process of removing himself from the spectrum of wrongdoing, Sprague implicates the defendant. Accord Zepp, 748 F.2d at 137 (stipulation between government and defense attorney cleared attorney of wrongdoing while it removed any inference of doubt favorable to defendant).
In the event that it becomes necessary to explain or refute testimony implicating Sprague or merely describing his knowledge of events charged in the indictment, he would surely constitute the best exculpatory witness on behalf of the defendant. He would then be required under Rule 3.7(a) to withdraw mid-trial as Stout's attorney in order to accomplish what is in his client's best interests.
The inordinate disruption, delay, and potential prejudice to the defendant occasioned by that sequence of events requires little discussion. Given the government's contention that Sprague and his law firm were the beneficiaries of some of the unlawful acts with which Stout is charged, my concern that Sprague may be a necessary witness for the defense is genuine and substantial, and not the product of mere speculation.
Finally, removing Sprague from this case is the only appropriate means to enforce the ethical standards articulated in Canon 9 of the Pennsylvania Code of Professional Responsibility. Canon 9 mandates that "a lawyer should avoid even the appearance of professional impropriety." Canon 9 was written "to preserve public confidence in the bar and in the legal process," United States v. Hobson, 672 F.2d 825, 828 (11th Cir.), reh'g denied en banc, 677 F.2d 117, cert. denied, 459 U.S. 906, 103 S. Ct. 208, 74 L. Ed. 2d 166 (1982), and not simply as a protection for litigants. "The requirement that a lawyer avoid even the appearance of impropriety reflects the bar's concern that some conduct which is in fact ethical may appear to the layman as unethical and thereby could erode public confidence in the judicial system or the legal profession." Woods v. Covington County Bank, 537 F.2d 804, 813 (5th Cir. 1976). Courts have therefore disqualified attorneys due to the appearance of impropriety even where there was no evidence of actual wrongdoing. See, e.g., Hobson, 672 F.2d at 828 (likelihood of public suspicion arising from anticipated testimony that defense attorney was aware of marijuana smuggling scheme for which defendant charged mandated disqualification, even absent proof that attorney was implicated in scheme); United States v. Miller, 624 F.2d 1198, 1202 (3d Cir. 1980) (tax attorney and his firm disqualified from representing defendant on tax evasion charges where attorney had worked in tax fraud unit of United States Attorney's Office during time that government's case against defendant was prepared because the public "would see little to assure itself that [the attorney] had not utilized his position to obtain confidential information or to serve conflicting loyalties.")
Lest Canon 9 be interpreted to require that attorneys yield to the concerns of even the most conservative and prudent members of society, the Fifth Circuit has articulated a logical and appropriate standard governing disqualifications under Canon 9. First, "there must be at least a reasonable possibility that some specifically identifiable impropriety did in fact occur." Woods, 537 F.2d at 813. Second, there must be a likelihood of "public suspicion or obloquy" which would outweigh the social interests served by the attorney's continued participation in the case. Id. at 813 n.12. An attorney should not be disqualified unless both prongs of the Woods standard are met. Id.; see also United States v. Snyder, 707 F.2d 139, 145 (5th Cir. 1983); Hobson, 672 F.2d at 828.
