It is well understood that a lawyer can have a disqualifying conflict of interest by having conflicting duties to current clients or because of a conflict between the duties owed to a current and a former client. This is the reason that, when a prospective client contacts a lawyer about possibly representation, one of the lawyer's first steps is to conduct a “conflict check” – that is, to see if representing a potential new client would create a conflict of interest for the lawyer or the lawyer's firm because of a relationship with another current or former client.

Conflicts checks are inherently imperfect for many reasons, including because of name changes through marriage, divorce or corporate merger, client affiliation with others, and the unavailability of complete information about firm lawyers who previously practiced elsewhere. The complexities that can be involved in identifying a conflict of interest were highlighted in a case recently decided by the California Court of Appeal (Winter v Menlo).

In 1983 and in 2004, Sam and Vera Menlo established several trusts for their children, grandchildren, and future generations. Sam and Vera were co-trustees of the 1983 trusts. They appointed Jeffrey Winter, Frank Menlo and Rafael Deutsch as co-successor trustees if either Sam or Vera ceased to act as trustee of the 1983 trusts and as immediate co-trustees of the 2004 trust.

Sam died in 2018. Vera survived him, but members of her family believed she was not able to manage her financial affairs.

In March of 2021, Jeffrey sought legal counsel to represent him in potential litigation against Frank. To protect the family’s privacy, court filings disclose few details about the issues involved, but we know that Jeffrey sent an email to Adam Streisand, a lawyer with the law firm Sheppard, Mullin, Richter & Hampton LLP, asking if Streisand would be conflicted out of representing him in litigation involving Frank. Streisand assured Jeffrey that there was no conflict. However, Streisand at first was unaware that Jeffrey intended to sue Frank.

Jeffrey in email exchanges with Sheppard Mullin shared information about the situation, including documents related to the dispute, his theory of the case, the identity of others who might be involved, and his understanding of Vera’s health condition. Streisand responded, again by email, with his understanding of the case, including Jeffrey’s theories and his belief that Frank exercised undue influence over Vera, all of which Jeffrey confirmed. All of this occurred without Jeffrey yet having hired Sheppard Mullin.

At this point Streisand understood that Jeffrey intended to sue Frank and conducted an additional conflict check that revealed that Streisand had previously represented Frank. Streisand informed Jeffrey that, because Frank was a former client, he could not represent Jeffrey in a lawsuit against Frank.

In December of 2022, Jeffrey filed a petition in probate court in Los Angeles. It sought to have Frank removed as a cotrustee, alleging financial elder abuse, breach of fiduciary duty, and other claims. Frank retained Streisand and Sheppard Mullin to represent him in opposing Jeffrey’s petition. Jeffrey asked the probate court to disqualify Streisand and Sheppard Mullin, citing Rule 1.18 of the California Rules of Professional Conduct.

That Rule defines a person who consults a lawyer about possibly retaining that lawyer for legal services or advice is a "prospective client;" even if no lawyer-client relationship results from that consultation, a lawyer who communicated with and received material information from a prospective client cannot then represent a client who is adverse to that prospective client “in the same or a substantially related matter.” The only exception to this prohibition is if both the affected client and the prospective client give informed written consent to the representation. The Rule generally imposes the same prohibition on all lawyers in the lawyer's firm.

Because of the strict obligations imposed by Rule 1.18, a lawyer communicating with a prospective client will generally limit the initial interview to the minimum information needed to determine whether a conflict of interest may exist. The disqualification of a lawyer under Rule 1.18 is likely to focus on the often thorny question of whether the lawyer limited the receipt of information in that way.

As Jeffrey requested, the probate court disqualified Streisand and Sheppard Mullin from representing Frank. Noting that Jeffrey had raised the issue of conflict of interest in his initial email, the trial judge said this should have caused Streisand “to hit the pause button until the conflict check was completed,” but he did not do so.

The judge said the extended communication with Jeffrey gave Streisand access to information that could be helpful to Frank in later litigation if Streisand used it, or that could harm Frank’s interest if Streisand felt compelled to avoid using it.

Disqualifying Streisand would burden Frank with the task and cost of finding a new lawyer, the court said, but that did not outweigh the reasons to disqualify Streisand.

Frank then appealed.

The appellate justices acknowledged that decisions about conflicts of interest often are not cut-and-dried. They noted that the State Bar’s materials discussing Rule 1.18 present a number of scenarios in which a potential client provides a lawyer with different types and amounts of information.

An important precedent involving claims of a conflict of interest, Syre v Douglas, turned on specific facts: Syre involved a prospective client who sought representation from a legal services agency. The Syre trial court had ruled, and the Court of Appeal there confirmed, that Rule 1.18 did not create a conflict that prevented the legal services agency from later representing the prospective client's adversary. The reasons for this conclusion included that the prospective client had spoken to a non-attorney intake worker, not a lawyer, and was informed that the case could not be taken until it has been reviewed by a committee of attorneys. Perhaps most important, the only confidential information provided was financial information needed to determine the prospective client's eligibility for representation, and this was not relevant to the agency's later adverse representation.

Unlike in Syre, Jeffrey had disclosed details to Streisand that went far beyond the minimum necessary for a lawyer to determine whether to accept the representation and included information likely material to the later litigation. This included Jeffrey’s theory of his case, confidential and material details, a document Frank had sent to Jeffrey, and Jeffrey's view of the status of Vera’s health.

Streisand’s knowledge of these and other details provided by Jeffrey, the justices said, could affect how he proceeded in representing Frank, and could even result in Streisand being called as a witness or having to withhold some information to avoid violating the duty of confidentiality he owed to Jeffrey as a prospective client.

In affirming the lower court’s ruling, the justices concluded that disqualifying Streisand and his law firm was necessary to “maintain ethical standards of professional responsibility and preserve the scrupulous administration of justice and the integrity of the bar.” They awarded Jeffrey his costs on appeal.

By Robert L. Kehr