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United States District Court, Eastern District of Pennsylvania

November 16, 1999


The opinion of the court was delivered by: Katz, Senior District Judge.


Before the court is defendant's motion to disqualify attorney Marvin I. Barish from continuing to represent plaintiff John Shade. Because disqualification is an inappropriate sanction under these circumstances, the court will deny the motion.

I. Background

John Shade brought this action under the Jones Act for injuries he suffered during his employment with defendant. After a jury trial in October 1997, plaintiff was awarded $870,000. The Third Circuit reversed this judgment for evidentiary error, and the case is scheduled for retrial beginning on December 13, 1999.

Defendant's present motion argues that Barish must be disqualified for violations of two professional rules.*fn1 Defendant first argues that the acknowledged provision of an apartment and associated costs for Shade and his family by the Barish firm since November 1997 qualifies as a conflict of interest that warrants disqualification. Defendant also claims that Barish knowingly offered false testimony to the court during the 1997 trial and that this requires his disqualification.*fn2

II. Standards

A district court has power to disqualify an attorney deriving "from its inherent authority to supervise the professional conduct of attorneys appearing before it." United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980); see also In re Corn Derivatives Antitrust Litig., 748 F.2d 157, 160 (3d Cir. 1984) (same). As many decisions have stressed, "courts have vital interests in protecting the integrity of their judgments, maintaining public confidence in the integrity of the bar, eliminating conflicts of interest, and protecting confidential communications between attorneys and their clients." Commonwealth Ins. Co. v. Graphix Hot Line, Inc., 808 F. Supp. 1200, 1203 (E.D.Pa. 1992); see also United States v. Moscony, 927 F.2d 742, 749 (3d Cir. 1991) (same).

In this case, the general power of the court to sanction an attorney is not at issue. The only question is whether the extreme sanction of disqualification is appropriate assuming that an ethical rule was violated. While disqualification is obviously a permissible and even necessary step in some cases, disqualification should not be imposed lightly.

  [T]he court should disqualify an attorney only when
  it determines, on the facts of the particular case,
  that disqualification is an appropriate means of
  enforcing the applicable disciplinary rule. It should
  consider the ends that the disciplinary rule is
  designed to serve and any countervailing policies,
  such as permitting a litigant to retain the counsel
  of his choice and enabling attorneys to practice
  without excessive restriction.

Miller, 624 F.2d at 1201. That is, even if the court finds that an attorney violated an ethical rule, "disqualification is never automatic." Id.; see also Cohen v. Oasin, 844 F. Supp. 1065, 1067 (E.D.Pa. 1994) (stating that district court has latitude to impose sanctions in a manner fair to all parties to the litigation). Although this right is obviously not absolute, a party's choice of counsel is a significant consideration in determining the propriety of disqualification. See Commonwealth Ins., 808 F. Supp. at 1203. Weighing against this right is the need to protect opposing parties' ability to try their case in a fair manner. See, e.g., University Patents, Inc. v. Kligman, 737 F. Supp. 325, 329 (E.D.Pa. 1990).

Doubts should be resolved in favor of disqualification, see Brennan v. Independence Blue Cross, 949 F. Supp. 305, 307 (E.D.Pa. 1996), but it is the burden of the party arguing for disqualification to demonstrate clearly that "continuing representation would be impermissible." Id. (quoting Cohen, 844 F. Supp. at 1067). As a general rule, motions to disqualify opposing counsel are disfavored. See Cohen, 844 F. Supp. at 1067; Kligman, 737 F. Supp. at 329. While the court does not suggest that the present motion was filed for strategic purposes, it must be acknowledged that "the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons." Rules of Professional Conduct, Preamble Scope.

