Management Registry, Inc. v. A.W. Companies, Inc.

Background

Management Registry, Inc. (MRI) sued A.W. Companies, Inc., Al Brown, Wendy Brown, and Eric Berg in 2017. The defendants considered hiring Nilan Johnson Lewis P.A. (NJL), and NJL attorneys Joel O’Malley and Katie Connolly attended a January 2018 mediation with the original defendants and their then-current lawyers. NJL did not ultimately represent the original defendants.

Berg later became adverse to A.W. Companies and the Browns, left the federal lawsuit, and pursued related litigation against them. NJL attorney O’Malley later signed an appeal brief in that related litigation. In April 2020, O’Malley and Connolly appeared as local counsel for the defendants in this federal case, and NJL attorneys Donald Lewis, Connolly, and O’Malley later became lead counsel.

After NJL produced more than 90,000 previously undisclosed documents in March 2021, MRI’s lawyers found materials showing NJL’s involvement in the 2018 mediation. MRI then argued that NJL had received confidential information from Berg and had taken positions against his interests in related proceedings. MRI moved to disqualify NJL from representing the defendants.

Legal standard

The court described disqualification of opposing counsel as an extreme remedy appropriate only when necessary. MRI had the burden of showing that NJL’s continued representation was impermissible. The court also considered the parties’ interests, the public’s confidence in the legal profession, the integrity of the proceedings, the defendants’ choice of counsel, and the risk that confidential information could be used unfairly.

Analysis

The court considered MRI’s arguments under Minnesota Rules of Professional Conduct 1.6, 1.7, 1.9, and 1.18. Rule 1.6 concerns protecting confidential information. The court found no evidence that NJL had disclosed or used confidential information from Berg. O’Malley and Connolly stated that they could not recall communications with Berg before, during, or after the mediation, and their records contained no such communications. Berg also provided no evidence that NJL obtained, disclosed, or used his confidential information.

Rule 1.9 concerns a lawyer’s duties to former clients. The court said MRI could not establish a Rule 1.9 violation because MRI had never had an attorney-client relationship with NJL. Although MRI argued that Berg was NJL’s former client, Berg—not MRI—held the interests involved, and Berg had not moved to disqualify NJL or submitted evidence supporting that request.

The court also found no evidence that NJL had formed an attorney-client relationship with Berg. There was no contract, payment, request for legal advice, or receipt of legal advice. Berg’s communications showed that he thought NJL might take over the case, but NJL never did so, and Berg continued to be represented by the Schaefer Halleen firm during and after the mediation. The court therefore concluded that Berg was not a former client of NJL under either a contract theory or a theory based on seeking and receiving legal advice.

Because Berg was not a former client, the court found that Rule 1.7’s restrictions on conflicts involving current clients did not apply. The court separately considered Rule 1.18, which protects information provided by a prospective client even when no attorney-client relationship results. NJL did not dispute that Berg was a prospective client. But the court found no evidence that Berg actually provided NJL with information, much less information that could have been significantly harmful to him. Information from Berg’s affidavits, depositions, and trial testimony had been disclosed to other parties and was not information NJL obtained during a consultation with him.

Disposition

The court denied MRI’s motion to disqualify NJL. It also stated that it would schedule a phone conference with the parties to discuss the next steps in the litigation.