Example

 4.15  Corporate  Transactional  Attorney 2/20/10 5:58 PM

Facts:  
• Parties  
o You:    
 graduated  from  law  school  in  1990  
 spent  four  years  at  the  firm  of  Able  &  Baker  (A&B)  
 While  at  A&B,  you  had  3  major  exposures  to  Shearson  
Partner  (SP)  
• 1992:  SP’s  purchase  of  Logic  Tech,  Inc  
o reviewed  exclusive  licenses  under  which  
LogicTech  sold  technology  that  had  become  
its  key  revenue  source.    
• 1994:  SEC  investigation  into  suspicious  stock  
trading  
o SP  simply  responded  to  an  SEC  document  
request  
• 1996(after  you  joined  C&D):  spoke  at  a  panel  
presentation  on  corporate  development  at  the  
annual  SP  Retreat,  which  provided  an  opportunity  to  
“meet  and  great”  SP  partners.  
 joined  the  firm  of  Charrow  &  Delta  (C&D)  in  September  1994  as  a  
fifth  year  associate,  and    
 on  January  1,  1997  became  a  C&D  partner.  
o Parent  Co—Your  Client:  
 Intended  to  sale  one  of  its  divisions  (an  assest  of  Parent  Co.)to  SP  
and  Victor,  Inc  ,  and  the  Division  would  be  later  incorporated  as  
New  Co.  
 General  Counsel:  Terry  Rushton  
 Division’s  so-­‐called  “Management  Group”—EVP  and  2  Senior  VPs  
o Shearson  Partners—Represented  by  A&B:  
 Lead  Negotiator:  Robin  West  
 Partner:  Pat  Sampson  
 Presumably  owns  60%  of  New  Co.’s  stock  
o Victor.Inc:  
 Owns  40%  of  New  Co.’s  stock  
 Unpleased  about  the  hiring  audit  and  foreign  bribery  issue  
Issue  (1):    
• In  assessing  your  conduct,  the  Legal  Practices  Committee  wants  to  determine    
o (a)  if  the  work  you  did  adverse  to  SP  was  “substantially  related”  to  work  
you  personally  performed  for  SP  while  at  A&B;    
 Legal  Standard—Rule  1.8  
 “Substantial  Relationship  Test”  in  T.C..&Theaters:“  the  
former  client  need  show  no  more  than  the  matters  
embraced  within  the  pending  lawsuit  wherein  his  former  
attorney  appears  on  behalf  of  his  adversary  are  
substantially  related  to  matters  or  cause  of  action  wherein  
the  attorney  previously  represented  him,  the  former  
client.”  
• “substantially  related”  is  a  term  of  art  that  permits  
the  court  to  gauge,  on  a  case-­‐by-­‐case  basis,  the  real  
risk  that  the  former  client’s  confidences  will  be  used  
against  the  client.  
 See  Comment  [3]Matters  are  "substantially  related"  for  
purposes  of  this  Rule  if  they  involve  the  same  
transaction  or  legal  dispute  or  if  there  otherwise  is  a  
substantial  risk  that  confidential  factual  information  as  
would  normally  have  been  obtained  in  the  prior  
representation  would  materially  advance  the  client's  
position  in  the  subsequent  matter.    
 Legal  Analysis—Application  of  the  Standard  
 What  is  the  work  I  did  adverse  to  SP—Negotiating  and  
Closing  the  deal  on  behalf  of  Parent  Co.  to  SP  and  Victor    
 What  is  the  work  I  previous  did  for  SP—2  projects  
 The  facts  in  this  case  clearly  does  not  satisfy  the  first  half  of  
the  test—No  same  transaction  or  legal  dispute  
 It’s  unlikely  that  through  reviewing  exclusive  licenses  of  
LogicTech  you  could  gain  any  confidential  factual  
information  that  would  materially  advance  Parent  Co.’s  
position  
 However,  it’s  unclear  whether  such  information  could  have  
been  obtained  by  preparing  materials  in  response  to  SEC’s  
investigation  
  The  SP  Retreat  should  not  be  used  as  an  occasion  to  attack  
the  lawyer  in  this  case  given  its  public  nature  and  the  fact  
that  by  the  time  of  the  Retreat  the  lawyer  in  this  case  was  
no  longer  an  employee  of  SP’s.  The  lawyer  went  to  the  
Retreat  as  purely  a  speaker  without  any  contemporavious  
nexus  with  SP.  It’s  mind-­‐boggling  that  every  lawyer,  many  
of  which  from  other  firms,  who  went  to  that  Retreat  should  
be  prohibited  from  undertaking  any  representation  of  
clients  whose  interests  are  adverse  to  that  of  SP’s.  
 In  conclusion,  the  court  is  more  likely  than  not  to  rule  that  
the  two  representations  are  not  substantially  related.  
• (b)  if  during  your  employment  at  A&B  you  learned  any  actual  confidences  of  SP’s  
that  were  material  in  SP’s  purchase  of  Division.  (Focus  on  just  those  two  issues;  
do  not  do  a  full  analysis  of  the  lateral  attorney  rules,  former  client  rules,  etc.)  
Discuss.  
o Two  probable  occasions  where  you  might  have  learnt  some  confidences  
 The  SEC  investigation  
 That  Robin  West  being  SP’s  choice  when  the  acquiror  had  an  “I  can  
take  it  or  leave  it  attitude”  
 Especially  under  the  so-­‐called  “playbook  theory”-­-­the  
former  client  can  assert  that  even  if  there  is  no  legal  or  
factual  overlap  between  the  current  adversity  and  the  
former  ACR,  the  lawyer  learned  how  the  former  client  
tends  to  handle  legal  matters,  how  it  negotiates,  and  how  it  
values  legal  claims.  
Issue  (2):    
• The  Legal  Practices  Committee  wants  to  determine  if  any  of  your  conduct  
violated  your  duty  of  loyalty  to  Parent  during  the  transaction.  Discuss.  
• Duty  of  Loyalty  to  Parent  During  the  Transaction  
o Communication  
 Fail  to  communicate  with  Rushton  before  visiting  West’s  
officebasically  the  lawyer  made  the  decision  ex-­‐parte  
o Prioritize  the  interests  of  Management  Group  
 Throughout  the  whole  transaction,  the  client  is  Parent  Co.,  not  the  
Management  Group.  
 In  the  hope  that  the  Management  Group  would  retain  you  for  