II. The Alleged Violations

A. Living Expenses

The basis for defendant's first allegation of impropriety is the Barish firm's provision of an apartment and related expenses to the Shade family. See Def. Ex. A (deposition testimony of Shade stating that Barish paid rent and other expenses since 1997); Def. Ex. B (rental papers listing Barish as applicant for occupancy by Shade and his family; billing records of apartment indicating Barish paid rent). Barish does not dispute these facts, although he explains that his firm had acquired the apartment to house out-of-town clients and experts. See Pl.Mem. of Law at 1. According to Barish, the Shades' occupancy began after Shade lost both his job and his home following the first trial and was extended indefinitely after Shade's wife was injured and he had an "emotional breakdown." Id. The family was told from the outset that they had no obligation to repay rent or other expenses. See Pl.Ex. A. Before taking this step, the Barish firm consulted with outside counsel, which opined that the firm would not violate applicable ethical rules if it provided housing and related expenses to the Shades. See Pl.Ex. B.

Defendant, however, argues that this conduct violated Rule 1.8, which generally prohibits lawyers from engaging in representation that constitutes a conflict of interest, and that Barish must be disqualified. As is most relevant in this case, the rule states:

  (e) A lawyer shall not provide financial assistance
  to a client in connection with

  pending or contemplated litigation, except that:

    (1) a lawyer may advance court costs and expenses
    of litigation, the repayment of which may be
    contingent on the outcome of the matter; and

    (2) a lawyer representing an indigent client may
    pay court costs and expenses of litigation on
    behalf of the client.

  (j) A lawyer shall not acquire a proprietary interest
  in a cause of action that the lawyer is conducting
  for a client, except that the lawyer may:

    (1) acquire a lien granted by law to secure the
    lawyer's fee or expenses; and

    (2) contract with a client for a reasonable
    contingent fee in a civil case.

Rule of Professional Conduct 1.8. As the commentary to the rule suggests, subsection (j) "has its basis in common law champerty and maintenance." Commentary to Rule 1.8. Section (e)'s provisions for payment of some expenses are a specific exception to those principles. See id.

The traditional perspective suggests at least three harms that could result from permitting lawyers to provide living expenses to their clients: (1) loaning money to a client gives the lawyer an interest in the litigation that could cause the lawyer to act other than in the client's best interests; (2) permitting such advances might encourage attorneys to seek out marginal claims that would "churn[] up litigation"; and (3) permitting advances might degrade the profession by leading lawyers to compete for clients by offering the best financial assistance packages. Michael R. Koval, "Living Expenses, Litigation Expenses, and Lending Money to Clients," 7 Geo. J. Legal Ethics 1117, 1117-18 (1994). The modern perspective frames these evils primarily in terms of a prohibited conflict of interest between the attorney and the client. See, e.g., Dawn S. Garrett, "Lending a Helping Hand: Professional Responsibility and Attorney-Client Financing Prohibitions," 16 U. Dayton L.Rev. 221, 230-35 (1990) (analyzing prohibition within framework of ethical canons). These concerns are evidenced in the 1954 American Bar Association Opinion on this issue submitted by defendant. See Def. Ex. 1. In that opinion, the ABA stated that payment of living expenses was improper as it gave the attorney an interest in the outcome of the litigation because, presumably, the living costs advanced would be reimbursed from the verdict. This situation might lead the attorney to consider her own interests above those of the client in negotiating a settlement.*fn3

Both parties, understandably, spend a considerable amount of time arguing as to whether or not there was a violation of an ethical rule. It is unnecessary to rule on this question however. Even assuming that the provision of an apartment and related expenses violates the Rules of Professional Conduct, disqualification is not necessary to effectuate the purposes of the rule or protect the integrity of the legal process in this case. First, the client's interests would not be served by disqualification. Barish has represented Shade in this matter for more than two years and is preparing for a trial scheduled in less than a month. Obviously, this point is not dispositive, and, were the court convinced that there was risk of a genuine conflict between Shade and his attorney, the matter would be resolved differently. However, the fact that Shade will not be asked to repay the firm for costs of housing his family indicates that the risk of improper settlement to protect the law firm's interest is low.*fn4 See, e.g. Essex County Jail Annex Inmates v. Treffinger, 18 F. Supp.2d 418, 431-32 (D.N.J. 1998) (in discussing Rule 1.7, noting particular need to have specific finding of conflict in situations in which attorneys' interests may trump those of clients; rejecting applicability of multi-defendant conflict cases to attorney self-interest cases). Second, while the court acknowledges the significant public interest in untainted legal proceedings and in promoting attorney integrity, permitting Barish to continue representing Shade will not compromise these principles. The defendant argues for disqualification based solely on its expressed concern for the legal system and for Shade but does not suggest that its own ability to prepare for trial or present its case will be hampered. Nor does the court envision any public interest that would outweigh Shade's interest in continuing to work with Barish; in fact, the danger of public dissatisfaction with the legal process appears to be greater from the last minute disqualification of an attorney who apparently provided housing for a client who was faced with dire financial circumstances.

