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Keywords

litigationlawyermotionpatentduty of loyalty
attorneylawyerappealwillduty of loyalty

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Picker Intern., Inc. v. Varian Associates, Inc., 869 F.2d 578, 57 USLW 2578, 10 U.S.P.Q.2d 1122

Facts

Prior to the merger on February 1, 1987, Jones Day had a long-standing relationship with Picker, while McDougall, Hersh & Scott (MH & S) represented Varian. Concerns about conflicts of interest arose when Varian refused to consent to the proposed dual representation after the merger. Following Varian's motion to disqualify Jones Day, both district courts ruled that the merger created an irreconcilable conflict of interest, leading to the disqualification of Jones Day from representing Picker in ongoing litigation against Varian.

On February 1, 1987, the law firms of McDougall, Hersh & Scott (MH & S) and Jones Day merged. Prior to the merger, Jones Day had a long-standing attorney-client relationship with Picker, and MH & S with Varian.

Issue

Whether the merging law firm, Jones Day, could continue to represent Picker in patent litigation against Varian despite the conflict of interest arising from the merger with a firm that represented Varian.

In order to avoid a conflict of representation between two clients and comply with [Disciplinary Rule (DR)] 2–110 and DR 5–105, may a merging law firm (a firm consisting of two law firms which are about to merge) withdraw from representing one of those clients in all matters, even if the conflict between the clients exists as to only one matter?

Rule

Under the Model Code of Professional Responsibility, particularly DR 5–105, a lawyer must not continue multiple employment if it is likely to adversely affect their independent professional judgment on behalf of a client or involve them in representing differing interests.

DR 5–105(B) requires that a lawyer 'not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, or if it would be likely to involve him in representing differing interests….'

Analysis

The court found that the merger created a conflict of interest as Jones Day sought to represent both Picker and Varian in separate matters. Varian's refusal to consent to dual representation and the incomplete withdrawal of MH & S from representing Varian in ongoing cases meant that Jones Day's continued representation of Picker violated the duty of loyalty owed to Varian. The courts determined that disqualification was necessary to resolve the conflict.

MH & S's planned merger with Jones Day would certainly result in the merged firm taking a position adverse to a present client, Varian, because the merged firm, if it followed the wishes of its merging predecessors, wanted to continue to represent Picker in its action against Varian, as well as represent Varian in the Genus action.

Conclusion

The court affirmed the disqualification of Jones Day as counsel for Picker International, Inc., concluding that the district courts did not abuse their discretion in ruling that the merging law firm must withdraw from the case involving Varian.

Accordingly, in response to the certified question of appeal from the Northern District of Ohio, where the district court answered no, we conclude that the district court did not abuse its discretion in ruling that this merging law firm must withdraw from the one case that provides the conflict, Civil Action No. C86–327, instead of ending its relationship with Varian, one of its clients.

Who won?

Varian Associates, Inc. prevailed in the case as the court upheld the disqualification of Jones Day, emphasizing the importance of maintaining the duty of loyalty to existing clients.

The district court in Ohio found that Varian was a client of the newly merged firm; it therefore ruled, in accordance with the language and precept of DR 5–105, i.e., the duty of loyalty firms owe existing clients, that the new firm had to withdraw from the one case which produced the conflict, Picker International, Inc. v. Varian Associates, Inc., 670 F.Supp. 1363 (N.D.Ohio 1987), rather than terminate its long-standing relationship with Varian and its representation of Varian in various matters.

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