Opinion
CAUSE NO. IP 96-102-C-D/F
January 29, 1998
ENTRY on Defendants' motion to disqualify McHale, Cook Welch (doc. no. 121).
The defendants move to disqualify the law firm of McHale, Cook Welch ("M.C.W.") from representing the plaintiffs because the firm previously represented Golden Care, Inc. which is now a subsidiary of defendant Sun Healthcare Group, Inc. The plaintiffs, John M. Brennan and Susan R. Bird (the "Brennans"), were the founders and ninety percent shareholders of Golden Care. The Brennans were also President, Executive Vice-President, and directors of Golden Care. In 1995, M.C.W. represented the Brennans during negotiations with defendant Sun Healthcare regarding a merger of Golden Care with Sun. Golden Care retained the firm of Testa, Hurwitz Thibeaut of Boston, Massachusetts. To accomplish the merger, Golden Care was required to provide Sun with an Opinion Letter confirming the legal status of Golden Care and its authorization for the merger. Golden Care engaged M.C.W. to produce the Opinion Letter. Although M.C.W. was representing the Brennans at the time, they gave their consent to M.C.W.'s production of the Opinion Letter on behalf of Golden Care.
The defendants object to M.C.W. representing the Brennans in this action. They contend that M.C.W.'s prior representation of Golden Care ethically disqualifies it because the positions M.C.W. represents in this action on behalf of the Brennans are adverse to Golden Care (through its parent, Sun) on the same subject matter as its prior representation. Thus, there is the appearance that M.C.W. has "switched sides" against Golden Care and M.C.W. has had access to Golden Care's confidences which it is in a position to use against Sun in this suit. The defendants argue that the nature of M.C.W.'s work on the Opinion Letter alone disqualifies it in this action, but they also allege that M.C.W.'s representation of Golden Care was much broader, involving all aspects of the merger negotiations and agreements which are the bases for the Brennans' claims and defenses.
Legal Standard.
In this Court, the standard governing disqualification of an attorney derives from two sources. First, the Rules of Professional Conduct as promulgated by the Indiana Supreme Court have been adopted as standards of conduct for practice in this Court. S.D.Ind.LR 83.5(f); Sofamor Danek Group, Inc. v. Depuy-Motech, Inc., No. IP 94-350-C, Order on Defendant's Motion to Disqualify Plaintiff's Counsel (doc. no. 45), p. 2, 3 (S.D.Ind., April 6, 1994) (J. McKinney). Rule 1.9 of the Indiana Rules of Professional Conduct provides that,
There are interesting questions about whether Local Rule 83.5(f)'s adoption of the state rules of professional conduct includes the official comments as well as the text and how much influence state decisions and opinions should have on this Court's application of the rules. On the present motion, however, the parties argued only the federal common law and did not point to any differences between it and the text, comments, or interpretations of the state rules.
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation; or
(b) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 would permit or require with respect to a client or when the information has become generally known.
Second, federal common law independently supplies standards for disqualification. See LaSalle National Bank v. County of Lake, 703 F.2d 252, 255 (7th Cir. 1983); Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263, 1266-67 (7th Cir. 1983). Whether the local rule or the common law should govern when they diverge is an issue that did not need to be addressed here as both sides have cited and discussed only the federal common law of disqualification with no suggestion that it diverges in any particular from the standard established by LR 83.5(f) and Prof. Conduct Rule 1.9. I have therefore followed the disqualification standards declared by the Seventh Circuit and the Supreme Court and have considered the decisions of other federal courts in determining the present motion.
Disqualification enforces an attorney's ethical obligation to maintain a client's confidences and to not use those confidences against him. LaSalle, 703 F.2d at 255. As the "substantial relationship" standard for disqualification is traditionally phrased, an attorney may not represent an adversary of a former client if the subject matters of the two representations are substantially related (absent the former client's consent). Analytica, 708 F.2d at 1266. However, because the focus of the underlying ethical duties are on the misuse of client confidences, the relationship actually examined is not between the subject matters of the prior and subsequent representations but between a former client's confidences and the subject matter of the subsequent representation — specifically the usefulness of the former to the latter. To afford a greater incentive for candor by clients with their counsel and to avoid even the appearance of impropriety, the disqualification standard has a broader scope than the ethical obligations. Analytica, 708 F.2d at 1266; LaSalle, 703 F.2d at 255. Thus, an attorney's disqualification depends not only on his actual receipt and use of a former client's confidences, but on his access to a former client's confidences which could be useful in the subsequent representation. Analytica, 708 F.2d at 1266-67.
