Dudhia v Agarwal

[*1] Dudhia v Agarwal 2019 NY Slip Op 29339 Decided on November 4, 2019 Supreme Court, New York County Cooper, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on November 4, 2019
Supreme Court, New York County

Ashiya Dudhia, Plaintiff,

against

Niraj Agarwal, Defendant.



305947-2017



For the Plaintiff

Warshaw Burstein, LLP

555 Fifth Avenue

11th Floor

New York, NY 10017

For the Defendant

Cohen Clair Lans Greifer Thorpe & Rottenstreich, LLP

885 Third Avenue

32nd Floor

New York, NY 10022
Matthew F. Cooper, J.

In a memorable episode of The Sopranos, mob boss Tony Soprano consults with multiple top divorce attorneys in the area so in the event his wife Carmela decides to divorce him, she will be hard-pressed to find attorneys who will not be required to ethically preclude themselves from taking her as a client. Here, in what appears to be life-imitating-art-imitating-life, the plaintiff-wife consulted with at least two well-known New York City matrimonial law firms and then briefly retained a third when she was contemplating suing her husband for divorce. After plaintiff commenced the action, the defendant-husband sought to retain the two firms that his wife had consulted with, each of which declined to take his case as a result of the consultation. Plaintiff now seeks to prevent the third firm, Cohen Clair Lans Greifer Thorpe & Rottenstreich, LLP (Cohen Clair), from representing her husband in the action.

Defendant, in opposing plaintiff's motion to disqualify his counsel, stops short of accusing his wife of engaging in a premeditated Soprano-like gambit designed to prevent him from being ably represented. He contends, however, that plaintiff has no reason to be concerned about her confidences being violated, and he charges that what she attempts to depict as a textbook conflict requiring disqualification is simply a pretext to bar him once more from being [*2]represented by the law firm of his choice.

Plaintiff, for her part, maintains that she is only seeking to protect herself from any harm that could result from her having previously retained the law firm that is now representing her husband. While she acknowledges that her contact with Cohen Clair was brief, being limited to the very short time that her present attorney was an associate there, and occurred a number of years before she actually filed the divorce action, she nevertheless contends that the slightest possibility that the firm may have retained confidential information garnered from her is sufficient to warrant disqualification.

As will be discussed at greater length, a threshold issue that the court needs to determine in deciding this motion is which of two legal standards for disqualification should be applied. The first, the "per se rule of disqualification," which might be considered the more traditional view, and remains ingrained in the popular imagination, is the more absolute one. Under this standard, even the mere appearance of a conflict occasioned by a client having met just briefly with a lawyer in a professional setting may be enough to create an irrebuttable presumption in favor of disqualifying that lawyer's law firm from representing an adverse party under any circumstances. The other standard, "imputed disqualification," which might be considered the more modern and evolving view, is a fact-specific one, and gives rise only to a rebuttable presumption in favor of disqualification. Under this standard, if the lawyer in question is no longer with the law firm, the focus is squarely on whether the remaining members of the firm have actual knowledge of a former client's confidences and have taken all steps necessary to reasonably assure the former client that his or her expectations of confidentiality have been protected.

Not surprisingly, plaintiff urges the court to utilize the per se rule, with its irrebuttable presumption, while defendant maintains that the court should instead be guided by the principles of imputed disqualification and allow his attorneys the opportunity to rebut any presumption in favor of disqualification. In arguing in favor of a standard of per se disqualification, plaintiff contends that imputed disqualification is applicable only in cases involving large, departmentalized law firms employing scores of lawyers, and not to Cohen Clair, a 20-person firm that she labels a "small matrimonial boutique." Should this argument fail, plaintiff takes the position that even if the court finds the presumption of disqualification to be rebuttable, it must still consider the size and structure of Cohen Clair to be determinative factors necessitating its removal from the case.

