He alleges that he owns the stock in Nicole's free of any beneficial interest on the part of Elliot Cook and that Elliot Cook used his position as an officer and employee of Nicole's to divert corporate funds to his own use and to usurp a corporate opportunity. The corporate opportunity allegedly usurped was the designation to receive title to the La Terrasse property, which Elliot Cook has been designated to take in his personal capacity.
Clayton Cook's allegations against DP & R are that they committed malpractice and breached their fiduciary duty to Clayton Cook and Nicole's by conspiring with Elliot Cook to usurp Nicole's corporate opportunity and by failing to inform Clayton Cook or Nicole's of the conflict of interest created by DP & R's joint representation of Elliot Cook and Nicole's.
Clayton Cook now moves to disqualify DP & R from further representation of Elliot Cook pursuant to the Pennsylvania Code of Professional Responsibility, DR 5-101 and DR 5-102,
which prohibits an attorney from being both an advocate and a witness in the same case.
In this case, DP & R was intimately involved with the conduct and settlement of the Sansom Committee litigation. One aspect of that litigation, the designation of Elliot Cook to receive title to the La Terrasse property, forms the basis of the defendant's counterclaim both against Elliot Cook and against DP & R. Because of DP & R's close connection with the subject matter of this action, and the fact that they are defendants on the counterclaim, they must be disqualified from representing the plaintiff. DR 5-101 and DR 5-102 are designed to prevent a lawyer from being both an advocate and a witness in the same litigation. See Ethical Consideration, 5-9. While neither 5-101 nor 5-102 specifically applies to the situation in which counsel is a co-defendant, it is clear that the rationale behind these rules requires that DP & R be disqualified as trial counsel. See Harrison v. Keystone Coca-Cola Bottling Co., 428 F. Supp. 149 (M.D.Pa.1977).
DP & R argues that even if they are disqualified, this disqualification should only extend to the conduct of the trial itself. While DR 5-102(A) does, on its face, seem to only require withdrawal as trial counsel, the policy underlying the code requires that DP & R be disqualified from any further representation of the plaintiff in this action.
Because DP & R and Elliot Cook are co-defendants on the counterclaim, it is possible that their interests in the conduct of the litigation might differ. DR 5-101(A) prohibits a lawyer from accepting employment "if the exercise of his professional judgment on behalf of his client . . . reasonably may be affected by his own financial, business, property, or personal interests." I cannot help but conclude that the exercise of professional judgment and the preparation of a case in which a lawyer is co-defendant may reasonably be affected by that lawyer's interest in the litigation. DP & R must, therefore, be disqualified from further representation of the plaintiff in this case.