AUSTIN – Texas law firms must adopt and enforce policies to prevent office workers from betraying secrets of firms where they previously worked, the Supreme Court of Texas ruled on Aug. 27.
"If a firm has formal, institutional screening measures in place, all employees of the firm will have greater understanding of the firm's expectations for guarding against conflicts of interest," Justice David Medina wrote.
Medina wrote that when a non-lawyer employee is given work to do on a "forbidden matter" and the employer reasonably should know about the conflict of interest, then disqualification is required.
"In the case of a small law office with only one employee, it may be that the lawyer will be required to perform some clerical functions on a matter from which the employee is screened," he wrote. "Yet this is a small burden when balanced against the threat of confidences being revealed and the protection of a client's confidential information."
The justices directed Cameron County District Judge Benjamin Euresti to disqualify the firm of Magallanes & Hinojosa in a medical malpractice suit.
The firm employed legal assistant Margarita Rodriguez, who had previously worked for lawyer William Gault at Brin & Brin, whose lawyers representing Valley Regional Medical Center.
Rodriguez had helped Gault defend Valley Regional in a suit filed by Magallanes & Hinojosa on behalf of plaintiff Yvonne Leal.
For Gault, Rodriguez filed investigative reports and records of strategy sessions and settlement negotiations. She also prepared correspondence to Valley Regional and its insurer.
When she left Brin & Brin, she signed an agreement obligating her not to work on any matter she had worked on with the firm.
Magallanes & Hinojosa hired her about a year later.
Gault found out and moved to disqualify Magallanes & Hinojosa as Leal's counsel.
At a hearing, lawyer J. A. Magallanes told Euresti he knew when he hired Rodriguez that she worked on the Leal case for Brin & Brin.
Magallanes told Euresti he orally instructed her not to work on any case with which she had prior involvement.
Rodriguez testified that she called Gault's assistant about a docket control conference, arranged to reschedule it and prepared an order on it.
Magallanes said that when he learned she rescheduled it, he told her and the employee in charge of the file that he would dismiss them if it happened again.
Rodriguez said that after the warning, she filed correspondence in the Leal case and marked dates on Magallanes's calendar.
She said he directed her to copy a birth certificate and a Social Security card in the case.
Euresti ordered Rodriguez not to be involved in any cases she worked on at Brin & Brin, but he denied disqualification.
Valley Regional sought mandamus relief, and 13th District appeals judges in Corpus Christi denied it.
They found that Magallanes & Hinojosa "took sufficient precautions to guard against any disclosure of confidences."
Valley Regional sought mandamus relief at the Texas Supreme Court, and achieved it.
Medina wrote that an attorney who has represented a client may not represent an adverse client in the same matter or a related matter.
"If the lawyer works on a matter, there is an irrebuttable presumption that the lawyer obtained confidential information during representation," he wrote.
When a lawyer moves to a firm representing an opposing party an irrebuttable presumption arises that he will share confidences with members of the second firm.
An office worker faces the same presumptions unless her new firm instructs her not to work on previous cases and takes reasonable steps to make sure she doesn't, he wrote.
He called disqualification a severe remedy and wrote that there were many reasons against granting it liberally.
He wrote, "We have stated that, as compared with lawyers, there is greater concern that the mobility of non-lawyers could be unduly restricted."
He quoted from a prior decision that, "If strict imputation were applied, employers could protect themselves against unanticipated disqualification only by refusing to hire experienced people."
In a serious conflict of interest, Medina wrote, public policy might balance in favor of disqualification.
He concluded that an informal admonition, even if repeated with threat of termination, does not count as a reasonable measure to shield an employee from litigation.
"A law firm that directs a non-lawyer employee to work on a forbidden case and that reasonably should know about the conflict of interest is not strictly adhering to a screening process," he wrote.
Medina rejected an argument that Brin & Brin should have enforced the agreement Rodriguez signed when she left.
"We refuse to shift the screening responsibility to the former client or its counsel," he wrote.
The decision noted that lawyers from Brin & Brin formed a new firm - Vidauri, Lyde, Gault & Quintana.
Gault, Michael Hatchell, Charles Watson Jr., Thomas Nye and Robert Clore represented Valley Regional.
Magallanes, Gilberto Hinojosa, Steve Kamel, Jack Washburn and Carlos Escobar represented Leal.