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Horvitz & Levy LLP represented defendant First American Title Insurance Company and its law firm Sonnenschein Nath & Rosenthal, in an appeal challenging an order disqualifying the Sonnenschein firm from defending First American in class actions filed by plaintiffs in 2005. Through a confluence of coincidental events, lawyers who had been representing First American at a different firm joined Sonnenschein in 2009 shortly after another lawyer (Cohen) moved laterally from an in-house counsel position to Sonnenschein. The trial court found that Cohen had, in his prior employment, briefly discussed the class actions with plaintiffs’ counsel in 2007 when they explored the possibility of retaining him as a consultant. Although Cohen turned down any role in the case, the court concluded Cohen had been given confidential information during the prospective retention interview, and he thus could not participate in representing First American in the class action litigation. The court went further, however, and found that the entire Sonnenschein firm was vicariously tainted by Cohen’s receipt of confidences, and that the firm’s ethical screen—erected immediately upon learning of Cohen’s prior contact with plaintiffs’ counsel—could not rebut the presumption that Cohen’s knowledge was known to every other attorney in the firm. 

The California Court of Appeal (Second Appellate District, Division Three) reversed the resulting disqualification order and remanded the matter to the trial court for reconsideration. The Court of Appeal ruled that automatic vicarious disqualification of an entire law firm is not required every time one attorney at that firm possesses confidential information relating to a case. Instead, there is a rebuttable presumption that the attorney’s knowledge of client confidences has been shared with others, which presumption can be refuted by evidence that the law firm adequately screened the attorney from those representing the adverse party. The court stressed that its approach was the best way to balance the important interests of clients on both sides in cases of successive adverse representations—an attorney’s former clients have an interest in protecting their confidences, while clients of the firm where the attorney works have an interest in being represented by counsel of their choice.