When an entire law firm switches from one side to another (i.e., when a law firm's new client is adverse to a former client), the test for disqualification is whether a substantial relationship exists between the prior and subsequent representations. United States v. Goot, 894 F.2d 231, 235 n. 9 (7th Cir.), cert. denied, 498 U.S. 811, 111 S.Ct. 45, 112 L.Ed.2d 22 (1990); Analytica, 708 F.2d at 1266. Whether the two matters are substantially related is determined according to a three-step process:
First, the trial judge must make a factual reconstruction of the scope of the prior legal representation. Second, it must be determined whether it is reasonable to infer that the confidential information allegedly given would have been given to a lawyer representing a client in those matters. Third, it must be determined whether that information is relevant to the issues raised in the litigation pending against the former client.
LaSalle, 703 F.2d at 255-56. Jones Henry, Engineers, Ltd. v. Town of Orland, Indiana, 942 F. Supp. 1202, 1206 (N.D.Ind. 1996). If the matters are substantially related, an irrebuttable presumption of shared confidences arises which requires disqualification. Cromley v. Board of Education of Lockport Township High School District 205, 17 F.3d 1059, 1065 n. 3, 1066 (7th Cir. 1994), cert. denied, 513 U.S. 816, 115 S.Ct. 74, 130 L.Ed.2d 28 (1994); Goot, 894 F.2d at 235 n. 9; Analytica, 708 F.2d at 1266.
When an entire firm doesn't switch sides, but a client's former attorney joins a firm currently representing the client's opponent, the presumption of shared confidences also arises but is rebuttable. Cromley, 17 F.3d at 1064, 1065 n. 3; Goot, 894 F.2d at 234-35.
While the Seventh Circuit has instructed courts to resolve doubts in favor of disqualification, Goot, 894 F.2d at 235; LaSalle, 703 F.2d at 257, the Court has also emphasized more recently that disqualification is a drastic measure which courts should "hesitate to impose except when absolutely necessary", Cromley, 17 F.3d at 1066. Cook Inc. v. Johnson Johnson Interventional Systems Co., No. IP 94-1459-C-T/F, Entry Regarding Motion to Disqualify Counsel (doc. no. 126), p. 2 (S.D. Ind., Nov. 6, 1995) (J. Tinder). When applying the substantial relationship test, courts must maintain the delicate balance between "the sacrosanct privacy of the attorney-client relationship (and the professional integrity implicated by that relationship) and the prerogative of a party to proceed with counsel of its choice." Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983). Cromley, 17 F.3d at 1066 (courts must "balance the respective interests of the parties and the public").
Discussion.
The parties dispute all three parts of the LaSalle test for disqualification. Each is discussed in turn.
