On July 17, 2012, Judge Irwin Solganick of the Circuit Court of Cook County, presiding in a bench trial, entered judgment in favor of the firm's client, a Chicago law firm represented by DBMS.
The plaintiff, a neurosurgeon, alleged that the defendant law firm breached its fiduciary duty to the plaintiff by representing another party (the plaintiff's then employer, a medical group) in employment discussions directly adverse to the plaintiff while other lawyers in the defendant law firm were concurrently representing the plaintiff in several medical malpractice cases.
The plaintiff further alleged that after he terminated his relationship with the defendant law firm (due to a perceived conflict of interest), the defendant breached its fiduciary duty to the plaintiff by representing the plaintiff's former employer in an arbitration against the plaintiff and by using confidential information gleaned from the defendant's prior representation of the plaintiff to the plaintiff's detriment in the arbitration.
The plaintiff also claimed that the arbitration was "substantially related" to the medical malpractice cases. The Rules of Professional Conduct applicable to attorneys prohibit an attorney taking on the representation of a client in any matter directly adverse to an existing client (Rule 1.7) and also prohibit an attorney from taking on a representation of a former client in the same or substantially related matter and from using confidential information obtained from the prior representation (Rule 1.9).
The plaintiff claimed lost income, attorney fees from the arbitration, the amount the plaintiff paid to settle the arbitration after the arbitrator found in favor of the employer on the key issues, and attorney fees paid in the defense of a medical malpractice case filed after his termination arising out of care he provided while still employed.
The defense argued that the representation of the plaintiff's employer in the employment discussions prior to the plaintiff's termination was not "directly adverse" in violation of Rule 1.7 because the parties were working toward the same goal: trying to find a way to keep the plaintiff employed
The defense argued that the plaintiff's termination was inevitable under the Physician Employment Agreement that governed the relationship of the parties because the employer was unable to obtain medical malpractice coverage for the plaintiff.
The defense maintained that the parties were not "directly adverse" until after the plaintiff terminated the attorney-client relationship with the defendant and thus, there was no violation of Rule 1.7. The defendant noted that the plaintiff maintained throughout the arbitration that he, not the employer, had terminated their relationship for "physician cause" under the PEA.
Evidence was presented that the plaintiff, represented by independent counsel, was negotiating a better employment contract with his subsequent employer prior to his termination.
The defendant argued that the subsequent arbitration was a contract dispute arising out of the PEA and was not "substantially related" to the prior medical malpractice cases, nor was confidential information obtained or used. The defendant argued that none of plaintiff's claimed damages were caused by the defendant's conduct: rather, the damages all flowed from the plaintiff's termination "for practice cause" under the PEA, consistent with the arbitrator's findings, and by the plaintiff's failure to purchase "tail" insurance as required by the PEA and the arbitration award, which caused the plaintiff to be uninsured with respect to the medical malpractice case filed after his termination.
Finally, the defense contended that the plaintiff's legal malpractice case was barred by the applicable 2-year statute of limitations and the doctrine of waiver where the plaintiff and his attorneys in the arbitration case (who also were co-counsel - though not of record, in the legal malpractice case) testified that they believed the defendant had a conflict of interest and that the plaintiff was damaged as a result but failed to file suit within the statutory period.
At the close of the plaintiff's case, the court found that the plaintiff had failed to prove any breach of fiduciary duty by the defendant and failed to prove any damages proximately caused by the defendant's conduct.
The court further found that the defense proved its affirmative defense based upon the statute of limitations and that the plaintiff waived the alleged conflict by failing to raise it during the arbitration, which had lasted 8 years. Accordingly, the court entered judgment for the defendant.