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CHEMICAL WASTE MGMT. v. SIMS

February 2, 1995

CHEMICAL WASTE MANAGEMENT, INC., a Delaware Corporation, Plaintiff,
v.
JAMES R. SIMS; JAMES T. McVEY; ADAM J. LIFF; JAN LIFF; JUDY LIFF, custodian for Zachary Liff; JUDY LIFF, custodian for Terence Liff; DARREN LIFF; DANIEL LIFF; JAMES C. BOW; ABE FREEMAN; ELIZABETH BAISLEY; GARY BAISLEY; KIM BAISLEY-WYATT; and MIKE SCHWEITZER, Defendants.



The opinion of the court was delivered by: ELAINE E. BUCKLO

 Before the Court is plaintiff's motion for a protective order prohibiting defendants and their counsel of record from seeking or obtaining legal advice from the law firm of Gullett, Sanford, Robinson & Martin. For the reasons stated herein, plaintiff's motion is denied.

 Facts

 Plaintiff, Chemical Waste Management ("CWM"), is a Delaware corporation with its headquarters and principal place of business in Oak Brook, Illinois. Diversified Scientific Services, Inc. ("DSSI") is a Tennessee corporation engaged in the business of processing mixed liquid wastes and providing on-site environmental remediation services at its plant in Kingston, Tennessee. Defendants are the former shareholders of DSSI ("former shareholders") who sold one hundred percent of their DSSI shares to CWM pursuant to a Stock Purchase Agreement. The present lawsuit arises from the alleged breach of representations and warranties contained in the Stock Purchase Agreement.

 Since the inception of DSSI, attorneys from Gullett, Sanford, Robinson & Martin ("GSR&M") have acted as corporate counsel for the company. Allen D. Lentz ("Mr. Lentz"), a partner at GSR&M, signed the corporate charter and served as incorporator and registered agent of DSSI. Over the years, Mr. Lentz also performed a variety of legal tasks for the corporation, including reviewing its license applications, meeting with state regulators in connection with the processing of its permit applications, advising DSSI with respect to applicable laws and regulations, and evaluating and negotiating contracts regarding the removal of hazardous waste.

 On February 9, 1993, CWM, through its attorney, Mr. Everett, advised Mr. Lentz as counsel for the former shareholders that CWM would file claims against the former shareholders. On April 28, 1993, Mr. Everett wrote Mr. Lentz, again as counsel for the former shareholders, asking him to review the claims and to attend a meeting to ask questions of CWM personnel familiar with the alleged problems at the DSSI facility and to begin negotiating a settlement. On May 20, 1993, CWM officials met with Mr. Liff and Mr. Lentz at GSR&M's law offices in Nashville. At this conference, CWM officials provided Mr. Lentz with specific information about the claims. On August 24, 1993, CWM officials met with Mr. Lentz and two independent experts retained by Mr. Lentz at the DSSI facility in Kingston. During this visit, CWM's claims were discussed at length, and Richard J. Dabolt ("Mr. Dabolt"), DSSI's General Manager, escorted Mr. Lentz and the two experts on a tour through the DSSI facility, pointing out alleged problems and answering questions. In each of these meetings, Mr. Lentz represented the former shareholders with the knowledge and consent of CWM.

 In late 1993, Mr. Lentz sent Mr. Everett two letters in which he summarized the positions of the former shareholders with respect to CWM's claims and requested several additional documents from CWM. CWM subsequently provided Mr. Lentz with the requested documents. On February 15, 1994, CWM counsel John Van Gessel sent Mr. Lentz a detailed account of CWM's claims and requested a written response from Mr. Lentz. On March 29, 1994, CWM brought this action against the former shareholders. On November 3, 1994, Mr. Dabolt informed Mr. Lentz that DSSI objected to GSR&M's representation of the former shareholders in this litigation. On January 4, 1995, CWM brought this motion for a protective order prohibiting the former shareholders and their counsel of record, Latham & Watkins, from seeking or obtaining legal advice from GSR&M during the litigation.

 Analysis

 A fundamental principle in the lawyer-client relationship is that a lawyer shall maintain the confidentiality of the information relating to the representation. Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982). Courts have a duty to safeguard the sacrosanct privacy of the attorney-client relationship so as to maintain public confidence in the legal profession and to protect the integrity of the judicial proceeding. Id. (citing American Can Company v. Citrus Feed Co., 436 F.2d 1125, 1128 (5th Cir. 1971); United States v. Agosto, 675 F.2d 965, 969 (8th Cir. 1982)). Disqualification of counsel is but one of several avenues available to a court in its exercise of this duty. Id. However,

 
disqualification, as a prophylactic device for protecting the attorney-client relationship, is a drastic measure which courts should hesitate to impose except when absolutely necessary. A disqualification of counsel, while protecting the attorney-client relationship, also serves to destroy a relationship by depriving a party of representation of their own choosing.

 Id. (citing Comden v. Superior Court, 20 Cal. 3d 906, 145 Cal. Rptr. 9, 16, 576 P.2d 971, 978, cert. denied, 439 U.S. 981, 58 L. Ed. 2d 652, 99 S. Ct. 568 (1978)). Accordingly, motions to disqualify counsel should be viewed with extreme caution since they can be misused as techniques of harassment. Id. at 722; see also Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 436, 86 L. Ed. 2d 340, 105 S. Ct. 2757 (1985) ("We share the Court of Appeals' concern about 'tactical use of disqualification motions' to harass opposing counsel").

 A. Substantial Relationship

 The Seventh Circuit has promulgated the following test in analyzing motions to ...


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