Counsel has not submitted any precedent suggesting that disqualification in an ongoing case is an appropriate response to the payment of living expenses. The only case defendant cites on this issue is In re Berlant, 458 Pa. 439, 328 A.2d 471 (1974). In that case, an attorney appealed from a decision suspending him from practice for five years because of fifteen instances of misconduct, including two counts of improper advances to clients. See id. at 473. The majority opinion discussed the improper advances only in a footnote, in which the court stated that the attorney attempted "to justify his advances on the basis of the client's indigency[.]" While the court ruled motivation irrelevant to a finding that the attorney had committed an offense, the court stated that motivation was relevant in considering the appropriate sanction. See id. at 476 n. 12. Furthermore, a concurring and dissenting opinion suggested that the propriety of sanctions would be doubtful if the attorney had advanced money solely for humanitarian reasons. That opinion explained, "My concurrence on [the advancement] charge is based solely on the evidence indicating that the purpose of one `loan' was not simply to enable an indigent client to withstand the rigors of a possibly protracted litigation, but was designed to (and did) influence the client — who had already retained other counsel — to dismiss his attorney and retain appellant." Id. at 479 (Manderino, J., concurring and dissenting).

Berlant is thus of limited value in determining the proper course of action in this case because of the larger number of allegations of misconduct and the scant discussion of the issue of providing living expenses. If anything, Berlant furthers the plaintiff's position by suggesting that the court should consider the attorney's motivation in advancing monies when determining what, if any, sanctions to impose. The only other authority directly on point submitted by defendant is the 1954 American Bar Association Opinion. The ABA Opinion did not, however, indicate that disqualification was necessarily the proper response to a violation of the rule.*fn5

B. Offering False Testimony

Defendant next alleges that Barish knowingly presented false testimony by Mark Oldham, a witness at Shade's trial, and that this warrants disqualification. Mark Oldham was one of John Shade's co-workers at Great Lakes Dredge. In 1995, Barish represented Oldham in his own personal injury action. During Oldman's trial in the New Jersey District Court in April 1995, Barish elicited testimony from Oldham in which he stated that he was running the front end loader that injured Shade's hand. In the course of that testimony, Oldham explained that he cut off Shade's thumb when he pulled the wrong lever on the machine. See Def. Ex. C at 60-61 (testimony at Oldman's trial).*fn6 Mr Barish referred to that explanation in his closing in the same trial. See Def. Ex. D at 15.*fn7 In contrast, at Shade's trial, Oldham testified that the lever had fallen down accidentally and that he had nothing to do with the accident in which Shade lost his thumb. He explained that he was not even in the cab of the machine when the accident occurred. See Def. Ex. F at 37 (direct and cross-examination).*fn8 Defendant stresses that Barish met with Oldham numerous times, both in the preparation of his own case and in connection with his testimony for Shade's case. During at least one deposition, Oldham also explained that he did not cause the accident in which Shade lost his thumb. See Def. Ex. E at 99-100, 106-07 (Oldham dep.).*fn9

Defendant alleges that this testimony violated Rule 3.3, which describes an attorney's duty of candor toward a tribunal. That rule states in relevant part:.

(a) A lawyer shall not knowingly:

    (4) offer evidence that the lawyer knows to be
    false. If a lawyer has offered material evidence
    and comes to know of its falsity, the lawyer shall
    take reasonable remedial measures.

