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Keywords

lawsuitplaintifflawyermotiontrustcorporationantitrust
lawsuitplaintiffdefendantlawyertrustantitrust

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International Business Machines Corp. v. Levin, 579 F.2d 271, 1978-1 Trade Cases P 62,114

Facts

The plaintiffs, Howard S. Levin and Levin Computer Corporation, filed a lawsuit against IBM alleging violations of the Sherman Act after IBM refused to extend credit for purchasing computer equipment. CBM had previously represented both Levin and IBM in unrelated matters, leading to a conflict of interest when CBM filed the antitrust suit. IBM moved to disqualify CBM, claiming the firm violated ethical rules by representing both parties without obtaining consent.

Issue

Did CBM violate the ethical rules of professional conduct by representing both IBM and the plaintiffs without obtaining IBM's consent, and was the disqualification of CBM justified?

The court held that: (1) although law firm representing plaintiffs in suit had no specific assignment from corporate defendant on hand on day antitrust complaint was filed and even though law firm performed services for defendant on a fee for service basis rather than pursuant to a retainer arrangement, where pattern of repeated retainers, both before and after filing of complaint, supported finding of a continuous relationship, law firm was obligated at the very least to disclose fully to defendant the facts of its representation of the plaintiffs and obtain its consent, in absence of which it was properly made subject to disqualification.

Rule

Under the American Bar Association's Code of Professional Responsibility, a lawyer must decline employment if their independent professional judgment is likely to be adversely affected by representing multiple clients, unless full disclosure and consent are obtained.

The pertinent rule of the Code of Professional Responsibility, which Code the district court adopted in 1970 under its Local Rule 6 as the controlling standard of conduct for the members of the bar practicing before it, provides as follows: 'DR 5-105 Refusing to Accept or Continue Employment if the Interests of Another Client May Impair the Independent Professional Judgment of the Lawyer.'

Analysis

The court found that CBM had a continuous relationship with both IBM and the plaintiffs, which required CBM to disclose its representation of the plaintiffs to IBM and obtain consent. The court determined that CBM failed to meet this obligation, as there was no evidence of full disclosure or consent from IBM regarding the dual representation.

The court also found that although the services required of CBM by IBM dealt consistently exclusively with labor matters, this was not the result of any special arrangement between them and that at any time IBM, unaware of CBM's participation in the plaintiffs' action, might have sought CBM's assistance in legal matters more closely related to the lawsuit.

Conclusion

The court affirmed the disqualification of CBM from representing the plaintiffs due to the failure to disclose the conflict of interest and obtain consent from IBM. The court also allowed CBM to assist in the transition to new counsel for a limited period.

Petition dismissed; order amended and affirmed.

Who won?

IBM prevailed in the case as the court upheld its motion to disqualify CBM, finding that CBM's dual representation without consent violated ethical standards.

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