16 Rev. Litig. 537

Nostalgia in the Fifth Circuit: Holding the Line on Litigation Conflicts Through Federal Common Law

Ted Schneyer

In two decisions, In re Dresser Industries, Inc. and In re American Airlines, Inc., the Fifth Circuit took an aggressive stance on disqualification for conflicts of interest. The court also treated disqualification doctrine as a matter of federal common law, despite the Supreme Court’s holding that disqualification decisions are not immediately appealable as a matter of right. This approach is not only unlikely to succeed in creating a uniform standard for disqualification, but also creates problems for both law firms and clients. Even if every district court were to embrace the Fifth Circuit’s methodology, this would simply leave each court with wide discretion to develop its own version of a “national standard.” Further, not all courts will share the Fifth Circuit’s aggressive approach to disqualification. As it stands, litigators in the Fifth Circuit now encounter difficulty in predicting the standard to which they will be held for the purposes of disqualification.


   I. Introduction The federal circuit courts of appeal review lower court decisions concerning litigators' conflicts of interest in two kinds of cases. Sometimes, the issue is whether a lawyer or law firm may represent a client in the face of a present or potential conflict or should instead be disqualified (or not appointed). n1 These cases usually evaluate conflicts before representation has begun or proceeded very far. In other cases, the courts must decide after representation has ended whether a lawyer's services were impaired by a conflict in a manner that justifies any of several ex post remedies: malpractice liability; n2 court imposed fines or denial of attorneys' fees; n3 denial of a petition to certify a settlement class action on the grounds that counsel did not adequately represent the class in negotiating the settlement; n4 or reversal of a criminal conviction on grounds of ineffective assistance of counsel. n5    My review of the Fifth Circuit's conflicts decisions since 1975 suggests that, while the court has been slow to recognize or remedy conflicts ex post, n6 it has policed conflicts very aggressively in the process of reviewing disqualification decisions in civil cases. This Article focuses on the court's two most aggressive disqualification decisions in recent years, In re Dresser Industries, Inc., and In re American Airlines, Inc. It argues that those decisions are anachronistic and unsound. They treat disqualification doctrine as a matter of federal common law, even though the Supreme Court foreclosed all hope of developing a uniform federal common law on the subject by holding in the 1980's that disqualification decisions are not immediately appealable as a matter of right. They offer lawyers and litigants in the Fifth Circuit no practical basis for predicting future disqualification rulings. Additionally, they treat a broader range of conflicts as impermissible, and support disqualification more aggressively as an enforcement technique than any other circuit. In this respect, they represent a quixotic denial of the realities that increasingly militate in favor of relaxed conflicts standards and less use of disqualification as a response to conflicts in the federal courts. n7    This Article proceeds in two parts. Part II provides background information on the logistical problems a disqualification motion can raise for the target law firm and its clients, on the frequency with which disqualification motions are filed in federal litigation today, and on the ease with which even sophisticated law firms can stumble into conflicted representations in an era in which federal civil dockets are skewed toward complex, multi party business litigation. Part II illustrates the last point by describing the facts that gave rise to disqualification motions in Dresser and American Airlines. Part III then focuses on the court's analysis of the conflicts issues raised in those cases. It argues that the decisions represent an across the board rejection of measures that commentators have proposed and other federal courts have taken to cut back on the use of disqualification as a sanction or remedy when law firms become embroiled in alleged conflicts of interest. It also criticizes the reasoning that lies behind the court's rejection of those measures. A brief conclusion summarizes my objections to the Fifth Circuit's approach.    II. The Realities of Federal Litigation Practice Today and How They Bear on Disqualification Policy To understand the forces that now militate in favor of relaxing conflicts standards in federal litigation and limiting the use of disqualification as a conflicts remedy, one needs some background information on the costs of disqualification and its prevention, the realities of federal litigation practice today, and the ease with which those realities can spawn disqualification proceedings. Being the target of a disqualification motion poses serious problems for both the targeted law firm and its client. If the motion is granted, the firm may have to forgo expected fees and disgorge fees already earned. n8 It may also suffer reputational harm. At the same time, if the firm wishes to oppose the motion, it must convince the client to support the effort a matter on which the firm's advice to the client can hardly be disinterested. n9    On the other hand, for a firm to detect and reject every new matter that poses even a remote risk of disqualification is burdensome, particularly if the firm practices in a highly specialized field such as antitrust litigation. Moreover, the firm may pass the estimated costs of its forbearance on to its clients in the form of higher fees, n10 and some clients may end up buying more "loyalty insurance" than they want or need. Of course, a firm might try to minimize its disqualification risks by accepting potentially risky cases but negotiating with clients for advance waivers of future conflicts. This strategy is fraught with uncertainty, however. A waiver may prove effective only if a court later finds that the client, at the time of consent, apprehended the precise nature of the conflict that later arose. n11    These problems are magnified by the fact that it has become common for federal litigators to be charged with improper conflicts. Of 443 reported federal decisions from 1990 to 1995 involving alleged lawyer misconduct, 56% involved conflicts of interest. n12 More to the point, six times more federal decisions on disqualification motions were reported from 1986 to 1990 than from 1970 to 1975, yet civil filings increased only modestly over the same period. n13    This growth in disqualification motions reflects changes in the organization of law practice and in federal dockets. As law firms have grown, merged, opened multiple offices, and hired more lawyers laterally from other firms, n14 they have heightened their risk of becoming embroiled in conflicts. As business clients have spread their legal work over multiple law firms, rather than relying primarily on one firm as they once did, n15 the risk has grown greater still. Moreover, large stakes business litigation accounts for much of the growth in federal civil caseloads since the 1960s n16 and these cases are especially likely to spawn disqualification motions, because they usually involve multiple parties that frequently purchase legal services. n17 In this environment, a law firm's chances of stumbling into a potentially disqualifying conflict are considerable. To illustrate the point, let me now describe the facts of the Fifth Circuit's two most important disqualification cases in recent years, reserving my discussion of the court's legal analysis for Part III.    In re Dresser Industries, Inc. n18 was an antitrust class action against several makers of oil well drill bits. Stephen Susman and his firm, Susman Godfrey, were designated as lead counsel for the class. n19 Dresser Industries, a defendant, moved to disqualify Susman Godfrey on the ground that the firm was then representing Dresser as a defendant in two other antitrust suits, although those suits concerned Dresser's marketing of compressors, not drill bits.    Susman originally sued other drill bit makers, but not Dresser. n20 Only after his case and others were transformed into the class action did he conclude that Dresser should be added as a defendant. Susman then informed Dresser that he had become lead counsel for the class and might be forced to name Dresser as a defendant. Rule 1.06(b) of the Texas state disciplinary rules, which had also been adopted by the federal district where the class action was filed, appeared to permit Susman to sue his present client without its consent, provided that the matters were not substantially related and that Susman's representing the class would not "adversely limit" his work for Dresser. n21 Nevertheless, Susman told Dresser that if the company considered his involvement in the class action a reason to replace Susman Godfrey as its counsel in the pending lawsuits, the firm would help Dresser with the transition. With such help, perhaps the only prejudicial effect that replacing Susman would have on Dresser would be the loss of any distinctive right under Rule 1.06(b) or otherwise that Dresser enjoyed as a present client to stop Susman from suing the company on behalf of the drill bits plaintiffs. n22 But Dresser declined to switch counsel. Susman then added Dresser as a defendant in the class action, and Dresser filed its motion to disqualify. The district court denied the motion, n23 finding that Susman's conduct was permissible under Rule 1.06(b), but the Fifth Circuit issued a writ of mandamus ordering disqualification. n24    In re American Airlines, Inc. n25 was a comedy of errors of more Shakespearean proportions. Before the case arose, Vinson & Elkins (V&E) had advised American Airlines on the antitrust implications of a proposed purchase of Continental Airlines, focusing mostly on the anti competitive effects the merger could have in the Denver air travel market. n26 V&E had also defended American in two state court actions alleging antitrust and contract violations in connection with American's use of its computerized airline reservation system. After these matters ended, Northwest and Continental filed antitrust suits against American, alleging that the defendant was using predatory airfares in an attempt to monopolize certain air travel markets not including Denver. American's in house counsel asked V&E to join other lawyers in defending his company. One V&E partner initially agreed to take the case, but, unbeknownst to her, another V&E partner, Harry Reasoner, had already promised Northwest's counsel, Joe Jamail, that V&E would not enter the case on American's behalf without first exploring whether to join Jamail as co counsel to Northwest. There were allegations that American knew about Reasoner's commitment to Jamail and had sought out V&E in "bad faith" not to gain representation, but to foreclose V&E from appearing on the other side. Within days, V&E turned down American in favor of representing Northwest. American then complained that V&E's prior representations of American in antitrust matters, as well as its initial agreement to represent American in this very case, made its representation of Northwest improper. When Northwest and V&E refused to part ways, American moved to disqualify V&E. The plot thickened when the parties realized that American's lead counsel in the matter Weil, Gotshal & Manges had previously represented Northwest and Continental in other matters! The parties discussed but rejected an exchange of conflict waivers.    The district court denied American's motion. n27 It treated V&E's decision to represent Northwest after apparently agreeing to represent American as a misunderstanding rather than as a case of improper "side switching," and it found that, because the matters were not substantially related, V&E's prior work for American was no obstacle to its new engagement. n28 The Fifth Circuit, as in Dresser, n29 issued a writ of mandamus ordering disqualification. n30     The ease with which sophisticated law firms such as Susman Godfrey or Vinson & Elkins can stumble into these situations and the financial sacrifice associated with avoiding them are motivating large law firms around the country to press judges to relax conflicts standards or, at least, to stop using disqualification as the remedy of choice for breaches of the prevailing standards. One sees evidence of such pressure in the process by which the American Law Institute is developing its new Restatement (Third) of the Law Governing Lawyers. n31 If it is accepted by the courts, a key provision in the emerging Restatement, section 204(2), will reduce the threat of law firm disqualification by permitting screening measures to immunize firms from disqualification for certain conflicts their lateral hires bring with them from elsewhere in private practice. n32 Some observers see section 204(2) as the fruit of a political campaign waged by large law firms, which rely heavily on lateral hiring. n33    III. A Critique of The Fifth Circuit's Resistance to Disqualification Cutbacks Recognizing that much of the burden of disqualification falls not on the lawyers who are disqualified, but on the (usually) innocent clients who must replace them and on the trial courts, which must delay proceedings until new counsel is hired and brought up to speed, n34 observers have proposed, and some courts have taken, measures to cut back on disqualification. Some measures relax conflicts standards directly, as is the case with section 204(2) of the Restatement, which allows screening to legitimate certain representations that would otherwise be impermissible. Others limit the range of ethically impermissible litigation conflicts for which disqualification is available as a remedy or sanction. Still others are procedural devices to discourage the overuse of disqualification motions as a litigation tactic. The Fifth Circuit's most important recent decisions seem hostile to all these measures.    A. Relaxing Conflicts Standards    1. Simultaneous representations and the Dresser decision Two conflict problems involving multiple clients have recently arisen in Fifth Circuit civil litigation. The first, exemplified by Dresser, arises in representing one current client against another without the informed consent of both. The drawbacks of this arrangement are obvious when the lawyer must take steps for one client which breach her duty of loyalty to the other, as when she tries to represent the plaintiff and defendant in the same case. But the problem can also arise in unrelated matters. Suppose A asks lawyer L to represent him in a suit against B, whom L already represents in an entirely unrelated matter. Prudence generally dictates sending A elsewhere or, at a minimum, making sure that A consents to the representation with a full understanding of L's ties to B and how they might affect L's efforts on A's behalf. But what about B? Notice that because the matters are unrelated, L would not be required in representing A to do something that impairs her work for B, though she may be tempted to do so in some circumstances. Should B's consent nonetheless be required before L is permitted to accept A's case? Should B have an absolute right to veto L's decision to represent another client against B as long as B remains a client? Or should B's veto right be limited to a subset of such cases?    Restated in economic terms, the question is whether there is some modest risk of L's impairment that B would rationally have accepted rather than "insured" against by paying an extra fee premium when he retained L. Two legitimate interests of B's could conceivably be impaired by L's representation of A. The risks to B's confidentiality interests are usually minimal where the matters are unrelated. B's loyalty interests may be at risk, however. For example, if L is working for A on a contingent fee basis or anticipates future work from A but not from B, she might threaten to work less than zealously for B in order to pressure B to accept an unfavorable settlement with A. Often, however, the risks to B's loyalty interests will be modest. In those cases, it is at least plausible to suppose that a per se ban on suing an unconsenting current client in an unrelated matter might force some clients to buy more loyalty "insurance" than they would otherwise choose, by causing L to raise her fee in order to recover the cost of opportunities foreclosed by accepting B as a client. n35    One cannot dismiss this concern on the ground that L need not worry that B will ever exercise his veto right unless L's work for A poses a genuine risk to B's confidentiality and loyalty interests. If a per se ban exists and B invokes the rule to disqualify L as A's counsel, this will not prove that, in the absence of the rule, B would have chosen to buy L's ex ante commitment not to represent A (or anyone else) against B without B's consent. B's disqualification motion instead might be purely opportunistic a strategic move to deny A his choice of counsel or to delay the proceeding.    Of course, B might be upset that his lawyer in one matter is suing him in another, even if the two are unrelated and no palpable risk exists that L's representation of A will impair her work for B. One can imagine this sense of betrayal damaging B's ongoing relationship with L in some cases. But this "intangible harm" to the "relationship" is not necessarily an impairment of the "representation." Nor is it inevitable and, if it in fact occurs, may be mild, especially if B is the kind of sophisticated business client so commonly found in federal civil cases. For all these reasons, a live issue in the federal courts today ought to be whether every representation in litigation against a present, nonconsenting client should be impermissible and subject to disqualification, or only those which pose a palpable risk of adversely affecting the lawyer's work for that client.     Ethics rules promulgated by the American Bar Association (ABA) and adopted as disciplinary standards in most jurisdictions reflect the legal profession's traditional views on the issue. They prohibit all nonconsensual representations against a current client. n36 But views appear to be changing rapidly in response to the realities of litigation practice today. Professor Tom Morgan recently mounted a strong argument that only those representations in which the lawyer's work for B may be "materially limited" by her duties to A should be improper without B's consent. n37 Moreover, the ethics rules adopted for disciplinary purposes by the Texas Supreme Court and, in turn, by the federal district court that denied Dresser's motion to disqualify Susman Godfrey take Professor Morgan's approach. n38 Under Texas Disciplinary Rule 1.06(b), a lawyer may represent Client A against Client B without B's consent unless the matters are "substantially related" or, for other reasons, the lawyer's work for B appears to be or threatens to become "adversely limited" by representing A. n39 Applying that standard, the District Court for the Southern District of Texas denied Dresser's motion to disqualify Susman Godfrey from representing the drill bits plaintiffs. The court found that Susman's defense of Dresser in compressor litigation was not substantially related to the drill bits litigation and that neither representation was likely to be adversely limited by Susman's involvement in the other. n40 After the trial judge refused to certify his decision for interlocutory appeal, n41 the Fifth Circuit took the case on mandamus and ordered that Susman Godfrey be disqualified. n42 The court held that less forgiving national ethics standards, as interpreted "in the light of the public interest and the litigants' rights," not Texas Rule 1.06 as adopted by the district court, governed Susman's conduct for disqualification purposes. n43 Since the ABA Model Rules, the older ABA Code of Professional Responsibility, and the ALI Restatement each ban all representations against current clients without their consent, n44 and since Susman offered no excuse or justification for violating these standards, n45 Dresser's right to have Susman disqualified from representing the class was "clear and indisputable," as was the trial court's abuse of discretion in denying Dresser's motion. n46    The Fifth Circuit thus judged Susman's conduct under standards that, contrary to Texas Rule 1.06(b), categorically ban representation against an unconsenting current client, even in matters unrelated to the lawyer's work for that client. In doing so, the court widened the range of standards a district judge must consider in ruling on a disqualification motion, to include provisions in the ABA's model ethics codes and the ALI's Restatement. One should not infer, however, that the ABA and ALI have been deputized as the official arbiters of Fifth Circuit disqualification standards. The court's post Dresser decisions indicate that a district court's own ethics rules, which often parallel the governing rules in the state in which the court sits, deserve equal consideration; that the various standards relevant in any given case may not be consistent; and that in cases of inconsistency, the trial judge must "weigh the relative merits of each of the various competing disqualification rules." n47 In addition, each relevant standard must be interpreted, not simply in light of its legislative history, but "in light of the public interest and the litigant's rights." n48 To complicate matters further, "exceptional circumstances may sometimes mean that what is ordinarily a clear impropriety will not ... determine a conflicts case." n49    In view of these qualifications, one can only characterize the approach to disqualification issues which the court began to develop in Dresser as a common law approach. To the extent the approach can ever produce consistent disqualification standards within the circuit or in the federal courts generally, it can only be through gradual case by case development. The drawbacks to this approach are enormous, though some of them will not become clear until we analyze its application in American Airlines. For now, one need simply consider the burdens the approach places on district court judges and on litigators in the Fifth Circuit. If we are to have appellate review of disqualification decisions, surely the goal of clarifying the governing standards is a key reason. After Dresser, however, litigators in the Fifth Circuit will have to do extensive research to find and compare all the standards that could come into play if and when they become the targets of a disqualification motion, as well as the standards they could plausibly invoke in moving to disqualify an opposing party's counsel. With no real guidance as to which of several potentially inconsistent standards will apply in any given case or how those standards will be interpreted, litigators will be unable to estimate for themselves or their would be clients the magnitude of the risk that an engagement might end in disqualification. As for the district courts, they may be presented with disqualification motions whenever any far flung ethics rule or Restatement provision could conceivably be read to forbid representation.    2. Successive client conflicts and American Airlines A second type of multi client litigation conflict, exemplified by American Airlines, involves representations against a former client without that client's consent. No one contends that lawyers should be barred categorically from accepting cases against a former client without its consent; such a requirement would unduly restrict lawyers' practices and would be clients' choice of counsel. On the contrary, a consensus exists that ex clients should have no right to prevent their former lawyer from suing them unless the old and new representations are related in a way that implicates the lawyer's present obligations to them. The prevailing rule is that lawyers must not accept cases against their former clients without consent if the subject matters of the representations are substantially related. n50 Lawyers who accept such cases are usually subject to disqualification on the former client's motion. n51 The contested issue is when the courts should consider the present and former representations "substantially related." A sensible answer must turn on the policy or policies underlying the substantial relationship test.    A clearly relevant policy is to prevent a lawyer from using a former client's confidences against him. Lawyers are understood to owe former clients an ongoing duty of confidentiality because only with that protection are clients likely to be candid enough with their lawyers to obtain effective representation in the first place. The substantial relationship test not only protects confidences, but does so without forcing the former client to disclose in a disqualification hearing the information he hopes to protect. The more a reconstruction of the two matters suggests to the court an overlap in relevant information, the stronger the inference that the lawyer received some confidences in the first representation that would strengthen the new client's case. n52 Once the court finds that the representations are substantially related, it will conclusively presume that the lawyer received relevant confidential information in the first representation. n53    What is less clear is whether (or to what extent) the substantial relationship test is designed to reinforce a lawyer's ongoing duty of loyalty to former clients. Professor Charles Wolfram recently argued that, except in the rare case in which a lawyer is hired to attack the very work she did for a former client, a case in which the former client retains a manifest but tightly circumscribed loyalty interest, n54 confidentiality should be the only value protected by the test. n55 As Wolfram points out, the Fifth Circuit rejects this view. n56 In American Airlines, the Fifth Circuit insisted that the substantial relationship test protects not only the former client's confidences but an amorphous loyalty interest as well. n57 On that basis, the Fifth Circuit concluded that V&E's defense of American Airlines' computerized reservation system was substantially related to Northwest's suit against American for predatory pricing of certain airfares. n58 Moreover, V&E's advice to American on the antitrust implications of its proposed merger with Continental was also found substantially related to Northwest's suit, n59 and would be so related even if V&E could prove that it had received only generally known and not confidential information in advising American. n60 Loyalty, not confidentiality, was the problem.    But why did American, though no longer V&E's client, retain a legitimate loyalty interest in preventing V&E from representing Northwest? And just what is the nature of that interest? Focusing on the "substantial relationship" between V&E's advice on American's proposed merger with Continental and the present case, the court tried to explain by offering what it considered a rhetorical question: "What credence might American have attached to V&E's December 1990 counsel that the airline's interests would be better served by postponing the acquisition of Continental ... if it even suspected that V&E itself might soon be representing one of its competitors in a suit against American, charging that it had abused its market power to the detriment of competition in the airline passenger service markets?" n61    The court's unstated answer would, I assume, be "none." If this answer were correct, then the court would have successfully shown how the prospect of V&E's later representation against American would have devalued its earlier work for American, just as a lawyer who later attacks the validity of a will she drafted for a client throws into doubt whether she was loyal to the testator when she drafted it. But my answer to the court's question is different. I suggest that American, though perhaps upset by the prospect that V&E might become its adversary, would still have trusted the advice. In no discernible way would V&E 's potential participation in Northwest's antitrust suit against American have undermined the reliability of V&E's merger advice to American. But if the prospect of Northwest's later hiring V&E to sue American would not have motivated V&E to give American unreliable advice, neither would it have motivated a rational American Airlines to consider V&E's advice unreliable.    American Airlines is not the only case in which the Fifth Circuit has emphasized loyalty considerations in applying the "substantial relationship" test. The court did so as early as 1979, in Brennan's Inc. v. Brennan's Restaurants, Inc., n62 but not in a way that protected the amorphous loyalty interest recognized in American Airlines. In Brennan's, a lawyer obtained certain trademarks for a family that owned a New Orleans restaurant. n63 Later, the family split into two factions. The faction that continued to own the restaurant sued the other faction for trademark infringement. The lawyer, having severed his ties to the plaintiffs, agreed to represent the defendant group. Plaintiffs moved to disqualify. Assuming for the sake of argument that the lawyer had originally represented both factions jointly, the court recognized that no confidentiality interests were at stake both factions had been privy to all the relevant information. n64 Yet the court ordered the lawyer to be disqualified, finding that, for loyalty purposes, this case and the previous representation were substantially related. n65    Though the Brennan's decision discusses loyalty in broad terms, the loyalty interest it protects is arguably the narrow one that even Professor Wolfram thinks the "substantial relationship" test should be used to support: a former client's interest in his lawyer's never turning around and attacking the very work she had done for him. n66 Since the lawyer in Brennan's was originally hired to get valid trademarks for the family business from which the plaintiffs' faction later emerged, it would be wrong for the lawyer now to argue that the plaintiffs were relying on invalid trademarks. The disqualified lawyer intended to make that very argument for the defense. n67    In American Airlines, however, it is hard to see how V&E would have been obliged or tempted in representing Northwest to attack its earlier work for American. The court's decision to disqualify appears instead to protect a broad interest in avoiding the upset that can sometimes accompany the realization that your former lawyer is suing you. Such an interest has little or nothing to do with how substantially the present and former representations are releated. n68 Thus, as Dresser did with simultaneous conflicts, American Airlines makes a relatively broad category of successive conflicts impermissible and uses disqualification aggressively to enforce its standard. But in American Airlines, the category is not only broad it's incoherent.    B. Limiting the Range of Impermissible Conflicts for Which Disqualification Is an Appropriate Response How to police litigation conflicts is a remedial issue, not just a problem of defining acceptable lawyer conduct. Although representations in violation of the conflicts standards codified in ethics rules are grounds for professional discipline, trial courts are not required to disqualify every litigator embroiled in such a representation. The factors by which policymakers determine the range of representations that ethics rules should forbid may not be the ones that properly bear on a court's decision to bar a lawyer who has already accepted and begun to work on a forbidden case from further participation in it. n69 In a series of well known decisions rendered around 1980, the Second Circuit emphasized this point. The court granted disqualification motions only when a litigator's impermissible conflict could be expected to "taint" the litigation at hand. n70 Specifically, the court recognized two types of conflicts as likely to taint a trial: those which "undermine the court's confidence in the vigor of the attorney's [present] representation" and those in which a client is likely to gain an unfair advantage through his lawyer's use of confidential information received in representing the other side. n71 In the Second Circuit's view, a trial court's business "is to dispose of litigation and not to act as a general overseer" of lawyers' ethics; n72 because disqualification disrupts litigation, causes delay, and burdens an innocent client, conflicts unlikely to taint a trial are better left to disciplinary bodies. n73 Moreover, while conceding that the taint requirement fails to correct all ethically proscribed conflicts, the Second Circuit emphasized that it discourages the meritless disqualification motions that might otherwise be filed for tactical reasons. n74    In American Airlines, the Fifth Circuit rejects this "jurisdictional" technique for cutting back on the use of disqualification to enforce litigators' ethical duties. n75 It does not believe that "a priori assumptions concerning the motivations underlying disqualification motions in general justify" the "taint" requirement. n76 On the contrary, a district court in the Fifth Circuit is "obliged to take measures against unethical conduct occurring in connection with any proceeding before it, " n77 and a "motion to disqualify counsel is the proper method for a litigant to bring the issues of conflict of interest or breach of ethical duties to the attention of the court." n78 Where representation is barred by the ethical standards governing lawyers' conflicts of interest, the aggrieved party's disqualification motion should normally be granted taint or no taint.    In rejecting the taint restriction, American Airlines quite correctly points out that "unless a conflict is addressed by courts upon a motion for disqualification, it may not be addressed at all," n79 in which case litigators will not be accountable for their improper conflicts and will receive no signal from any enforcer that their conduct is forbidden. Professional discipline, though available in theory, is almost never used as a response to litigation conflicts. n80 Indeed, there is evidence that lawyers from the large firms that predominate in federal litigation are almost never disciplined for any reason. n81    Nevertheless, the Fifth Circuit's rejection of the taint standard as a limit on the range of disciplinable conflicts that are also subject to disqualification has a considerable downside. It imposes a broad duty on the district courts to serve as ethics enforcers. It invites parties to file disqualification motions for tactical purposes. And it encourages disqualification orders even when the foreseeable harm from the continued representation seems trivial when measured against the burdens disqualification will impose on an innocent client and, through delay, on other non moving parties and on the court.    Perhaps a compromise between the Second and Fifth Circuit views is possible. Professor Bruce Green recently suggested one compromise: allow the federal courts to develop disqualification standards through a case by case balancing process that takes full account of the costs disqualification imposes on the courts and on innocent clients, but treat disqualification solely as a remedy to redress or avert breaches of confidentiality or other tangible harm, not as a pure sanction to reinforce ethics compliance. n82 When a court decides against disqualification but nonetheless detects an ethical violation, Green suggests, let it fine, censure, or otherwise personally sanction the offending lawyer or firm, much as the courts sanction lawyers who raise frivolous claims or defenses in violation of Rule 11 of the Federal Rules of Civil Procedure. n83 With this approach, the Fifth Circuit could maintain a broad role for the district courts in enforcing its rigorous conflicts standards and could allow parties to obtain "monetary sanctions" against lawyers who violate those standards, even when there is no basis for a disqualification order, which would amount to injunctive relief. n84    C. Barring Interlocutory Appeals from Disqualification Rulings Interlocutory appeals can significantly delay a lawsuit, and many litigants have tactical reasons to seek such delays. In the 1980s, the Supreme Court reduced the tactical value of disqualification motions by holding that decisions on those motions are not immediately appealable as a matter of right. n85 For all its attractions, this procedural restriction snuffs out any realistic hope for the development through caselaw of a uniform approach to litigation conflicts within each circuit and throughout the federal system. Post litigation appeals are often worthless, even if the appellant can show that the trial judge erred, because the errors will be considered harmless. Consequently, in most of the federal circuits, even anomalous district court decisions on disqualification motions now go unreviewed. n86    Despite the Supreme Court's termination of interlocutory appeals as a matter of right, the Fifth Circuit has found a way to justify immediate review of lower court decisions denying disqualification motions. Dresser n87 and American Airlines n88 both use the court's mandamus power to justify review. n89 Moreover, now that the court has displayed its willingness to use mandamus, district courts in the circuit are getting the message. One recently certified a disqualification decision for immediate appeal, n90 and the Fifth Circuit accepted jurisdiction. n91    In preserving its opportunities to review lower court decisions denying disqualification motions, the Fifth Circuit is once again resisting a development that limits the use of disqualification as a remedy for litigation conflicts. n92 The court's approach interacts in an ironic way with its rejection of the Second Circuit's taint requirement for disqualification. In American Airlines, the court asserts that "there is less reason to suspect tactical motivations behind disqualification motions than at the time the "taint ' standard was initially formulated," because disqualification motions are no longer immediately appealable. n93 By welcoming immediate review through mandamus and certification, however, the Fifth Circuit may resuscitate the use of disqualification motions for delay, which the Supreme Court tried to curb by barring interlocutory appeals as a matter of right.    IV. Conclusion As we have seen, the Fifth Circuit grounds its disqualification decisions on federal law. n94 More fundamentally, the court has tried to promote the development of a federal common law of conflicts disqualification. n95 The court will not permit district courts to use their own ethics codes as the sole standards for judging disqualification motions. n96 It insists that disqualification turn on "national standards," including those codified by the ABA or restated by the ALI, but recognizes that those standards may conflict, which will require judges to exercise discretion in choosing the best standard. n97 Moreover, the court treats all the relevant standards as potential sources of the federal common law of disqualification, not as federal law in themselves; the standards must always be interpreted in "light of the public interest and the rights of the litigants," n98 which requires a case by case balancing of competing interests. n99     If the Fifth Circuit's interest in a federal common law of disqualification reflects a desire to promote greater uniformity in disqualification standards throughout the federal system, its quest seems quixotic. To be sure, the oft noted inconsistency of disqualification standards in the federal courts n100 is a practical concern, especially for lawyers who litigate in more than one district. Under present circumstances, however, only Congressional action n101 or Supreme Court rulemaking n102 could produce uniform standards; development through caselaw is out of the question. The Supreme Court's termination of interlocutory appeals of disqualification decisions as a matter of right, coupled with the reluctance of courts of appeal other than the Fifth Circuit to use their mandamus power, leave most federal trial courts to their own devices. And even if every district court chose to embrace the Fifth Circuit's common law methodology, that would simply leave them with enormous discretion to develop their own views on the appropriate "national standards." In the hands of federal judges who do not share the Fifth Circuit's enthusiasm for disqualification, the methodology will not replicate the rigorous standards on simultaneous and successive conflicts announced in Dresser and American Airlines, respectively. Indeed, some panels on the Fifth Circuit itself may use the approach to justify relatively relaxed conflicts standards, even as other panels try to hold the line against today's pressures for a relaxation of standards. n103    Of more immediate concern to litigators in the Fifth Circuit is the difficulty they now face in predicting the standards they will be held to for purposes of disqualification. Which of several sets of "national standards" will be applied in any given case, and how the governing standards will be interpreted "in light of the public interest" will be unclear in all cases raising conflicts issues other than those resolved so far under the Fifth Circuit's approach. Researching potential conflicts problems will be more complicated, and lawyers may be chilled from accepting cases whenever they discover some far flung standard that could be interpreted to make the representation improper. They may charge higher fees for accepting the uncertain risks of disqualification. And, when any conceivable conflicts issue looms, they will be unable to assure clients that they will see their cases through. n104    Perhaps these concerns could all be set aside, if it were clear that the disqualification standards announced in Dresser and American Airlines were desirable on their merits. But this is far from clear. The sophisticated business litigants who predominate in federal lawsuits today may neither need nor want the Fifth Circuit's protections that is, until they have occasion to use those protections opportunistically to disqualify an adversary's law firm of choice. To put the matter more hypothetically, if in negotiating their retainer agreements, Dresser Industries and American Airlines had focused on the disqualification options they wished to retain, I suspect they would not have chosen to purchase the extensive loyalty insurance from Susman Godfrey and Vinson & Elkins that the Fifth Circuit ultimately gave them. If I am correct, then until the court bows to the realities of federal litigation today, similar clients may find themselves buying more unwaivable loyalty insurance in the Fifth Circuit than they want or need.
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