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US law firm removed from record due to conflict

Editorial Staff

A US judge has removed one of the USA's largest law firms, Sonnenschein, Nath & Rosenthal, from representing First American Title Insurance Company in a class action suit. The firm, its partners and all other lawyers at the firm are injuncted against acting for the company in the litigation which raises questions about the migration of teams of lawyers and - perhaps even more importantly - what constitutes conflict.

The complaint against the conduct of Sonnenschein was made by the lawyers representing the plaintiffs in a class action suit, within that action. In the litigation (details below) First American was originally represented in the litigation by the St. Louis and Los Angeles offices of the Bryan, Cave law firm. The First American defence team at Bryan, Cave included attorneys Newman, Maschmann and Siegel, who eventually left Bryan, Cave to become partners at Sonnenschein in February 2009. They took the First American litigation with them to Sonnenschein.

Whey they arrived, Gary Cohen was already a partner at Sonnenschein.

The lawyers representing the plaintiffs are Los Angeles attorneys Steven Jay "Bernie" Bernheim of The Bernheim Law Firm and Taras Kick of The Kick Law Firm. Until 2007, Gary Cohen was Deputy Commissioner and General Counsel at the California Department of Insurance.

Bernheim say, and have produced documents to evidence, that prior to the arrival of the Bryan, Cave litigation team at Sonnenschein, they contacted Gary Cohen and " on several occasions communicated with Mr. Cohen about retaining/employing Mr. Cohen to work on behalf of [the] plaintiffs in the First American litigation. In so doing, [the] plaintiffs [sic] counsel communicated extensive confidential work product information to Mr. Cohen... When Mr. Cohen became a Sonnenschein partner, plaintiffs' counsel again contacted Mr. Cohen, expressing interest in retaining him through the firm...Mr. Cohen caused a conflict check to be run at Sonnenschein. He reported that there was a conflict, and that he and the firm could not work with plaintiffs against First American in this litigation."

So far, so good, it appears.

But Bernheim says that it was just three weeks later that Sonnenschein lodged a notice changing lawyers from Bryan Cave to Sonnenschein.

Bernheim said yesterday in a statement: "In a publicly filed declaration, First American Title's in-house counsel, Mr. Timothy P. Sullivan, Esq., testified that the Sonnenschein lawyers hold "unique and irreplaceable knowledge" pertaining to the litigation. He also testified that these class actions "are the most aggressively litigated and complex proceedings that I have experienced in my 35 years of practice. Mr. Sullivan testified that First American has incurred more than USD5,500,000 in attorney's fees and USD1,000,000 in additional expenses in defending them."

The firm said that Cohen had been put behind a Chinese Wall - but he nevertheless acted for First American in at least one other case. Bernheim said that the two cases were so similar in nature that this must, of necessity, mean that Cohen was conflicted and that tainted the firm and the other cases.

The Judge found that there was a conflict of interest and that Sonnenschein should be barred from the proceedings, that four former Bryan, Cave partners should be banned by name: partners Charles Newman and Jason Maschmann of the St. Louis office, partner Joel Siegel of the Los Angeles office, and partner Gary M. Cohen of the San Francisco office.

The case raises two important points:

1. the issue of conflict when teams migrate

2. what amounts to conflict.

Cohen told the plaintiffs that Sonnenschein could not act due to conflict. That, of course, means that he has access to information on behalf of an opposing party which he must maintain confidential. It could also mean that he knew that the firm was to receive the litigation formerly conducted by Bryan, Cave and would, therefore become conflicted. That conflict, or potential conflict, then was the reason he gave for not taking on Bernheim and Kick as professional clients. In this, everyone appears agreed, he acted properly.

The questions that remains outstanding are these: what information was passed to Cohen and did he read it? Or did he decide not to act before reading the Plaintiffs' case? Did he solicit information, or did Berhneim simply send him a bundle of documents "on spec?"

Is "being in possession of" the same as "knowing?"