1. The scope of M.C.W.'s representation of Golden Care.
M.C.W. asserts that it briefly represented Golden Care only for the limited purpose of supplying the May 5, 1995 Opinion Letter. Response, Appendix, Exhibit 1 (Opinion Letter). In order to accomplish the Sun-Golden Care merger, Golden Care was required to supply an opinion letter regarding the existence and authority of Golden Care, the status of its authorized and outstanding stock, its approval of the merger, legal prerequisites for the merger under Indiana law, and the acts which would consummate the merger under Indiana law. Although M.C.W. was representing the Brennans' personal interests in the merger negotiations, Golden Care's separate merger counsel, Testa Hurwitz, requested M.C.W. to supply the Opinion Letter because time was of the essence and M.C.W. was the only firm that was already familiar with Golden Care, the merger, and Indiana law. M.C.W.'s dual representation was approved by the Brennans and Golden Care management. While M.C.W. asserts that the scope of its representation of Golden Care was restricted to the five subjects addressed by the Opinion Letter, the defendants allege broadly that M.C.W., "acting on behalf of Golden Care, reviewed and commented extensively on drafts of the Merger Agreement and merger documents, analyzed various tax and pooling issues, and commented on drafts of the Employment Agreements", (Defendants' Brief in Support of Motion (doc. no. 122), p. 4), and that M.C.W. "served as counsel to Golden Care in connection with the Merger Agreement", (id., p. 11). The only facts they rely on to support their allegation are the plaintiff's descriptions of certain documents on their May 1, 1997 privilege log. (Brief in Support, p. 4). By itself, this showing is insufficient because the subject matters described are consistent with M.C.W.'s representation of the Brennans and the log did not specify whether the Brennans' or Golden Care's attorney-client privilege was being asserted. Moreover, because M.C.W. had no privilege to assert against Sun for Golden Care representation documents (Golden Care being a subsidiary of Sun), the log should not have included, and the plaintiffs should not have withheld, any documents (or parts of documents) relating to M.C.W.'s work for Golden Care; thus, the log should have supported only the inference that the documents represent work done for the Brennans, not Golden Care. Finally, in support of their opposition to the motion, the plaintiffs submitted the affidavit of an M.C.W. attorney who averred that he and the firm represented Golden Care only in relation to the Opinion Letter and the defendants submitted no contrary affidavit. Response, Appendix, Exhibit 2. But then M.C.W. added confusion.
Because of the relationship of the Brennans to Golden Care and the information needs of the merger, the fact that some of the logged documents regard information received from or transmitted to Golden Care personnel would not contradict the client inference, but might suggest that the documents are not privileged.
On August 20, 1997, the same date they filed their Response to the motion, the plaintiffs produced several of the documents previously withheld and logged as privileged (the "August 20, 1997 Documents"). Several of these documents were the ones on whose descriptions the defendants relied to support their contention of a broader scope to M.C.W.'s representation of Golden Care. The defendants submitted some of those documents with their September 26, 1997 Reply (the "Reply documents"). The plaintiffs had characterized the August 20, 1997 Documents as ones "that were contained in the Brennans' files due to their positions with Golden Care, as well as those documents which are related to the opinion letter. . . ." June 2, 1997 Welch-Krystowski letter, Appendix of Exhibits to Brief in Support (doc. no. 123), Exhibit K. On October 3, 1997, in relation to a different pending motion, the Court ordered the plaintiffs to revise their privilege log to designate specifically whether the attorney-client privileges asserted therein belonged to, and involved work done for, the Brennans or Golden Care. Entry of October 3, 1997, p. 4 (doc. no. 198). On October 10, 1997, the plaintiffs submitted their revised privilege log (doc. no. 206) which now asserted that some of the documents "constitute or reflect attorney-client communication between MCW and Golden Care, Inc., or counsel for Golden Care, and ha[ve] been produced to Defendant, Sun Healthcare Group, Inc., as the corporate parent of Golden Care, Inc." The plaintiffs made this assertion with respect to many of the August 20, 1997 and Reply Documents.
Because the Reply documents clearly addressed many subjects aside from the Opinion Letter and, if created for the purpose of representing or advising Golden Care, tend to support the defendants' assertion of a broader scope to M.C.W.'s representation, the Court issued an Interim Order directing M.C.W. to submit a sur-response containing additional specified information as to each of the Reply documents, including a "final opportunity to accurately advise the Court" about the client or clients for whom the Reply documents were created. Interim Briefing and Production Order of November 24, 1997, p. 3 and n. 4 (doc. no. 259). Because of the import of the Reply Documents in conjunction with the revised privilege log, the plaintiffs were also directed to produce billing statements, engagement letters, and conflicts documents relating to services performed by M.C.W. for Golden Care and the Brennans. Id., at 4. The plaintiffs submitted their Sur-response supplying the requested information and additional affidavits in support thereof. Some of the billing and conflicts information was submitted for in camera inspection. The defendants filed a Sur-reply and the plaintiffs moved for leave to file a "supplemental statement" (Dec. 18, 1997, doc. no. 283) which is granted.
