1.10(c). A failure to satisfy either prong means Winston & Strawn is prohibited from representing McDonald's.
Here, of the numerous attorneys who billed AFTEC and Tippman in the GDR case, only one still remains with the law firm. That attorney billed only one hour during the first week of representation. For the purposes of this opinion, the Court will assume, as McDonald's suggests that the lone remaining attorney did not "represent" AFTEC in the GDR case due to his lack of involvement in the matter. Accordingly, all of the attorneys who represented" AFTEC in the GDR case are no longer with Winston & Strawn.
Pursuant to the plain-language of Local Rule 1.10(c), Winston & Strawn may represent McDonald's against its former client AFTEC if the GDR case is not "substantially related" to the instant case and no lawyers who possess material confidential information remain at Winston & Strawn. Because, as discussed below, the Court finds that the two cases are "substantially related," there is no need to inquire whether any current lawyers in Winston & Strawn actually possess material confidential information.
A "substantial relationship" exists between two cases "if the lawyer could have obtained confidential information in the first representation that would have been relevant in the second." Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263, 1266 (7th Cir. 1983). The "substantial relationship" inquiry is not concerned with whether actual confidences were disclosed. See Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 224 (7th Cir. 1978). In fact, if the lawyer is a firm rather than an individual practitioner, it is irrelevant whether "different people in the firm handled the two matters and scrupulously avoided discussing them." Analytica, 708 F.2d at 1266. Instead the court is to make a "realistic appraisal of the possibility that confidences had been disclosed in the one matter which will be harmful to the client in the other." Westinghouse, 588 F.2d at 224.
The "substantial relationship" test essentially has three levels of inquiry: (1) the court must make a factual reconstruction of the scope of the prior legal representation; (2) the court must determine whether it is reasonable to infer that confidential information would have been given; and (3) the court must determine whether the confidential information is relevant to the issues raised in the instant pending litigation. Westinghouse, 588 F.2d at 224. Applying the three-part test, the Court finds the GDR case and the instant case are "substantially related."
The prior legal representation in the GDR case concerned Winston & Strawn's defense of AFTEC in what was essentially a breach of contract action. Rice and GDR claimed that as a result of finding a buyer for AFTEC they were entitled to cash and an ownership interest in AFTEC.
There is no dispute that the development of the "Thermodyne technology" was well underway at the time of the GDR case. Because Rice and GDR were allegedly entitled to an ownership interest in AFTEC if they prevailed, one would necessarily have to place a monetary value on such an interest for purposes of calculating their damages -- which, of course, is not only necessary for trial, but also, for purposes of negotiating a settlement. Calculating the value of AFTEC would necessarily involve estimating the value of the "Thermodyne technology." And, of course, when valuing the "Thermodyne technology, " it is reasonable to infer that a discussion of the sensitive technological aspects underlying the technology occurred.
Finally, knowledge obtained regarding the technological intricacies of the "Thermodyne technology" could be relevant to the issues in the instant litigation which focus primarily on whether McDonald's (and other defendants) misappropriated the technology.
Accordingly, based on a realistic appraisal of the GDR case and the instant litigation, the Court finds that the two cases are "substantially related."
Based on the plain-language of Local Rule 1.10(c), the Court's analysis is over -- Winston & Strawn cannot represent McDonald's since it failed to satisfy the first prong. McDonald's does not like that result, however. It claims that even if the cases are "substantially related," Winston & Strawn should not be disqualified if it can show that no lawyers in the firm possess material confidential information.
McDonald's position is not without merit. In fact, it is entirely consistent with the ABA Model Rules of Professional Conduct ("Model Rule"). Model Rule 1.10(b) states:
When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:
(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and