In today’s post I recount an epic battle between the Rules of Professional Conduct (tagline: saving clients from unscrupulous lawyers for over 100 years!) and the Uniform Arbitration Act (tagline: saving arbitration from hostile judges for 60 years!) in the Supreme Court of California.  Spoiler alert: the Rules of Professional Conduct win.

The story in Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co.,2018 WL 4137103 (Cal. Aug. 30, 2018), begins with a “large law firm” [ed: with too many names] taking over the defense of J-M in a qui tam action in federal court in March of 2010.  The problem was that one of the public entities that had been identified as a real party in interest in the qui tam case was also a client of the firm (for employment matters).  Because both clients had signed engagement letters with general language waiving potential conflicts, the firm concluded it could take on the qui tam action.

The SMRH firm defended J-M for just one year before its employment client moved to disqualify it.  In that time, the firm had put in 10,000 hours defending J-M, and was still owed over one million dollars in fees.  The district court disqualified the firm based on the firm’s failure to adequately inform the employment client and J-M of the adversity before obtaining waivers, as required by the Rules of Professional Conduct.

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