hiring Committee has told you that she has heard of law firms hiring "temporary" lawyers for work on such projects. These "temps" could review documents on-line (using your firm's network), supervise legal assistants' work and prepare initial privilege logs. The Hiring Committee head gives you the name of a staffing agency which makes all the arrangements -- the agency pays the temporary lawyers and you write a single check to the agency each month (which, of course, includes the agency's fee). It sounds like a great idea, but you have a number of questions. (a) Must you perform a conflicts check for all of the "temps" you hire? (b) May you bill your client for the "temps" at an hourly rate that exceeds the hourly rate you must pay the agency for the "temps"? (c) Would the payment of a fee to the agency amount to fee-splitting for purposes of the ethics rules? 9

11 Hypothetical 8 In an effort to cut expenses in an upcoming document collection, privilege review and log creation project, you are considering a number of options. One of your young colleagues who recently moved in-house from a large Los Angeles firm has recommended that you use a cost-saving measure that her firm frequently used -- relying on lawyers and paralegals in Bangalore, India, to review the documents, search for privileged communications and prepare the privilege log for review by the outside counsel handling the case for you. (a) May you outsource these tasks to lawyers in India? (b) What ethics considerations will you have to address? 10

12 Hypothetical 9 Your law firm administrator just called to ask about an application she received from what appears to be an excellent prospect who has applied for a secretarial position with your firm. The secretary is currently working at another law firm in town, but plans to leave that law firm in two months because she is marrying one of the young partners at that firm. The secretary currently works for the other firm's chairman, who is a litigator handling two active matters adverse to your firm's clients. Your administrator thinks that this prospect would make an excellent secretary for your firm's chairman, but she has asked you a number of questions. (a) If you hire the secretary, will your firm be disqualified from the two cases that the other firm's chairman is handling adverse to your firm's clients? (b) If you hire the secretary, will your firm be disqualified from handling matters in which her fiancée is representing your firm's adversaries? (c) Would different rules apply if the secretary were already married to the lawyer in the other firm? 11

13 Hypothetical 10 Two years ago, a paralegal with whom you work suggested that his neighbor hire your firm to handle a construction case for a general contractor (which your paralegal s uncle owns) against an owner. Your firm just settled the case for $2 million, meaning that your firm's contingent fee will amount to over $600,000. You think that the firm should pay a hefty bonus to the paralegal. May your firm pay a bonus to the paralegal for recommending that your firm handle the construction case? 12

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