The plaintiffs' assertion in the June 2, 1997 Welch-Krystowski letter that the Reply Documents concerned either the Opinion Letter or "were contained in the Brennans' files due to their positions with Golden Care" also suggested that the documents reflected M.C.W.'s work for Golden Care. These documents were clearly not created in the ordinary course of Golden Care's business, but reflect information-gathering, negotiations, deliberations, or advice regarding the proposed Sun-Golden Care merger and the Opinion Letter. If the documents (or parts of them) instead reflected communications by or to M.C.W. for the purpose of its representation of the Brennans' personal interests, they would not be discoverable merely because they were contained in the Brennans' files at their Golden Care offices; it is the purpose for which documents are created, not their location, which creates the privilege. What the plaintiffs intended to mean by the addition of the phrase "due to their positions with Golden Care" is unclear, but it certainly does not suggest that the documents were protected by the Brennans' attorney-client privilege.
I have carefully examined the original briefs and supporting submissions and all of the parties' additional submissions, including the in camera documents, together with the defendants' Sur-reply thereto, and the plaintiffs' supplemental statement. I find and conclude that M.C.W.'s representation of Golden Care was limited to the subjects of the May 5, 1995 Opinion Letter. The upshot of the plaintiffs' argument and showing is that the discrepancies between their Response assertions and the Reply Documents, June 2, 1997 letter, and privilege log descriptions is due to M.C.W.'s mistakes in compiling their revised privilege log: the log descriptions of the Reply Documents (and some of the August 20, 1997 documents) should have read that the documents "constitute or reflect communications between MCW and Golden Care or its counsel", (Sur-response, p. 4 n. 6 (doc. no. 271) (emphasis added)), instead of "constitute or reflect attorney-client communication[s]" between M.C.W. and Golden Care, as they were originally described (Revised Privilege Log, p. 1 (emphasis added)). The plaintiffs' argument and contention now, supported by affidavits of M.C.W. attorneys, are that all material in the Reply Documents which is not related to the Opinion Letter was created, acquired, or transmitted for the purpose of M.C.W.'s representation of the Brennan's personal interests in the merger negotiations. Having examined the Reply documents in light of M.C.W.'s affidavits, I find their explanations to be credible and true. Because M.C.W. was preparing the Opinion Letter at the same time that it was representing the Brennans toward the end of the merger negotiations, and both representations necessitated consultations and communications with the same officers and counsel of Golden Care, often at the same time, it is reasonable and likely that some of the Reply Documents contain material pertaining and/or privileged as to both clients.
2. Access to Golden Care's confidential information.
Next, the extent and nature of Golden Care's confidential information to which M.C.W. had access as a result of its preparation of the Opinion Letter must be determined. Again, the substantial relationship test examines the information to which any counsel undertaking the type of representation at issue reasonably would have had access; the information which counsel actually received and reviewed is not relevant, unless, of course, the information actually reviewed exceeded the reasonably expected access.
In this case, M.C.W. has specifically delineated the records and documents which it reviewed in the course of preparing the Opinion Letter. Eckerle Affidavit, August 20, 1997 (Response, Appendix, Exhibit 2), ¶ 12. I find that this delineation also describes the documentation to which an attorney would reasonably have had access in the course of preparing such an Opinion Letter. Therefore, in representing Golden Care, M.C.W. had expected and actual access to the information of Golden Care which was contained in the documents and records listed at ¶ 12 of the Eckerle Affidavit.
