What was the importance of Phoenix v McClellan in 1994?Supreme Court decisions
This Supreme Court of Texas from 1994 concerns the ethical question of conflict of interest. The court was asked to consider whether a law firm must be disqualified from ongoing litigation because it rehired a legal assistant who had worked for opposing counsel for three weeks. Phoenix was represented by the law firm of Thompson and Knight. A paralegal working for this firm left and was hired by the firm of David and Goodman, who represented the Benekes.
The Benekes were being sued by Phoenix. The paralegal, who originally worked for Thompson and Knight, left and went to work for David and Goodman for three weeks and then returned to Thompson and Knight. While at David and Goodman, the paralegal had some minor involvement in the case against the Benekes. When she returned to Thompson and Knight, the Benekes made a motion to disqualify the firm on the basis that it was now privy to confidential information.
In the meantime, the paralegal had resigned from the firm (the alternative being termination). The trial court disqualified the firm. The firm appealed. The court stated that the paralegal did obtain confidential information. However, the court could not say that any confidential information obtained by a paralegal was absolutely imputed to the law firm. The firm would not have to be disqualified if proper steps were taken to insulate the paralegal. The case was remanded to determine if Thompson and Knight had in fact taken such steps.
Why did the firm of Thompson and Knight ask the paralegal, Denise Hargrove, to leave or be fired? The answer to this question is not entirely clear. One reason may be either the firm was trying to minimize the conflict (and the paralegal was more expendable than the client), or it felt that she might not have been honest with the firm. This question raises the issue of the consequences of ethical choices.
This was actually a State of Texas Court case.