NewCo’s  legal  work,  you  prioritize  the  interests  of  the  Group  over  
that  of  Parent  Co.  
 Advocate  for  the  better  offer  to  Management  Group  is  not  
necessarily  consistent  with  seeking  the  best  situation  for  
Parent  Co.  Conversely,  the  two  interests  might  be  in  conflict  
when  all  that  Parent  Co.  wanted  is  a  better  price  for  the  
Division  as  a  whole  and  that  price  could  be  significantly  cut  
lower  when  the  purchaser  has  to  pay  a  lot  for  the  
Management  Group.  
 You  jointly  agreed  on  a  “don’t  lie  but  don’t  tell  too  much”  
strategymade  yourself  a  co-­‐conspirator  of  the  fraud  
against  the  interest  of  Parent  Co..  
o Conceal  the  hiring  audit  and  bribery  issue  
 This  might  later  jeopardize  Parent  Co.  by  dragging  them  into  
endless  lawsuit  for  fraud  and  etc.    
 Non-­‐disclosure  under  this  context  DID  violate  the  confidentiality  
rule,  meaning  the  lawyer  itself  might  have  to  stand  the  scrutiny  of  
the  state  bar  association  in  addition  to  contractual/tortious  fraud  
charges.  
 Non-­‐disclosure  in  this  case  involves  
• Parking-­‐lot  talk  
• Faxing  federal  court  opinion  knowing  that  the  
material  was  far  from  impartial  
 
 
 
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2/20/10 5:58 PM