Plein Redux: Supreme Court Reverses Court of Appeals on Disqualification for Former Client Conflict

Last fall, Division I of the Washington Court of Appeals in Plein v. USAA Casualty Insurance Company, 9 Wn. App.2d 407, 445 P.3d 574 (2019), articulated a new—and quite broad—standard on disqualification for former client conflicts. As discussed in my NWSidebar post, “Court of Appeals: New Standard in Disqualification for Former Client Conflicts,” the Court of Appeals in Plein abandoned its long-standing case law-based standard for assessing former client conflicts in favor of looking primarily to the comments to the former client conflict rule—RPC 1.9. That part of Plein wasn’t particularly controversial because the Court of Appeals’ case law-based approach was developed before the Washington Supreme Court adopted official comments to RPC 1.9 in 2006. In applying those comments, however, the Court of Appeals read the standard quite broadly in disqualifying the law firm involved. On May 21, the Supreme Court reversed the Court of Appeals in a unanimous opinion that the law firm should not have been disqualified. 2020 WL 2568541 (Wn. May 21, 2020).

The facts in Plein were straightforward (please review my previous post for a more complete breakdown). It involved an insurance “bad faith” claim by the plaintiff homeowners against their property insurance carrier, defendant USAA. However, a second law firm the plaintiffs hired after the lawsuit was filed had, until shortly before the lawsuit, represented USAA in at least 165 cases. USAA objected to the law firm’s participation in the new case, the trial court permitted the law firm to continue, but the Court of Appeals reversed.

The question before the Court of Appeals, therefore, was whether Plein was—in the vernacular of the former client conflict rule, RPC 1.9(a)—“substantially related” to the work the firm had done for USAA. The Court of Appeals noted that it had historically analyzed that question under its own decisional line that preceded significant revisions to the RPCs that were adopted by the Supreme Court in 2006. The earlier line compared the present and former matters and attempted to determine whether they were similar enough factually that confidential information from the earlier matter would be material to the later case.

The Court of Appeals reasoned, however, that with the adoption of official comments to the RPCs by the Supreme Court in 2006, it should look to those rather than its own earlier line of decisional law in assessing the issue of substantial relationship. The Court of Appeals analyzed Plein primarily under Comment 3 to RPC 1.9. The Court of Appeals read that comment broadly to include situations where a law firm had acquired significant information about the former client’s operations even if the new matter was factually distinct—and disqualified the law firm on that basis.

The Supreme Court agreed that the comments now control. It parted company with the Court of Appeals, however, in reading the comments. The Supreme Court noted that under Comment 3 general knowledge of a former client’s operations does not meet the substantial relationship test. The Supreme Court instead focused on Comment 2, which considers the factual similarity between earlier and present representations in assessing their “substantial relationship”:

[C]omment 2 anticipates the exact situation presented by this case: a lawyer representing a current client against a former organizational client on a “factually distinct problem” of the same type as the prior representation. And it allows such representation of the current client, despite the objection by the former client. Under this comment 2, [the law firm’s] representation of the Pleins is clearly permissible. Id. at *6.

Ironically, although the Supreme Court based its decision on Comment 2, its analysis under that comment wasn’t all that different than the fact-driven test used by the Court of Appeals’ prior case law-based standard.