Murphy & Demory, Ltd. v. Murphy

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Brief Fact Summary.

A firm is charged with malpractice relating to an attorney’s failure to heed warnings from junior partners that the firm should not be representing a client with interests in both parties in this litigation.

Synopsis of Rule of Law.

Firms with deficient internal mechanisms for the resolution of ethical issues may be liable for malpractice. A safe harbor is available under the Rules only if a supervisory attorney provides a “reasonable resolution of an arguable question of professional duty.”

Facts.

Defendants, Admiral Daniel J. Murphy and his firm Murphy and Associates are alleged to have broken an employment contract and breached fiduciary duties to Plaintiff, Murphy’s former firm Murphy & Demory, Ltd. Plaintiff’s law firm, Pillsbury, Madison & Sutro and two of its lawyers in its D.C. office are also named as defendants for alleged malpractice and breach of fiduciary duty in their representation of Defendant Murphy after he left Plaintiff’s firm. Junior associates in the firm had repeatedly attempted to warn the firm that this dual representation was a serious conflict of interests, but all such warnings were directed to the case’s lead attorney, Deanne Siemer, who ignored them.

Issue.

Did Defendant’s law firm provide a “reasonable resolution” of the ethical concerns raised by referring them to the case’s lead attorney?

Held.

Yes. Allowing the case’s lead attorney to be the “final determiner” of junior associates’ ethical concerns was not an appropriate response to these concerns. Both Ms. Siemer and Pillsbury are liable, and are ordered to pay $500,000 to Plaintiffs.

Discussion.

This rule is often difficult in practice due to the realities of the power imbalances between junior associates and partners at large firms. It should also be noted that this case was particularly egregious because Ms. Siemer had just written a treatise on D.C.’s Rules of Professional Conduct.