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Will That New Associate Get You Disqualified?

By Kasey T. Ingram

In these tough economic times, many attorneys are changing firms. When your firm takes on a new hire, you may be putting the firm at risk for disqualification from a large case. For example, suppose you literally just hired a superstar. Ima Superstar graduated from a top law school, clerked for a great judge and spent the last two years practicing at Big & Expensive, LLP (“B&E“), the most prestigious law firm in this region. Now she works for you. Even better, she spent her two years at B&E in the bankruptcy group researching and writing on complex issues. You were just retained by Mom & Pop Construction (“MPC“) to represent it as a creditor in the bankruptcy case of Grew Too Fast, Inc. (“GTF“). Superstar will help you prove that MPC's mechanic's liens have first priority on GTF's assets. This will be great. Or maybe not.

MegaBank was GTF's primary secured lender, and asserts that it holds a first priority lien on GTF's assets. B&E represents MegaBank. MegaBank files an adversary proceeding to determine lien priority. Just as the discovery process begins, B&E moves to disqualify you and your firm. B&E asserts that Superstar worked for B&E when it analyzed MegaBank's case. Thus, Superstar is disqualified from representing MPC and, by imputation, so are you.

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