The more important point of contention at this step, however, is not the information M.C.W. acquired as a result of its representation of Golden Care, but the information about Golden Care that M.C.W. had access to in the course of its representation of the Brennans. Because the Brennans were founders, ninety percent shareholders, and officers of Golden Care, they had knowledge of and access to virtually all of Golden Care's confidential information and more information. Because M.C.W. represented the Brennans' personal interests in the merger negotiations and more information about Golden Care was required to advise the Brennans than to produce the Opinion Letter, it is reasonable to expect that M.C.W. had access to a great deal more of Golden Care's confidences and information than was required to produce the Opinion Letter. The defendants argue that this additional information must be considered in the substantial relationship analysis. The plaintiffs do not dispute that M.C.W. had access to, and in fact reviewed, much more information regarding Golden Care's operations and confidences than was required to produce the Opinion Letter; they contend however that M.C.W.'s independent source of this information should not figure into the substantial relationship test. They go further: because all of Golden Care's information was known to, or accessible by, the Brennans, even the Opinion Letter-related information should be excluded, thus evading the substantial relationship and disqualification question entirely.
Under the rule of Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1321 (7th Cir. 1978), cert. denied, 439 U.S. 955, 99 S.Ct. 353, 58 L.Ed.2d 346 (1978), as reiterated in Analytica, 708 F.2d at 1268-69, if a person "entertained a reasonable belief that it was submitting confidential information . . . to a law firm which had solicited the information upon a representation that the firm was acting in the undivided interest of" the submitter and other persons, the law firm would be disqualified from undertaking substantially related litigation against any of the interested persons. Westinghouse, 580 F.2d at 1321. In Westinghouse, several member companies of an industry institute shared confidential information with the institute's law firm; the Court held that the law firm was disqualified from later representing a party against one of the member companies on a matter to which the shared information was relevant. In Analytica, a company and its three shareholders together engaged one law firm to represent each of them in structuring a compensation transaction for one of the shareholders, involving a transfer of shares from the other shareholders and cash from the company to the third shareholder; the law firm was later disqualified from undertaking an antitrust suit against the company.
Although the application of this rule to the facts of this case is a close question, I conclude that the access to Golden Care's information that M.C.W. enjoyed because of its representation of the Brennans does not fall under the "undivided interest" rule of Westinghouse and Analytica. On the one hand, the Brennans' ninety percent ownership of and management role in Golden Care argue in favor of "undivided interest" treatment. The Brennans thus enjoyed, if not absolute control of, at least an undeniable right to obtain, Golden Care's confidential and business information. Both the Brennans and Golden Care desired and worked toward the merger with Sun and the accomplishment of their mutual goal necessitated that the Brennans and M.C.W. have access to Golden Care's information. On the other hand, however, while closely related, the Brennans and Golden Care were not identical entities, but were legally distinct persons and their interests in the merger, while close, were not necessarily identical in all aspects. Golden Care retained separate merger counsel which actively represented its interests. All parties to the negotiations knew that M.C.W. represented only the Brennans' personal interests; neither Golden Care, its lawyers, nor Sun could have believed that M.C.W. or the Brennans were representing, responsible for, or watching out for any separate interests of Golden Care in the merger. There is no evidence that Golden Care, the Brennans, or M.C.W. disregarded the forms or substance of Golden Care's separate legal existence. In their arguments, the defendants themselves emphasize the independent status of Golden Care and the corporate nature of its information vis-a-vis the Brennans and there is no evidence or allegation that means for asserting the corporation's separate and independent interest in that information did not exist or were disregarded. Although the issue is close, I conclude that, when releasing its information to the Brennans or M.C.W. during the merger negotiations, Golden Care could not have entertained a reasonable belief that M.C.W. was acting in any undivided interest of the company and the Brennans. Therefore, the access to Golden Care's information that M.C.W. had as a result of its representation of the Brennans does not figure into substantial relationship analysis.
Even if M.C.W.'s access to Golden Care's information as a result of its representation of the Brennans were considered under the "undivided interest" rule of Westinghouse, the only accessible information which the defendants identify as creating a conflict — viz., Golden Care's capitalization plans, where and how Golden Care competed, type of services Golden Care provided, the geographic area in which it provided services, (Brief in Support, pp. 12-13), and negotiating positions — was not confidential as to the Brennans or, therefore, their counsel to whom they could have and would have passed along the information, whoever that counsel might have been. Moreover, because the identified information is not privileged and is relevant to the claims and/or counterclaims in this cause, then it was properly discoverable in this action. Thus, M.C.W.'s representation of the Brennans during the merger negotiations gave it no advantage in this litigation and should not constitute grounds for M.C.W.'s disqualification. See Castillo v. St. Paul Fire Marine Insurance Co., 938 F.2d 776, 778 (7th Cir. 1991). In this context, the careful balance the Court must make between ethical duties and protections, on the one hand, and the Brennans' right to have counsel of their own choice, on the other hand, tips against disqualification.
