The Second District holds that an attorney is disqualified as an expert witness where his representation twelve years earlier was substantially related to his current engagement.
21st Century retained Zalma to defend and render coverage opinions in connection with coverage and bad faith claims under its insurance policies. Zalma received confidential information concerning the company’s claims handling policies and procedures, litigation strategies, business practices, and the handling of litigation based on mold infestation claims.
In 1990 Zalma and a business partner formed ClaimSchool, Inc. as an educational operation to train insurance adjusters and lawyers in the business of insurance. 21st Century engaged ClaimSchool to present a 12-week seminar to its adjusters concerning 21st Century’s claims handling practices and procedures. In preparation Zalma consulted with 21st Century concerning its claims handling policies and procedures, and, during the seminar, he spent two to three days analyzing 21st Century’s homeowner’s policy line-byline. Zalma acknowledged he acquired knowledge of the company’s claim handling practices, policies and procedures.
Plaintiff Helen Brand sued 21st Century for damage to her home due to mold caused by a water leak. Brand designated Zalma as her expert to testify on the issue of 21st Century’s handling of her claim. The trial court denied 21st Century’s motion for a protective order because 21st Century’s claims handling practices were discoverable; 21st Century had not produced “enough proof” of a substantial relationship between Zalma’s current and former engagement; and Zalma’s representation of 21st Century involved only the rendering of coverage opinions, not litigation. Following Zalma’s deposition, 21st Century renewed its motion to disqualify Zalma as Brand’s coverage expert. The motion was supported by Zalma’s deposition testimony and the ClaimSchool notebook used in the seminar for 21st Century’s claims handlers and adjusters, which contained numerous forms and documents related procedures.
The trial court denied the motion, indicating that a substantial relationship between the prior and current representations could not be established based on the twelve years between the two engagements. The trial court also found the ClaimSchool seminar to be a “general course,” which could not form the basis for any claim of attorney-client privilege, and thus would not support Zalma’s disqualification.
The Court of Appeal noted that the Rules of Professional Conduct preclude an attorney from accepting employment adverse to a former client where there is a substantial relationship between the lawyer’s current and former representation. The courts focus on the practical consequences of the attorney’s prior representation to determine whether material confidential information would normally have been imparted. If the nature of the former representation is such that confidential information material to the current dispute would normally have been imparted, receipt of confidential information is presumed and the attorney will be disqualified. In rare instances the attorney can show there was no opportunity for confidential information to be divulged, but this limited exception is not available when the lawyer’s former and current employment are on opposite sides of the same matter or the current matter involves work the lawyer performed for the former client.
If the relationship between the attorney and the former client involved direct communication the court presumes confidential information was exchanged without scrutinizing the specifics. In a direct communication context disqualification will depend upon the strength of the similarities between the current and former legal issues. Conversely if there was no direct communication the court must determine the likelihood that the attorney acquired relevant confidential information during the prior representation based on the similarities between the two representations.
The Court of Appeal found that there was a substantial relationship between Zalma’s current and prior engagements. He personally represented 21st Century and supervised associates representing the company. The representation concerned matters substantially related to matters he had been retained to testify about.
The two engagements arose in the same context and shared numerous factual and legal elements. Zalma rendered coverage opinions about mold claims and defended 21st Century in coverage and bad faith claims. These involved issues about whether the insurer conducted an adequate investigation, whether the insurer gave sufficient consideration to the interests and expectations of the insured, whether the insurer reasonably construed and applied the relevant policy language, and whether the insurer’s construction and application of the relevant policy language was consistent with its treatment of other similarly situated insureds. Zalma taught the company’s claims adjusters how to evaluate claims for coverage under 21st Century’s homeowner’s policy and made suggestions to the company for improving its claims handling procedures using knowledge gained from consultations with 21st Century concerning its claims handling policies and procedures. Since confidential information material to the current dispute would normally have been imparted to Zalma, his knowledge of confidential information is presumed.
Neither Zalma’s professed failure to recall any confidential information obtained during his representation of 21st Century nor the passage of 12 years since he directly represented 21st Century could overcome the conclusive presumption. 21st Century was not required to run the risk that Zalma would employ its confidential information. Where the factual presentations of the parties stray into the prohibited world covered by the conclusive presumption, the dispute effectively becomes a subtle evaluation of the extent to which the attorney acquired relevant information in the first representation and of the actual use of that knowledge and information in the subsequent representation. When this occurs, the purpose of the conclusive presumption is subverted by what in reality is an inquiry into the actual state of the lawyer’s knowledge. As a result, the client’s confidences are in danger of disclosure, however inadvertent.
Comment: Given the depth and breadth of the representation, the passage of 12 years between the two engagements did not neutralize Zalma’s representation in the first case.