go to the nature and value of his legal services, and at this early stage in the litigation, his disqualification is unlikely to work substantial hardship on Caplan.
Having resolved of the exceptions to Rule 3.7, it is necessary to examine the general rule. Caplan argues that it is impossible to say at this point whether Ewing is likely to be a necessary witness or not. She points out that during discovery, better evidence than Ewing's may be uncovered, that the Defendants may agree that she was terminated, or that his testimony may be ruled inadmissible as a statement made in the context of an offer to compromise under F.R.E. 408. She points to cases in this District where judges reserved decision on a motion to disqualify until after discovery. Vanguard S&L Assoc. v. Banks, No. 93-4627, 1994 U.S. Dist. Lexis 8697 at *6 (E.D. Pa. June 27, 1994); Gillespie v. Chrysler Corp., No. 93-1532, 1993 U.S. Dist. LEXIS 8979 at *2-*3 (E.D. Pa. June 25, 1993); Anderson v. Reliance Standard Life Ins. Co., No. 86-3328, 1988 U.S. Dist. Lexis 7914 at *5 (E.D. Pa. July 27, 1988).
Waiting until discovery is completed on this issue is the best course to resolve this potential conflict. At this early date, it is uncertain whether Ewing is likely to be a necessary witness, but this will be more clear following discovery. We agree with Defendants that the rule applies to disqualify those attorneys who are "likely to be a necessary witness," and not just those who will be a necessary witness. Further into the case, therefore, we will be able to determine the likelihood of Ewing's testimony. This will also give Caplan the opportunity to make strategic decisions, such as whether to stipulate that Ewing will not testify, in order to guarantee that he can be her advocate at trial.
If it becomes likely that Ewing will be a witness on this contested issue, Rule 3.7 will certainly preclude his participation as her trial advocate. This possibility having been raised so early in the litigation, it will be difficult for her later to plead the substantial hardship exception. A presently unimaginable and significant event must occur before this Court, based on this record, will be willing to permit Ewing to both testify and advocate at trial. It would be advisable for Caplan, if discovery shows any chance that Ewing may be called to testify, to prepare other counsel for the event that they may be her advocate at trial.
We will rule now on Defendants's argument that if Ewing is disqualified, his law firm must be as well. Where the parties stand now, there is no need to disqualify Ewing's firm from representing Caplan at trial even if Ewing cannot. Rule 3.7 specifically provides that a firm is not vicariously disqualified along with an attorney unless either Rule 1.7 or Rule 1.9 is violated.
Defendants argue that under Rule 1.7(b), Ewing's firm would "be materially limited by [its] responsibilities to another client or to a third person, or by the lawyer's own interests" because Ewing and Caplan have a contingent fee agreement based on the outcome of this litigation. We do not find that this is so.
Rule 1.8(j)(2), titled Prohibited Transactions, expressly permits contingency fee agreements. Defendants do not argue that the potential conflict arises from anything more than this fee arrangement. For this reason, the situation is not on a par with a case heavily relied on by Defendants, United States v. Stout, 723 F. Supp. 297 (E.D. Pa. 1989). In Stout, a union officer was charged with several federal crimes including theft from programs receiving federal funds. Sprague was Stout's attorney for those charges, but had also acted as the union's lawyer in the past and was involved in numerous dealings with various attorneys and players in the criminal case and related civil cases. As an indication of the widespread activities of attorney Sprague with other participants in the events, it took five pages for the District Court just to describe the background. Id. at 298-302. Stout 's facts, therefore, are far from the facts at bar, where a common contingent fee is at issue.
In addition, even if Ewing's representation would be materially limited by his own interest in a contingent fee, Rule 1.7(b) would specifically permit the representation if:
(1) the lawyer reasonably believes the representation will not be adversely affected; and