3. Relevance of Golden Care's confidences to this cause.
The defendants contend that the confidences of Golden Care to which M.C.W. had access while preparing the Opinion Letter are relevant to the defendants' counterclaims alleging that the Brennans violated the non-solicitation, non-competition, and confidentiality provisions of the Employment Agreements. (Brief in Support, p. 4). In addition, the defendants argue that, after opining in the Opinion Letter that the Merger Agreement was valid under Indiana law, M.C.W. now advocates the Brennans' contrary claim that the sale of unregistered shares provision is invalid. (Id., p. 5).
It is clear, however, that the Opinion Letter did not state that the transactions contemplated by the merger agreements were valid under Indiana law or any other law. As I found above, the Opinion Letter was limited in scope to five matters and was not required or intended to opine on the legality of the Merger Agreement or any other associated agreement. These limitations appear in the text of the Opinion Letter itself:
Without verification, we have assumed that the Merger Agreement and the Plan of Merger . . . have been duly authorized, executed and delivered by the respective parties thereto (other than Golden Care) for value given; that the Merger Agreement and the Plan of Merger constitute the valid and binding obligations of the respective parties thereto, enforceable in accordance with their respective terms . . . . We have assumed that the execution and delivery of, and the performance of their respective obligations under, the Merger Agreement and the Plan of Merger by the parties (other than Golden Care) have not violated, and will not violate, any provisions of any law or regulation or any ruling, order, judgment, warrant or decree of any court or governmental authority or agency applicable to such corporations or entities (other than Golden Care). . . .
* * *
We are admitted to practice in the State of Indiana and, accordingly, we are opining solely with respect to the present laws of Indiana, except that, with your permission, we express no opinion as to the securities laws of the State of Indiana.
Opinion Letter, pp. 2-3. In addition, the Opinion Letter on its face specifically excluded all attachments to the Merger Agreement from the scope of its review, including the Employment Agreements which form the bases for the defendants' counterclaims. Opinion Letter, p. 1 ("the term Merger Agreement shall not include any agreements included as exhibits thereto"). Finally, none of the information about Golden Care which I found M.C.W. reviewed for the Opinion Letter is reasonably relevant to the Brennans' claims or the defendants' counterclaims.
In regard to the defendants' second argument, even if the Opinion Letter were interpreted as stating that the non-registration provisions of the merger were valid under law, the Brennans' claim in this action is that events occurring after the merger rendered the non-registration provision invalid.
I find and conclude, therefore, that the information to which M.C.W. had access during its representation of Golden Care on the matter of the Opinion Letter is not relevant to the issues in this cause, and therefore does not constitute grounds for M.C.W.'s disqualification.
5. Forfeiture.
I found above that M.C.W. represented Golden Care only for the limited purpose of the Opinion Letter. Sun and Golden Care knew at the time of the merger negotiations and agreements that M.C.W. represented the Brennans' personal interests and also that it produced the Opinion Letter on behalf of Golden Care. At that time, the defendants were also aware of the information that M.C.W. reviewed for the purpose of providing the Opinion Letter. Despite this knowledge, the defendants waited over seventeen months after the commencement of this suit to move for M.C.W.'s disqualification. I find none of the defendants' excuses for their delay convincing. If, as the defendants assert, there is a duty to disclose potential conflicts, the potential conflict at issue here was as well known to the defendants as to the Brennans and M.C.W.; no "ferreting out" of the conflict was necessary. M.C.W.'s failure to reveal the already-known is no excuse. The defendants also cannot plead ignorance of essential facts until the plaintiffs produced their privilege log and the Reply Documents. Golden Care, Sun, and their attorneys already knew that M.C.W. had broad access to Golden Care's information in the course of their representation of the Brennans' personal interests and the Reply Documents added nothing to their knowledge of M.C.W.'s work on the Opinion Letter. Finally, M.C.W.'s billing, engagement, and conflicts documents do not add anything significant to the information already possessed by the defendants.