Background

On November 21, 2014, plaintiff and her present attorney, who was then an associate at Cohen Clair, participated in a consultation regarding plaintiff's intention to sue defendant for divorce. Plaintiff alleges that a second attorney, a partner at Cohen Clair, was present for the consultation. One page of notes allegedly taken during the consultation appear to be in a different handwriting from plaintiff's or her attorney's and purportedly support the assertion that someone else was present at the meeting.[FN1]

Somewhat peculiarly, even though plaintiff claims to "vividly" recall details as to what was discussed at this hour and a half consultation almost five years ago, neither plaintiff nor her attorney can recall which partner was actually present, and no billing records exist that identify the mystery participant. Cohen Clair, for its part, states it has no record of any attorney other than plaintiff's current attorney interviewing the plaintiff, and none of the lawyers now at the firm have a recollection of meeting with plaintiff or being involved with her case.

Plaintiff subsequently retained Cohen Clair, but worked exclusively with her present attorney. After billing $1,357 with Cohen Clair on this matter (which equated to less than 2.5 hours of legal work), plaintiff's attorney left the firm in late March 2015 and joined Warshaw Burstein, LLP (Warshaw), where she took plaintiff as her client in early April 2015.[FN2]

Plaintiff commenced the action for divorce in August of 2017. Although initially represented by another firm, defendant chose to retain Cohen Clair to represent him in December 2018. After a series of letters between counsel were unsuccessful in resolving the dispute over defendant's retention of Cohen Clair, plaintiff made this motion seeking the firm's disqualification. Part of the relief sought was a restraining order barring further substantive communications between defendant and anyone at Cohen Clair pending the determination of the motion, as well as an order by which the court would conduct an in camera review of the unredacted notes from the November 21, 2014 meeting. The court granted both applications. Defendant cross-moved for a hearing and various forms of disclosure to be granted in the event the court determined it could not deny plaintiff's request for disqualification on the motion papers and oral argument alone.

Legal Standard for Disqualification of Opposing Counsel

The general rule is that a movant seeking to disqualify his or her adversary's counsel on the basis of having previously been represented by that counsel must establish that: (1) an attorney-client relationship existed; (2) the matters involved are substantially related; and (3) the interests of the present and former client are materially adverse (see Matter of Janczewski v Janczewki, 169 AD3d 795 [2d Dept 2019]; see also Lyons v Lyons, 50 Misc 3d 876 [Sup Ct, Monroe County 2015]). Neither side disputes that plaintiff has met these basic requirements, and has thus raised a presumption of disqualification. What is disputed is whether the presumption is rebuttable or irrebuttable, a determination which, in turn, is based on whether the appropriate applicable standard is imputed or per se disqualification.

Defendant argues that inasmuch as this case involves the attempted disqualification of a law firm where the attorney involved in the prior representation has left the firm, imputed disqualification is applicable. This is in contrast to plaintiff's position that because Cohen Clair is what she deems to be a "small" law firm, it must be subject to the far more restrictive standard of per se disqualification.

There is an ample body of legal authority that addresses disqualification where, as here, it is sought against a law firm that previously employed the attorney with whom the movant may have shared confidences. Rule 1.10 (b) of the Rules of Professional Conduct is particularly instructive. In invoking the principles of imputed disqualification, the Rule clearly provides for a [*3]rebuttable presumption, even where confidential information has been transmitted. It states:

"When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless: (1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and (2) any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9 (c) that is material to the matter."

Case law also emphasizes this important distinction regarding imputed disqualification. As the Court of Appeals explained in Kassis v Teacher's Ins. & Annuity Ass'n, (93 NY2d 611, 616-617 [1999]):

"As we made clear in Solow [v W. R. Grace & Co., 83 NY2d 303 (1994)], imputed disqualification is not an irrebuttable presumption. A 'per se rule of disqualification,' we stated, 'is unnecessarily preclusive because it disqualifies all members of a law firm indiscriminately, whether or not they share knowledge of former client's confidences and secrets.' Such a rule also imposes 'significant hardships' on the current client and is subject to abusive invocation purely to seek tactical advantages in a lawsuit. Additionally, a per se disqualification rule 'conflicts with public policies favoring client choice and restricts an attorney's ability to practice'" (citations omitted).

In other words, while the so-called "per se rule of disqualification" may very well be appropriate to disqualify individual attorneys substantially involved in the prior representation, it does not apply in situations involving imputed disqualification to other attorneys in the same law firm having insignificant involvement (see Solow v W. R. Grace & Co., 83 NY2d 303 [1994]).

Further, where the attorney who was principally involved in the prior representation has left the firm, the presumption of disqualification may be rebutted by the non-movant by providing facts establishing that the law firm's remaining attorneys do not possess confidences or secrets of the former client (see St. Barnabas Hosp. v New York City Health & Hosps. Corp., 7 AD3d 83 [1st Dept 2004]).

It having been clearly established that imputed disqualification is the appropriate standard in cases where the "principally involved" attorney has left a law firm whose removal is sought, the sole remaining issue as to the standard's applicability to this matter is plaintiff's argument that Cohen Clair, by virtue of its size and the nature of its practice, is somehow ineligible to avail itself of the standard. Plaintiff's position, initially set forth in her papers and more fully articulated at oral argument, boils down to the assertion that there is a large firm/small firm dichotomy, under which it is only large firms that are entitled to the benefit of the rebuttable presumption that comes with imputed disqualification, while small firms are relegated to the irrebuttable presumption of per se disqualification. Plaintiff's position is without merit. Leaving aside the question of what constitutes a large versus a small law firm,[FN3] there is neither legal [*4]authority nor a compelling rationale to support the type of bright line demarcation suggested by plaintiff. Instead, the size of a firm and the way it practices law are simply factors — albeit significant ones — that a court must consider in "determin[ing] whether the presumption of shared confidences and disqualification has been rebutted" (Kassis at 617).

Discussion

The decision to disqualify counsel rests with the discretion of the court (Cardinale v Golinello, 43 NY2d 288 [1977]; Macy's Inc. v J.C. Penny Corp., Inc., 107 AD3d 616 [1st Dept 2013]) and the movant seeking to disqualify an opponent's counsel "bears a heavy burden" (Mayers v Stone Castle Partners, LLC, 126 AD3d 1, 5 [1st Dept 2015]). Therefore, any attempt to disqualify counsel should be throughly scrutinized (see S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437 [1987]).

Resolving issues of disqualification requires a delicate balance between the interests of the client, who desires to retain an attorney of his or her choice, against the interests of the opposing party to be free from any risk of opposition by an attorney who had been privy to that litigant's confidence (Saftler v Government Employees Ins. Co., 95 AD2d 54 [1st Dept 1983). Rule 1.10 (b) Comment 4A is instructive; it states:

"[t]he principles of imputed disqualification are modified when lawyers have been associated in a firm and then end their association. The nature of contemporary law practice and the organization of law firms have made the fiction that the law firm is the same as a single lawyer unrealistic in certain situations. In crafting a rule to govern imputed conflicts, there are several competing considerations. First, the former client must be reasonably assured that the client's confidentiality interests are not compromised. Second, the principles of imputed disqualification should not be so broadly cast as to preclude others from having reasonable choice of counsel. Third, the principles of imputed disqualification should not unreasonably hamper lawyers from forming new associations and taking on new clients after leaving a firm.If the principles of imputed disqualification were defined too strictly, the result would be undue curtailment of the opportunity of lawyers to move from one practice setting to another, of the opportunity of clients to choose counsel, and of the opportunity of firms to retain qualified lawyers. For these reasons, a functional analysis that focuses on preserving the former client's reasonable confidentiality interests is appropriate in balancing the competing interests.

Risk that Prejudicial Information Remains at Cohen Clair

Plaintiff and her attorney acknowledge that they cannot recall which partner was allegedly present at the consultation. And even though plaintiff places great emphasis on the existence of what she contends is the second participant's notes, the sheet of paper in question contains no identifying information whatsoever — no date, no identification of the author, no mention even of the client's name.

These factual voids are consequential because they result in allegations shrouded in ambiguity. As such, they inescapably call for considerable speculation, rather than clear factual determination, on the part of the court (see i.e., Starwood Hotels & Resorts Worldwide, Inc. v [*5]Aoki Corp., 2 AD3d 135 [1st Dept 2003] [motion to disqualify denied because movant failed to assert that the attorney at issue was ever personally involved in the prior representation, and the allegation was too speculative given that the attorney denied having acquired any relevant confidential information]).

Furthermore, plaintiff and her attorney's failure to identify the participants and other details of the consultation highlights (1) how long ago this event took place (almost five years), (2) the objective insignificance of Cohen Clair's legal representation of plaintiff as a whole (no more than 2.5 hours of total billing and none by any other person than plaintiff's current counsel), and (3) the likelihood that any confidential information transferred, which is vaguely and conclusively identified by plaintiff as her "substantial settlement positions," along with the information captured in the notes — consisting largely of numeric calculations and asset values— has become undoubtedly stale, immaterial, and of no strategic value to defendant.[FN4] Plaintiff's counsel's argument that Cohen Clair does not allow an associate of the firm to work solely on a matter without "close and constant supervision from one or more partners" is belied by the simple fact that she fails to substantiate, by document or statement, which partner was tasked with such supervision.

Finally, although this court fully recognizes, and defendant himself acknowledges, that the likelihood of acquiring material client confidences increases in small law firms that are conducive to "constant cross-pollination" and a "cross-current of discussion and ideas" (Kassis at 617-618, quoting Cardinale v Golinello, 43 NY2d at 292), the size of the firm alone is certainly not determinative. In any event, a busy, partner-heavy law firm with 20 or more attorneys occupying a 13,500 square foot floor of the Lipstick Building, such as Cohen Clair, does not squarely fit into this "small firm" rubric (see, Poma v Ipek, 27 Misc 3d 1206[A] [Sup Ct, New York County 2010 [two-partner firm]; Gentile v Gentile, 57 Misc 3d 886 [Sup Ct, Rockland Co, 2017] [two-partner firm with four associates]).

Still, even without a clear indication of the individual who was allegedly directly privy to plaintiff's confidential information, along with the weaknesses attendant to plaintiff's other allegations, Cohen Clair remains charged with meeting its burden to rebut the presumption of disqualification. To do this, it must sufficiently disprove that the firm or anyone currently at the firm possesses confidential information that is significant or material that could be prejudicial to plaintiff in this litigation. To this end, the firm conducted an internal investigation and concluded that none of the attorneys at the firm remember the consultation or have retained confidential information about plaintiff.

As to confidential documents, it is undisputed that plaintiff's counsel took plaintiff's physical file with her to Warshaw including the notes from the consultation that, after an in camera review, appear innocuous. Additionally, in accordance with the requirements set forth in Kassis (93 NY2d at 617), rebutting the presumption of disqualification requires the firm employ "adequate screening measures" to eliminate any access or involvement of the potentially conflicted attorney. In satisfying this requirement, Cohen Clair has walled off the rest of the firm [FN5] and has had their computer servers searched by a forensic expert to confirm that no relevant emails or related files remain on the firm's on-site servers. The firm also represents that it has taken all steps necessary to insure that any archives that may be present on off-site servers cannot be accessed by any of the attorneys there.

Defendant's Right to Select Counsel of His Choice

The Court of Appeals, as well as the commentary to Rule 1.10 (b), direct that it is critical that courts consider "public policies favoring client choice" (Kassis at 617). In addition, "[c]ourts must . . . consider such factors as the party's valued right to choose its own counsel, and the fairness and effect in the particular factual setting of granting disqualification or continuing representation" (S & S Hotel Ventures Ltd. Partnership, 69 NY2d at 437). "A party's entitlement to be represented in ongoing litigation by counsel of his or her choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted . . ." (Olmoz v Town of Fishkill et al, 258 AD2d 447, 447 [2d Dept 1999]).

