Can a Practitioner be Disciplined for Being Adverse to a Former Client Without Proof he Misused Confidential Information?

It's settled that a lawyer can be disqualified for being adverse to a former client in a substantially related matter.  If I represent Exxon in defending a breach of contract action by a gas station owner, I likely can't later represent that same gas station owner in a suit against Exxon over that same contract or a dispute "substantially related" to it. (I'm sure I'll be posting on what is "adverse" and what is "substantially related" at some point!)

Can the USPTO OED discipline a practitoner for doing so?

To start off, there is no provision in the PTO Code for disciplining a practitioner who is adverse to a former client in a substantially related matter.  Instead, as shown below, there is a provision about misuse of confidential information that, in the context of disqualification, has been held to permit tribunals to disqualify lawyers who are adverse to their clients in a matter substantially related to their prior representation of the client.

            Given that there is no rule against adverse representations in substantially related matters, there is a very strong argument discipline would be improper. 

            The PTO Code is based upon the ABA Model Code.  The Model Code lacked any specific prohibition, though courts felt possessed of the power to disqualify lawyers for being adverse to former clients in substantially related matters.  As one court (In re Gadbois, 786 A.2d 393, 397 (Vt. 2001)) explained:

Numerous commentators have discussed the omission of a former client conflict rule from the Code of Professional Responsibility.  Indeed, the repair of that omission is one of the reasons why the American Bar Association adopted the Model Rules of Professional Conduct as a replacement for the Code.

The Gadbois decision recognized that without a specific rule, it would be improper to discipline a lawyer for being adverse to a former client.  The case draws out the distinction between discipline and disqualification.

The lawyer in that case had been disqualified for being adverse to a former client in a substantially related matter.  The bar then brought disciplinary proceedings based on state rules based on the Model Code, and so lacking a prohibition against adverse representations in substantially related matters.  The bar had disciplined him based upon various other more general provisions in the state rules.  The court summarized the proceedings below: 

We agree with the Board that respondent's conduct would violate [Model] Rule 1.9(a) if it governed this case.  We also agree with the family court's disqualification decision.  The difficulty with this case is that the prophylactic rule now stated in Rule of Professional Conduct 1.9(a) was not contained in its predecessor, the Code of Professional Responsibility, which was in effect when respondent entered his appearance in the divorce case against his former client.  The Board hearing panel acknowledged this difficulty.  Nevertheless, it found a violation of two specific disciplinary rules, DR's 4-101(B)(3) [prohibiting misuse of confidential information] and 5-105(A) [relating to current client conflicts of interest], and a general disciplinary rule, DR 1-102(A)(7) [general prohibition against ‘misconduct’], apparently on the view that the combination of these disciplinary rules created a prohibition on respondent's conduct.

In a lengthy analysis, the court reasoned that discipline under these other rules was improper.  With respect to discipline based upon misuse of confidences, the court stated:

The first is DR 4-101(B)(3), which required that a lawyer not knowingly “[u]se a confidence or secret of his client for the advantage of himself or of a third person.”  “‘Confidence’ refers to information protected by the attorney-client privilege under applicable law, and ‘secret’ refers to other in-formation gained in the professional relationship … the disclosure of which would be embarrassing or would be likely to be detrimental to the client.”  DR 4-101(A).

 As the minority of the Board held, there is no evidence that respondent knowingly used confidential information acquired from his former client for the advantage of his new client.

With respect to discipline based upon the current client rule in the Model Code, the court stated:

 The Board also found that respondent violated DR 5-105(A).  DR 5-105(A) forbids an attorney from accepting employment “if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve him in representing differing interests.”  DR 5-105(A).  “Differing interests” are defined as those “that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest.”  Code of Prof'l Responsibility, Definitions (1).

This disciplinary rule states the classic formulation of the prohibition of accepting a client who has a conflict of interest with a present client.  By its terms, it requires the presence of two clients or potential clients.  It does not apply where the conflict is with a former client who is no longer a client of the lawyer.

With respect to whether being adverse to a former client in a substantially related matter could constitute misconduct,” after describing prior case law holding what did, and did not, constitute “misconduct,” the court wrote:

 Although broad standards are not unconstitutional in the context of lawyer disciplinary proceedings, we must be careful to adequately define a threshold to give lawyers some warning of what kind of conduct can give rise to sanctions…..  For example, the New York Court of Appeals has held that the standard “must be whether a reasonable attorney, familiar with the Code and its ethical strictures, would have notice of what conduct is proscribed.”  The Massachusetts and New Jersey courts have held that violation of a general rule is shown only by “conduct flagrantly violative of accepted professional norms.”  We believe that the Massachusetts and New Jersey standard captures the essence of the line we attempted to draw in McCarty and explains our application of DR 1-102(A)(7) in the cases in which we have employed it.

We cannot, consistent with that standard, conclude that respondent violated DR 1-102(A)(7) here.  The Code of Professional Responsibility purported to fully regulate lawyer conflicts of interest and did not prohibit side-switching as reflected in this case.  As the comment to the Restatement states: “a specific lawyer-code provision that states the elements of an offense should not, in effect, be extended beyond its stated terms through supplemental application of a general provision to conduct that is similar to but falls outside of the explicitly stated ground for a violation.”  Restatement (Third) of the Law Governing Lawyers § 5, cmt. c.  We would be doing exactly what the Restatement comment advises against if we disciplined respondent for side-switching under DR 1-102(A)(7).

As a result, the Vermont supreme court reversed the disciplinary action, holding no Vermont provision of its version of the Model Code allowed for discipline solely because a practitioner had been adverse to a former client in a substantially related matter.  I think the court was right. I think the same thing is true as to the PTO Code and discipline.

I have to tell you though that that's just my view.  I have to tell you that I've read articles by people saying that these "catch-all" provisions apply to all sorts of conduct, even conduct not relating to practice before the Office.  But I think those folks are mistaken, both because of this reason and because of other issues relating to the scope of authority of the USPTO to regulate conduct.  That is, however, something I'll get to another time.