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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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<img style="max-width: 100%;height: auto;max-width: 100%;height: auto" loading="lazy" class="alignright size-medium wp-image-3272" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2017/05/Hot-potatoes-300x199.jpg" alt="potatoes covered in soil against white" width="300" height="199">Even though a Mississippi lawyer&rsquo;s conflict of interest lasted only one day, that was enough for a U.S. magistrate judge to disqualify him from representing a client adverse to Allstate Insurance Co. on a coverage claim, in a <a href="http://filehost.thompsonhine.com/uploads/McLain_vs_Allstate_ecbb.pdf">ruling</a> issued last week.&nbsp; Sending a termination letter to the insurer the day after accepting the new client&rsquo;s case didn&rsquo;t help the lawyer.&nbsp; The judge found that the lawyer&rsquo;s duty of loyalty required him to turn down the case, in light of the fact that he had pending cases in which he was directly representing Allstate.
Hot potato doctrine
The court recognized that the key issue in the case was whether the lawyer could drop Allstate as a client, turning it into a &ldquo;former client&rdquo; for purposes of the conflict-of-interest rules.&nbsp; If so, then the &ldquo;more lenient&rdquo; substantial-relationship test would apply, in which the court looks at whether the new client&rsquo;s matter is substantially related to the work the lawyer did for the former client.&nbsp; But if the lawyer takes on the new client&nbsp;and represents it&nbsp;concurrently with the now-adverse existing client without both clients&rsquo; consent, then the duty of loyalty under <a href="http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_7_conflict_of_interest_current_clients.html">Model Rule 1.7</a> has been breached.
The &ldquo;hot potato&rdquo; doctrine prohibits a lawyer from turning an existing&nbsp;client into a former client by &ldquo;firing&rdquo; it in order to accept an engagement adverse to the existing client.&nbsp; The 1987&nbsp;case that gave the principle its name is <a href="http://law.justia.com/cases/federal/district-courts/FSupp/670/1363/2594432/">Picker International, Inc. v. Varian Associates</a>, in which the federal district court judge said that &ldquo;A firm may not drop a client like a hot potato, especially if it is in order to keep happy a far more lucrative client.&rdquo;
Termination didn&rsquo;t cure impropriety
In the Mississippi case, the court said that the lawyer&rsquo;s conduct was understandable:&nbsp; he hadn&rsquo;t received any new work from Allstate in over a year; his firm was wrapping up its work on the &ldquo;handful&rdquo; of cases it still had, the majority of which were near&nbsp;the end of their life-spans; and the firm planned to end its relationship with the insurer based on the fact that it was not getting new work.
Nonetheless, said the judge, the lawyer and his firm had an attorney-client relationship with Allstate when the lawyer signed a contract to represent the claimant against the insurer, and he couldn&rsquo;t abandon his existing client by dropping it like a hot potato:&nbsp; &ldquo;In withdrawing representation of Allstate to pursue a new, more attractive representation, [the lawyer] violated the duty of loyalty he owed to Allstate.&rdquo;
Game of spuds
The question of when a client becomes a former client under conflict rules can be a nuanced one.&nbsp; For instance, the hot-potato doctrine may not operate when a conflict is &ldquo;thrust upon&rdquo; a law firm as a result of a client merger, the addition or&nbsp;new parties&nbsp;or other circumstance over which the firm has no control.&nbsp; Then, the firm may be able to choose to avoid disqualification by withdrawing from the representation that creates the conflict.&nbsp; See, e.g., <a href="http://filehost.thompsonhine.com/uploads/Sabrix_v._Carolina_Casualty_d12f.pdf">Sabrix, Inc. v. Carolina Casualty Ins. Co</a>. (D. Ore. 2003) (hot-potato rule did not apply where withdrawal followed another party&rsquo;s naming of additional defendant that created conflict).&nbsp; And timing matters, too.&nbsp;&nbsp;For example,&nbsp;if a firm has a new client in mind for the future, may it terminate an existing relationship in order to prevent a conflict?
Bottom line:&nbsp; Be careful in working through these conflict issues so you don&rsquo;t drop the ball &mdash; or the potato.

core/freeform

Ethics

Legal Ethics, Professional Responsibility and the Business of Law

One potato, two potato; hot potato brings DQ in Mississippi federal case