as such, Hamilton would not be an indispensable party. Therefore, as to Lybrand, disqualification is not appropriate. If Mr. Richardson should, whether intentionally or otherwise, during the course of that litigation reveal an attorney-client confidence reposed in him, such might be cause for separate disciplinary action or possible action for damages by the former client, but it does not go to disqualification.
Does the fact that Mr. Richardson is a shareholder of Hamilton mitigate against disqualification? As a derivative suit, Mr. Richardson seeks to sue on behalf of Hamilton Life for alleged violations of the SEC regulation that the Hamilton Life officers and directors allegedly perpetrated. In my initial discussion, I concluded that Mr. Richardson through the Schnader firm formerly represented the individual officers and directors of Hamilton Life as well as Hamilton Life. Had Mr. Richardson through the Schnader firm represented Hamilton Life alone, it is arguable that his present position would not be inconsistent with the former representation. Marco v. Dulles, 169 F. Supp. 622 (S.D.N.Y. 1959), appeal dismissed, 268 F.2d 192 (2nd Cir. 1959). However, since he did represent the individual defendants as well, in what I find to be a substantially related matter, the maintenance of this suit as a derivative action would be a conflict of interest vis-a-vis the individual officers and directors requiring disqualification. The fact that Mr. Richardson is a plaintiff in this action does not mitigate disqualification. If disqualification is appropriate, he certainly cannot do through an attorney what he could not do himself. Norman v. McKee, 431 F.2d 769, p. 772 (9th Cir. 1970).
We come face to face now with the conflicting policies of the law, i.e., to protect shareholders and to protect the confidences of former clients. No amount of legal reasoning can completely harmonize this conflict. There are substantial arguments on both sides; it appears to be a question of priorities.
In a suit of this nature there are other shareholders who are able to bring this suit for the benefit of all shareholders. The sacrosanct nature of the attorney-client privilege dictates that an attorney not disclose the confidences of his client no matter how heinous they may be.
Mr. Richardson became a shareholder of Hamilton Life during the time that he was representing that company. I point this out not to infer that this was improper, but only to show that it may hint of some impropriety, and it is this suggestion of impropriety that I feel must be avoided.
For the above stated reasons, I feel that the policy of the law to protect the attorney-client relationship should take precedence over the policy of the law to protect shareholders of a corporation, under the facts of this case.
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