Even if the access M.C.W. enjoyed to Golden Care's information as a result of its representation of the Brennans is considered in the analysis through the "undivided interest" doctrine, the facts essential for a disqualification motion — e.g., that M.C.W. represented the Brennans and that it had wide access to Golden Care's confidential and other information — were already known to Golden Care, Sun, and their attorneys at the time of the merger negotiations. The very content of the merger negotiations — e.g., the details which were discussed regarding the Employment Agreements and the non-competition, non-solicitation, and confidentiality provisions therein, and the discussions about the price and structure of the merger deal — made clear to all the parties, including Sun and Golden Care, that the Brennans' lawyers enjoyed access to Golden Care's information bearing on these and other issues. The Reply Documents did not reveal any additional information necessary to put the defendants on notice about the scope of M.C.W.'s access to Golden Care's information or its representation of the Brennans.
In fact, the only new insight the defendants argued the Reply Documents revealed related to the scope of M.C.W.'s representation of Golden Care, not the Brennans. As explained above, the argument that the Reply Documents proved M.C.W.'s work for Golden Care was broader than the Opinion Letter matter was based solely on M.C.W.'s mistakes in compiling the Brennans' privilege logs.
Because (1) the length of the defendants' delay is significant, (2) the defendants were aware of all necessary facts since long before this suit was filed, (3) the defendants were represented by counsel during all relevant periods, (4) there is no adequate reason shown for the defendants' delay, (5) the plaintiffs will suffer obvious prejudice if their attorneys are now disqualified, and (6) no potential prejudice has been shown should disqualification be denied, I find and conclude that the defendants have forfeited any objection they might have had to M.C.W.'s representation of the Brennans because of their delay in moving for disqualification. See Chemical Waste Management, Inc. v. Sims, 875 F. Supp. 501, 504-05 (N.D.Ill. 1995); General Electric Co. v. Industra Products, Inc., 683 F. Supp. 1254 (N.D.Ind. 1988).
One final point needs to be emphasized. Although M.C.W. is not disqualified, plaintiffs' counsel should reflect on how their conduct protracted the litigation and adjudication of this motion. While the protection of the attorney-client privilege serves vital interests in our legal system, both counsel and court must take care that the privilege is accurately applied because it impedes or prevents the discovery of truth. The careful evaluation by counsel of whether the privilege applies to specific documents, the accurate compilation of privilege logs, and the thorough presentation of arguments and evidence when the privilege is challenged are all essential to this process and especially so because the adjudication of a privilege question necessarily takes place without full adversarial participation. The Brennans, advised by M.C.W., withheld the August 20, 1997 Documents under a claim of privilege only to produce them later and then counsel failed to accurately and completely compile the Brennans' privilege log despite the log's obvious importance, the repeated challenges by the defendants to the log's content, and the Court's own Order. Asserting the attorney-client privilege and producing privilege logs are not trivial matters; they are two matters which demand the most intensive scrutiny by counsel because the Court must largely rely on its officers' representations in such matters. Neither should they be exercises in trial and error. The Court exercised what should only be considered rare discretion in not holding the plaintiffs to the representations of their Revised Privilege Log; but it did so only because of the importance of the policies underlying the attorney-client privilege, the drastic effect that disqualification would have had on the administration of this case, and the prejudice to the plaintiffs if held responsible for their counsel's mistakes. Counsel's conduct caused the parties and the Court to expend excessive effort, time, and resources on this motion; delayed the defendants' discovery of documents; and delayed other litigants waiting in the Court's queue. This admonishment to plaintiffs' counsel shall suffice; monetary sanctions, while considered, are not ordered.
The defendants' motion is DENIED.
Done this ___ day of January, 1998.