The Former Joint-Venture Client Objects
Luis is a partner at Harbor & Vance, a four-lawyer Denver firm. Fourteen months ago Luis represented Summit Solar LLC in negotiating a joint venture with Brightline Electric. Luis drafted the term sheet and learned Summit’s internal cost structure and its plan to exit the venture if Brightline demanded more than an 18% margin. The deal closed and the matter ended. Brightline now asks Harbor & Vance to sue Summit for fraud, alleging that Summit concealed its cost data during the joint-venture negotiations. Dana, another partner, would be lead counsel; Luis would be screened, would not work on the matter, and would receive no part of the fee. Summit’s general counsel sends a letter objecting and refusing consent. Brightline says it will consent to the screen and waive any conflict. Dana asks whether the firm can take the case because Luis is walled off and the prior matter is closed.
1. Analyze the conflict under Colo. RPC 1.9(a) and 1.9(c). Is the new matter “substantially related” to Luis’s former representation?
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Colo. RPC 1.9(a) prohibits a lawyer who has formerly represented a client in a matter from later representing another person in the same or a substantially related matter in which that person’s interests are materially adverse to the former client, unless the former client gives informed consent confirmed in writing. The threshold question is substantial relationship, which asks whether the matters are the same or whether there is a substantial risk that confidential factual information from the prior representation would materially advance the new client’s position.
Here the answer is yes. The new fraud suit arises out of the same joint-venture negotiations that Luis handled. Luis learned Summit’s cost structure and its internal 18% exit threshold. Those facts are precisely the kind of confidential information that could be used against Summit in a fraud case about concealed cost data. Even if Luis did not learn a “smoking gun,” the information is materially relevant to damages, negotiation posture, and whether Summit’s conduct was fraudulent. The matters are substantially related.
Brightline’s consent and waiver do not substitute for Summit’s informed consent. Rule 1.9 protects the former client. Without Summit’s informed consent confirmed in writing, Luis is personally disqualified. Rule 1.9(c) also prohibits using or revealing information relating to the former representation to Summit’s disadvantage.
2. Does the screen cure the firm’s disqualification under Colo. RPC 1.10? Can Harbor & Vance rely on Brightline’s waiver?
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No, not on these facts. Colo. RPC 1.10(a) generally imputes a lawyer’s disqualification to the entire firm. A screen can cure imputation in some lateral-hire situations if the rule’s specific requirements are met, but the screen must be timely and the personally disqualified lawyer must be screened from participation and apportioned no part of the fee. The more fundamental problem here is that Luis is still a partner at Harbor & Vance. A wall inside the same firm does not ordinarily cure a current partner’s former-client conflict. The firm is not a new firm that hired a lawyer from outside; it is the same firm that obtained Summit’s confidences. A screen may reduce the risk, but it does not substitute for Summit’s informed consent.
Brightline’s waiver is also insufficient. Brightline is the new client, not the former client whose confidences are at risk. Rule 1.9(a) requires the former client’s informed consent, confirmed in writing. Summit has expressly refused. The firm must decline the representation unless Summit withdraws its objection and gives informed consent after full disclosure. If the firm proceeds, it risks disqualification, sanctions, and discipline.
3. Dana proposes to have Luis “forget” the Summit information and to rely on the fact that the prior matter is closed. Evaluate that proposal and the firm’s alternatives.
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The proposal is not ethically sufficient. A lawyer cannot cure a former-client conflict by subjective forgetting or by asserting that the prior matter is closed. Rule 1.9(c) prohibits the use of confidential information to the former client’s disadvantage, and Rule 1.9(a) focuses on the objective relationship between the matters. Luis’s knowledge of Summit’s cost structure and exit threshold cannot be unlearned, and the firm’s own files may contain the information. The fact that the matter is closed is irrelevant; former-client duties continue.
The firm’s realistic alternatives are: decline the Brightline representation; ask Summit for informed consent confirmed in writing after full disclosure, which Summit has already refused; or, if the firm believes a screen is legally available in a lateral-hire scenario, obtain a written ethics opinion before proceeding. Given the facts, declining is the safest course. If the firm proceeds, it should expect a motion to disqualify, possible fee forfeiture, and an OARC complaint. Brightline’s willingness to waive its own conflict does not solve the problem.