Applying these principles to the facts before me, I find that the contingent fee arrangement between the union, Sprague, and Daniels creates "at least a reasonable possibility that some specifically identifiable impropriety did in fact occur." Standing alone, Sprague's testimony is telling in its simplicity. He steered the union-city case to Daniels, handled an appeal for Daniels, negotiated a contingent fee with the union for Daniels, and then entered into an "$ 8.5 million for $ 250,000" fee-swap with Daniels. Of course, these events did not occur overnight; the usual uncertainties of litigation were hovering somewhere in the wings, and Stout did give the deal his approval. The fact remains, however, that on April 9, 1985, Sprague, appearing before the union's executive board, informed its members that Judge Prattis' decision probably made its Health and Welfare Fund "the richest in the world," and characterized the contract with the city as "a gold mine." See Plf's Motion to Amend, D.C. 33 v. Daniels, Exh. F at 2, 3, attached to Exh. A. Within months, Sprague was in line for $ 8.5 million from the gold mine without any notice to or approval from the union's board. Regardless of Stout's acquiescence to this strange fee arrangement, I come up empty-handed in my search for an acceptable reason why an attorney who had represented the union as general counsel for many years, during which time he knew its various funds, and in particular, its Health and Welfare Fund, had struggled financially, would not approach the appropriate officials in the union and inform them that in exchange for $ 250,000, Daniels would reduce his contingent fee from 25 percent of an anticipated $ 66 million to 12.5 percent of the same amount.
In light of his appearance at the executive board meeting and the detail with which he explained to the board members the financial ramifications of Judge Prattis' decision, see id. at 1-4, Sprague can hardly claim that he was unaware that the board members possessed some degree of authority over and concern about the proceeds of the Health and Welfare Fund. I conclude that even if Sprague is never found to have done anything wrong, his own testimony provides "at least a reasonable possibility" that the "specifically identifiable impropriety" charged in the union's complaint against him "did in fact occur."
To apply the second prong of the Woods standard, I must balance the likelihood of public suspicion against the social interests served by Sprague's continued representation of the defendant. I do not take lightly the long-standing attorney-client relationship between Sprague and Stout in which Stout has placed his trust and in which he has expressed great confidence. Nonetheless, while Stout's right to be represented by the counsel of his choice is entitled to great deference, this right must yield to the best interests of society where its vindication would undermine public confidence in the integrity of our judicial system.
After much reflection and a careful review of the record, I conclude that the likelihood of public obloquy outweighs the interests of the defendant and society in Sprague's continued participation in this case. District Council 33 and its various entities are the alleged "victims" of the crimes with which Stout has been charged. Sprague represented District Council 33, its local unions, its executive boards, its affiliated employee benefit funds, JFK Hospital, and the individual union members to varying degrees from 1979 to 1988. In effect, he represented the union as general counsel during the period of time when Stout is accused of "victimizing" it. Aside from the obvious concerns relating to Sprague's ongoing duty of confidentiality to his former client, which will be addressed infra at slip op. pp. 30-36, an ordinary layperson would find it both troublesome and reproachful if I were to condone the representation of the alleged "victimizer" by the attorney who, little more than a year ago, enjoyed the status and financial rewards associated with his position as trusted advisor to the purported "victim." Furthermore, the public is aware of the union's pending allegations against Sprague and its characterization of his actions with regard to Daniels' contingent fee agreement. It would not only arouse public suspicion, but would shock the public's collective notion of justice if I were to permit an attorney who has been accused of wrongdoing by a former client in a matter related to the crimes with which his current client has been charged to defend the current client at his criminal trial.
Society's sense of unfairness undoubtedly would extend not only to the union as the former client, but also to the defendant, who stands to suffer the most from any hostility and ill will that might be directed against Sprague. This is precisely the type of ethical problem Canon 9 was designed to prevent. See Snyder, 707 F.2d at 146; Hobson, 672 F.2d at 829. It is also the type of ethical problem that cannot be the subject of a waiver by the defendant. Because Canon 9 governs society's perception of the bar and the judicial system rather than the attorney's effective representation of his client, Stout may not waive Sprague's disqualification under Canon 9. Snyder, 707 F.2d at 146.
C. Sprague's Prior Representation of District Council 33
An attorney's duty of loyalty and confidentiality to his clients continues even after the termination of the attorney-client relationship. It does not end until the former client releases the attorney from that duty or waives any interest in the continued protection of privileged communications. This well-known principle is contained in Rule 1.9 of the Pennsylvania Rules of Professional Conduct, which states in pertinent part:
A lawyer who has formerly represented a client in a matter shall not thereafter: