Fifth District orders Greensfelder firm to turn over documents to former client

In upholding a ruling ordering an area law firm to turn over files of a former client suing it for malpractice, the Fifth District Appellate Court highlighted some of the reasons why attorneys should be cautious in representing two clients in the same case.

When an attorney decides to take on a dual representation, he or she must be loyal to the interests of both clients, something that means attorney-client privilege doesn't attach to communications in such situations.

Not only should both clients be aware of this, but the panel said attorneys who take on two clients in the same matter need to remember their duty to be loyal to their clients is ongoing and remains even after the relationships end.

“In fact,” the panel stressed, “this is one of the reasons attorneys should act with caution before representing clients whose interests are likely to become adverse in the future.”

The cautionary tale was delivered Monday in an unpublished order from the Fifth District spurred by a legal malpractice case Dr. Bill Daily and Cardiothoracic Surgery Associates (CSA) brought in the St. Clair County Circuit Court against Greensfelder, Hemker & Gale.

Justice Melissa Chapman wrote the order, with justices Thomas Welch and Stephen Spomer concurring.

The panel upheld Circuit Judge Vincent Lopinot’s decision to grant the plaintiffs’ motion to compel the Greensfelder firm to produce documents related to a contract between CSA and SSM Healthcare St. Louis (SSM).

In 2003, attorneys at Greensfelder negotiated and drafted an agreement under which CSA would become the exclusive provider of cardiovascular surgery services at SSM’s DePaul facility.

At that time, both CSA and SSM were clients of Greensfelder, which represented CSA from its 1996 formation until May 2004. CSA, the order states, agreed to let Greensfelder represent both of them in the matter.

The parties went on to expand their relationship and in 2004, entered into a service agreement for SSM’s Kirkwood facility. Two years later, CSA became the exclusive provider of cardiovascular surgery services at SSM’s St. Mary’s and St. Joseph’s facilities, although service agreements for those facilities were still in negotiations at the time.

Those negotiations, however, broke down in 2007 and that same year, two SSM surgeons sued CSA in St. Louis County, seeking a declaratory judgment that the non-compete clauses in their employment contracts were unenforceable.

Greensfelder attorneys had drafted the surgeons’ employment contracts in the late '90s. The two surgeons hired their own attorneys to bring their suit.

Although SSM was not party to that suit, it, through Greensfelder's representation, filed a motion to intervene in March 2007, asking the court to deem the non-compete clauses in the doctors’ contracts, as well as non-solicitation clauses in its service agreements with CSA, as unenforceable.

In May 2007, CSA filed a motion to disqualify Greensfelder from the case based on its joint representation of CSA and SSM in the negotiating and drafting of the contracts at issue. The matter settled that same month so the court never ruled on that motion.

Two years later, CSA and Daily brought the suit at the crux of the Fifth District order.

They accused Greensfelder of breaching its fiduciary duty to them by “representing adverse parties in a substantially similar matter without first obtaining” their consent, “using information obtained during [its] representation of” them to their disadvantage, “coordinating strategy with the attorneys representing the physicians even before formally filing a petition to intervene in their suit, and … including itself as a party released by the settlement agreement.”

During discovery, the panel's order states that CSA and Daily sent Greensfelder requests to turn over its “’SSM file,’ which it defined as ‘all work done on behalf of SSM’ for the St. Louis County litigation.”

Greensfelder asserted the requested file was immune from discovery under the attorney-client privilege or the work product doctrine and as such, produced a privilege log.

The plaintiffs then filed a motion to compel, seeking documents in the log dated after Oct. 4, 2006, the date they claim Greensfelder started coordinating with attorneys representing the doctors in the suit over their employment contracts.

Lopinot granted the motion and ordered Greensfelder to turn over all documents related to the DePaul contract. He went on to deny the firm’s motion for reconsideration, before granting its request for a finding of friendly contempt so it could appeal.

On appeal, Greensfelder argued that Lopinot erred in granting the plaintiffs’ motion to compel because the common representation exception didn’t apply.

The firm claimed this exception was inapplicable to the case because 1) SSM and CSA didn’t have a common interest during the period it represented them both, 2) the requested documents were generated after its representation of CSA ended and 3) Lopinot said there were questions of fact regarding common representation when he granted the motion to compel.

“We find none of these arguments persuasive,” Chapman wrote for the panel.

First, Chapman said, Greensfelder’s reliance on certain language in the Illinois Supreme Court’s 1991 ruling Waste Management, Inc. v. International Surplus Lines Insurance Co. “is misplaced.”

The firm cited that case to bolster its contention that the common representation exception didn’t apply because the interests of CSA and SSM were not identical at the time it represented both of them.

“Significantly, the Waste Management, Inc. court did not hold that the common representation applies only when the interests of both commonly represented parties are identical or very nearly identical at the time of the representation, a question it was not called upon to decide,” Chapman wrote.

The panel further rejected Greensfelder’s argument “that the exception has never been held ‘to apply to parties on opposite sides of negotiations,’ as occurred in this case.”

“Although we are not aware of any published decisions involving the precise set of circumstances involved in the case before us, the Illinois Rules of Professional Conduct do directly address this situation,” Chapman wrote.

The rules, she said, state “An attorney may represent parties involved in negotiations if the parties are ‘generally aligned in interest even though there is some difference in interest among them’” and “[i]n doing so, the attorney works ‘to resolve potentially adverse interests by developing the parties' mutual interests.’”

In deciding whether to take on two clients in the same case, the panel stressed that “the attorney needs to consider the effect common representation will have on client confidentiality” because “privilege does not attach to communications related to matters subject to the common representation.”

“Greensfelder offers no reason these rules should not apply to the case at hand," Chapman wrote.

The panel also didn't buy Greensfelder’s argument that the exception didn't apply here because the requested documents were generated three years after its representation of CSA had ended.

Pointing again to the Rules of Professional Conduct, Chapman said an attorney has an ongoing duty of loyalty to a former client.

“Because the requested documents directly relate to the DePaul contract, a matter on which Greensfelder attorneys provided simultaneous representation to CSA and SSM, they fall within the common representation exception," the panel held.

The panel, without much discussion, also denied Greensfelder’s attempt to argue the exception shouldn’t apply because Lopinot said he found questions of fact regarding common representation when he granted the motion to compel.

“Here, the court reached the correct decision even though it may have erroneously believed there were questions of fact remaining," Chapman wrote. "We may therefore affirm its ruling.”

In addition, the panel noted this case involved claims of privilege and work product, doctrines that "are not interchangeable."

"The work product doctrine affords broader protection than the attorney-client privilege," Chapman said. "However, even this broader protection is not absolute."

Although production of documents protected from disclosure under the work product doctrine can be ordered when the party seeking discovery proves it can't get the information from anywhere else,  Chapman said that's not the case here.

"Here, the basis of the plaintiffs' suit is the fact that Greensfelder represented SSM in litigation involving a matter on which it previously represented the plaintiffs," she wrote. "Because the representation itself is at issue, it is impossible to conceive of any other source from which the plaintiffs might obtain the relevant information."