This right is particularly important where, as here, plaintiff has consulted with multiple law firms and was twice barred by conflicts from retaining counsel of his choosing. Specifically, defendant was precluded from retaining two other leading matrimonial firms because plaintiff had consulted with a named partner, and that partner was still at the firm. Although New York City has no shortage of matrimonial attorneys, the number of firms handling high-end divorces is far more limited. As a result the court must consider whether plaintiff's ". . . motion to disqualify, made during ongoing litigation, [was] made for tactical purposes, such as to delay litigation and deprive an opponent of quality representation" (Mayers v Stone Castle Partners, LLC, 126 AD3d 1, 6 [1st Dept 2015]; see also, Bernacki v Bernacki, 47 Misc 3d 316 [Sup Ct, NY County 2015] [movant's motion denied where, among other considerations, his purpose in contacting multiple experienced matrimonial attorneys was to disqualify them from handling his wife's defense of the action]).

Appearance of Impropriety

Absent actual prejudice or a substantial risk thereof, the appearance of impropriety alone is not sufficient to require disqualification of an attorney (see Cummin v Cummin, 264 AD2d 637 [1st Dept 1999]; Matter of Lovitch v Lovitch, 64 AD3d 710 [2d Dept 2009]).

Plaintiff relies heavily on the argument that the appearance of impropriety is sufficient enough to disqualify Cohen Clair, and any doubt as to the existence of a conflict of interest should be resolved in favor of disqualification (see Matter of Janczewski v Janczewski, 169 AD3d 796 [2d Dept 2019]). Under the facts and circumstances here, this court disagrees. The appearance of impropriety is eliminated when adequate screening measures are employed as [*6]there were here. Further, any doubt that may exist relating to a conflict of interest in this case was created by the movant and her current counsel in failing to identify the second participant who was alleged to be in the room during the consultation. Accordingly, it is not appropriate that the movant benefit from any doubt present by granting her motion on those grounds.

Conclusion

The court agrees with Cohen Clair that there is no reasonable risk that it possesses confidential information relevant to this matter. Further, the possibility, however small, that any confidential material remains with the firm is outweighed by defendant's right to choose his own counsel. Lastly, the appearance of impropriety has sufficiently been eliminated by the representations and safeguards employed by Cohen Clair, and any doubt that a conflict of interest remains present cannot be resolved in favor of the plaintiff because that doubt is of her own making. Accordingly, the court concludes that the presumption of disqualification has been adequately rebutted.

In light of the foregoing, plaintiff's motion to disqualify defendant's counsel is denied in its entirety and defendant's cross-motion is denied as academic. This constitutes the decision of the court.

Dated:_____________________________

Matthew F. Cooper, J.S.C. Footnotes

Footnote 1:The totality of the notes consist of two one-page notebook pages, one alleged to be in the handwriting of plaintiff's attorney and one not.

Footnote 2:Plaintiff's client file and her retainer balance of $23,643, out of an initial deposit of $25,000, were transferred from Cohen Clair to Warshaw during her attorney's transition between firms.

Footnote 3:Characterizing the size of a law firm is a good deal less straightforward than it might seem. Although the national and international firms popularly referred to as "BigLaw" are undoubtedly "large," does that designation change in the context of a disqualification in a divorce case if the firm has a matrimonial department consisting of only a small number of lawyers? Similarly, can a law firm with 20 attorneys that exclusively handles matrimonial cases be considered "small" when it is far larger than most matrimonial practices?

Footnote 4:The notes appear to refer only to the parties' income and the value of separate and marital assets — information on its face not confidential or prejudicial to a litigant in a divorce proceeding (see Pellegrino v Oppenheimer & Co., Inc., 49 AD3d 94 [2008] [no disqualification where the movant failed to show that the information conveyed could not been obtained through discovery]). Furthermore, generalized, non-specific, and conclusory allegations that confidential information was imparted to the consulting attorney(s) is insufficient to warrant disqualification of opposing counsel (see Nomura Secs. Int'l v Hu, 240 AD2d 249, 250-251 [1st Dept 1997] [First Department reversed the lower court's determination of disqualification finding that the allegation that discussing "all aspects" of the case "falls far short of the standard required").

Footnote 5:Only three lawyers — two partners and an associate — are permitted to work on this matter and are the only attorneys at Cohen Clair with access to the file.