The Third DCA recently released an opinion that provides further demonstration of the limitations on lawyers representing parties in the same or in a substantially related matter.
The opinion addresses a conflict stemming from a company and its owner entering into a stock-transfer contract with a then-employee, who started a separate corporation of his own. The lawyer for this deal was tasked with drawing up terms for the parties’ agreement that would be discussed at their final meeting. The company paid the lawyer for this work on the contract, but the lawyer’s contact with the company was primarily handled through the former employee. In addition, the lawyer never signed a formal retainer agreement with the company.
Unfortunately, when the deal fell through, the former employee sued the company and its owner, using the same lawyer who drew up the contract terms.
The complaint contained nine counts—including breach of an oral agreement and unjust enrichment. The defendants moved to disqualify the lawyer representing the former employee under Rule Regulating the Florida Bar 4-1.9, which prohibits a lawyer from representing a new client in a matter against a former client where the matter is the same or substantially related and the new client’s interests are materially adverse to those of the former client.
The comments of this rule define substantially related matters as those that “involve the same transaction or legal dispute, or if the current matter would involve the lawyer attacking work that the lawyer performed for the former client.”
The trial court denied the motion, concluding that there was no substantial similarity between the legal representation sought from the former employee and the prior work done for the company.
The defendants petitioned for a writ of certiorari to the Third DCA. In its decision to overturn the trial court ruling, the Third DCA reasoned that the lawyer acted as the company’s lawyer in the prior matter when he was paid by the company to draw up the term sheet. Ultimately, because the lawsuit stemmed from a conflict regarding the ownership percentage of the company’s stock, the matter was substantially related, and the attorney should have been disqualified from assisting in suing his former client.
Read the full opinion here.
