When it comes to imputing conflicts of interest, size really does matter. This much is clear from two recent decisions of the U.S. District Court for the Southern District of New York. At one end of the spectrum, Judge Naomi Reice Buchwald disqualified a small firm, notwithstanding the firm’s immediate creation of a substantial ethical wall when a lawyer with a conflict joined the firm. At the other extreme, Judge Jed S. Rakoff denied a motion to disqualify where a large firm concurrently represented both sides of a litigation, notwithstanding his finding that the firm had violated ethical rules and had been grossly negligent in failing to conduct an adequate conflict check.
Ethical Screen Insufficient
Judge Buchwald’s decision in Energy Intelligence Group, Inc. v. Cowen and Co.,1 underscores the challenges faced by small firms seeking to avoid the imputation of a conflict of interest affecting an attorney who joins the firm. Plaintiffs in that case alleged that defendant Cowen and Co. had engaged in copyright infringement by forwarding, without authorization, certain energy industry newsletters produced and sold by plaintiffs. After it was sued, in addition to retaining counsel to defend the litigation, Cowen retained two lawyers from Reed Smith to advise it on its copyright policies and practices. Cowen’s discussions with Reed Smith covered, among other subjects, Cowen’s business practices and use of copyrighted materials.
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