Do you toil in the pressure cooker of a firm, but dream of going in-house? Many lawyers have that goal. But the churn works in the other direction, too, with in-house lawyers migrating to firms or solo practice. When they do, they can face conflict of interest issues leading to disqualification, as a former in-house lawyer for Rolls-Royce discovered earlier this year.
A luxury ride
Donald Little was in-house counsel for Rolls-Royce for more than 10 years. A couple years after he left, he represented Rolls-Royce as outside counsel in a suit by Davis S.R. Aviation, defending against allegations that Rolls-Royce made false statements about airplane engine parts in order to prevent Davis from selling engines on the open market. That case settled.
Then, in 2016, a different plaintiff filed suit against Rolls-Royce under the False Claims Act, but based on the same constellation of facts as Davis, centering on the alleged use of defective parts in a U.S. Air Force aircraft. The qui tam plaintiff alleged that Rolls-Royce improperly used the parts, resulting in a crash, and that it submitted false documents and invoices for payment to the air force.
Little became one of the lawyers for the qui tam plaintiff in the False Claims Act case.
Rolls-Royce moved to disqualify Little, as well as to dismiss the case. The magistrate judge recommended disqualification and dismissal, and the U.S. district court for the Western District of Texas overruled the plaintiff’s objections and accepted the recommendation.
The rubber meets the road
In its opinion, the district court noted that the magistrate judge had “expressed disbelief at Little’s insistence that he should not be disqualified” in light of his prior work for Rolls-Royce, in a matter substantially related to the qui tam suit.
The Texas version of Model Rule 1.9 (Duties to Former Clients) is codified in Rule 1.09(a) of the Texas Disciplinary Rules of Professional Conduct. Like the Model Rule, the Texas version bars representation adverse to a former client in the same or a substantially related matter, except with the former client’s consent.
In the view of the magistrate judge and the district court, this was a no-brainer: it was “a clear violation” of the conflict rules for Little to represent the plaintiff adverse to Rolls-Royce in the qui tam action, because it was substantially related to his prior work in-house for Rolls-Royce, and to the Davis case, in which Little had represented Rolls-Royce as outside counsel.
In-house counsel take heed
Migrating from a berth as in-house counsel to being outside counsel raises former-client conflict issues that you – and your new employer – must be aware of. As the Association of Corporate Counsel has pointed out, all the ethics rules apply with equal force to in-house counsel. Even lateral moves, from a company law department to the same post with a competitor can raise some thorny former-client conflict issues. See Dynamic 3D Geosolutions LLC v. Schlumberger Ltd. (Schlumberger N.V.), 837 F.3d 1280 (Fed. Cir. 2016) (affirming disqualification of plaintiff’s in-house counsel and outside counsel in patent infringement case; plaintiff’s in-house counsel was defendant’s previous deputy GC). Be aware, and you can avoid the risk of disqualification.