  (c) A lawyer may refuse to offer evidence that the
  lawyer reasonably believes is false.

Rule of Professional Conduct 3.3. This rule safeguards principles that are basic to the adversarial system of justice: The excesses of this system would likely overcome its virtues if attorneys were free to represent clients with no regard whatsoever for the truth of their statements to the court. See Eagan by Keith v. Jackson, 855 F. Supp. 765, 790-91 (E.D.Pa. 1994); see also United States v. Shaffer Equip., 11 F.3d 450, 457 (4th Cir. 1993) ("Even the slightest accommodation of deceit or a lack of candor in any material respect quickly erodes the validity of the process."). That is, the overall duty of truth "takes it shape from the larger object of preserving the integrity of the judicial system." Id. However, it is important to emphasize that a mere suspicion of perjury is not enough to require disclosure to the court. See id. at 459. As the rule quoted above indicates, an attorney's duty to inform the court does not arise unless the attorney knows that false testimony has been elicited; an attorney has the option of refusing to offer testimony she believes to be false.

The defendant has not met its burden of justifying disqualification under this rule. First, the court is not satisfied that defendant has shown that Barish offered false testimony, much less that he did so knowingly. According to Oldham's affidavit, his testimony at his own trial was based on the knowledge he had at the time. See Pl.Ex. E ¶ 9 (Aff. by Oldham). He explains that his limited experience on the machine that caused the injury led him to believe mistakenly that "the lowering of the claws could only have occurred by pulling the lever for the claws," id. ¶ 4, when, in fact, he later learned that the machine itself had mechanical problems that "affected the movement of the claws." Id. ¶ 5. Oldham also states, "I further became aware that even if I had pulled the wrong lever in an effort to raise the forks, that would not have caused the claws to fall." Id. ¶ 5. The supporting memorandum of law explains that Oldham's testimony at his trial on this matter was peripheral evidence "offered with other evidence to explain Mr. Oldham's own subjective belief that he was unable to return to seaman's duties as his eye injury prevented him from properly performing his work." Pl. Mem. of Law at 16.

More importantly, the court does not believe that disqualification is the only means to enforce the rule in general or, in this case, to assure that trial occurs without taint of wrongdoing or unfairness to the defendant. Knowledge of the seeming inconsistency in Oldham's testimony provides the defendant with ample ground to impeach him and to raise the question of what, if any, role Barish played in the different testimony. See Essex County Jail Annex Inmates, 18 F. Supp.2d at 440 (focusing primarily on degree to which misconduct tainted future proceedings). That is, the defendant does not face meaningful prejudice either in terms of trial preparation or trial presentation. Similarly, the public's interests in a fair and open resolution of this dispute will be served by exploration of these issues in the courtroom itself during trial. Weighing strongly against disqualification, as described previously, are the rapidity with which trial is approaching and Barish's long-time representation of Shade. These factors warrant permitting Barish to continue acting as Shade's attorney. Cf. id. at 443-45 (holding that attorney who disclosed sensitive information regarding security to inmates and then misled court had to be disqualified because of potential prejudice to enforcement of consent decrees).*fn10

III. Conclusion

In denying defendant's motion, the court makes no comment on the propriety of sanctions besides disqualification. The only question before this court is whether Barish should be disqualified from representing Shade in the outgoing litigation regarding his injury. With this in mind, the court looks to the degree to which Barish's actions compromise his client and the degree to which they would taint the trial scheduled for December. Shade would suffer severe hardship from losing the attorney he has selected at this late point in the process, and both of the allegations made by defendant may be explored in the trial itself, a fact that lessens the possibility of public disenchantment with the judicial process and the bar. The public discussion of these issues will also ensure that the defendant is not hampered in presenting its own position. In short, the defendant has not met its burden of demonstrating that disqualification is necessary.

An appropriate order follows.


AND NOW, this 16th day of November, 1999, upon consideration of Defendant's Motion for Disqualification of Plaintiff's Attorney, Marvin I. Barish, and the response thereto, it is hereby ORDERED that the Motion is DENIED.

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