8-27-13 case 1-90-cv-05722-rmb-thk document 1376 endorsed letter addressed to judge richard m....

7/27/2019 8-27-13 Case 1-90-cv-05722-RMB-THK Document 1376 ENDORSED LETTER addressed to Judge Richard M. Berman

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U.S. Department of Justice

END S E D ' ~ : ~ ~ r ~ ~ ~ : I ~ ; : ~ ; Z e w YorkMEMOrs r = : . . . . . . - - ' - l ] - - ( b - . ~ ~ ~ ~ ~ ~ n ~ W J ~ ' ! ! ! ~ ~ -1=-=7=:\-'\\86 Chambers StreetNew York, New York 10007August 26,2013

By HandThe Honorable Richard M. BermanUnited States District JudgeUnited States Courthouse500 Pearl StreetNew York, New York 10007 DATE fILED: q ~ ? ( 1 3 ~

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Re: United States v. District Council o(Carpenters. 90 Civ. 5722 (RMB)Dear Judge Berman:

This Office represents the United States in the abovenamed case. We write respectfullyin response to the Court's August 12, 2013, Order directing the parties to analyze any potential oractual conflicts of interest arising from the fact that the District Council Benefit Funds ("BenefitFunds") and the Contractors Association ofGreater New York ("CAGNY"), an association ofemployers, were both represented by the law firm ofKauff, McGuire & Margolis LLP (the"McGuire firm"). This issue arose in connection with a request that the Court approve acollective bargaining agreement ("CBA") entered into between the District Council andCAGNY. As discussed below, while we believe there may be a potential conflict in the McGuire nrfirm's representation ofCAGNY in collective bargaining negotiations with the District Councilin light of the Benefit Funds' status as a third party in interest. we cannot provide a definitiveanswer, as this is a very fact dependent determination and this Office is without all of thenertinent facts.

As an initial matter, our analysis is based on the New York Rules of Professional Conduct(the "New York Rules"), as this matter is pending in the Southern District ofNew York, whichhas adopted the New York Rules. See, e.g., Local Civil R. 1.5(b)(5). However, we also discussthe comments to the New York Rules which, whi1e not officially adopted, are considered by theNew York State Bar Association and provide informative, if not binding guidance.

First, the issue before the Court implicates New York Rule 1.7. As relevant here, the rulestates:(a) Except as provided in paragraph (b), a lawyer shall not represent a client if areasonable lawyer would conclude that either:(1) the representation will involve the lawyer in representing differing interests; or


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page 2Hon. Richard M. Berman August 26, 2013

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (I ) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law;(3) the representation does not involve the assertion of a claim by one clientagainst another client represented by the lawyer in the same litigation or otherproceeding before a tribunal; and(4) each affected client gives informed consent, confirmed in writing.

New York Rule 1.7.The New York Rules define "differing interests" as "every interest that will adversely

affect either the judgment or the loyalty of a lawyer to a client, whether it be conflicting,inconsistent, diverse, or other interest." New York Rule 1.0(f); see also New York Rule 1.7 cmt.8 ("Differing interests exist if there is a significant risk that a lawyer's exercise of professionaljudgment in considering, recommending, or carrying out an appropriate course of action for theclient will be adversely affected or the representation would otherwise be materially limited bythe lawyer's other responsibilities or interests. . . . The critical questions are the likelihood that adifference in interests will eventuate and, ifit does, whether it will adversely affect the lawyer'sprofessional judgment in considering alternatives."). Notably, "differing interests" conflicts canoccur in transactional matters as well, see New York Rule 1.7 cmt. 26, even if the attorney'srepresentation of the two clients at issue occurs in separate matters. Thus, an attorney'srepresentation of one client in a negotiation (here, the McGuire firm's representation of CAGNYin CBA negotiations), which entails advocating a position that is adverse to the interests ofanother client (here, the Benefit Funds) may result in a conflict, even though the attorney'srepresentation of the other client (Benefit Funds) is undertaken in connection with a separatematter. See New York Rule 1.7 cmt. 7. 1 This is because, among other things, the first client"may reasonably fear that the lawyer will pursue that client's case less effectively out ofdeference to the other client, that is, that the lawyer's exercise of professional judgment on behalfof that client will be adversely affected by the lawyer 's interest in retaining the current client."See id cmt. 6.

I There is no conflict if the adverse interest is only economic. "[S]imultaneousrepresentation in unrelated matters of clients whose interests are only economically adverse, . . .does not ordinarily constitute a conflict of interest and thus may not require consent of therespective clients." New York Rule 1.6 cmt. 6.


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page 3Hon. Richard M. BermanAugust 26, 2013As applied here, "differing interests" may exist between the McGuire firm's .representation ofCAGNY in the CBA negotiations and its representation of the Benefit Funds m

other matters, notwithstanding that the Benefit Funds are not a party to the CBA negotiations,because the CBA directly addresses contributions to the Benefit Funds. One might reasonablyassume that an employer's association would seek to minimize contributions its constiturntem 10 ers must a on behal fof the union workers the em 10 while the Benefit Funds woulseek to maximize those same amounts. However, as CBA negotiations are multifaceted ancomplex, further factual development would be necessary to test the validity of this assumption.For example, CAGNY may not have any contested any requested increase in contributions by theDistrict Council, but focused its efforts at challenging other requested modifications. This Officeis not privy to that information.

Second, and relatedly, the McGuire firm owes both CAGNY and the Benefit Funds a dutyof confidentiality. The duty of confidentiality is defined in New York Rule 1.6, which states inrelevant part:

(a) A lawyer shall not knowingly reveal confidential information, as defined inthis Rule, or use such information to the disadvantage of a client or for theadvantage of the lawyer or a third person, unless:(l) the client gives informed consent, as defined in Rule l.O(j);(2) the disclosure is impliedly authorized to advance the best interests of the clientand is either reasonable under the circumstances or customary in the professionalcommunity; or(3) the disclosure is permitted by paragraph (b) [which defines certain exceptionsnot applicable here].

New York Rule 1.6. "Confidential information" consists of information gained during orrelating to the representation of a client, whatever its source, that is (a) protected by theattorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or(c) information that the client has requested be kept confidential. ld.2

Here, the McGuire firm almost certainly obtained confidential information from each ofCAGNY and the Benefit Funds in representing each in the respective matters. Accordingly,absent client consent, the firm's professional obligations preclude (1) revealing such information;(2) using that information to the disadvantage of either; or (3) using that information to theadvantage of a third party (such as the other client). It is possible that the McGuire firm obtainedpertinent confidential information from CAGNY or the Benefit Funds involving CBA provisionsthat affect both entities. If this was the case, the duty of confidentiality would "materially limit"its representation of the client who did not supply the confidential information. New York Rule

2 "Confidential information" does not ordinarily include (i) a lawyer's legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates. See id.


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Hon. Richard M. Berman page 4August 26, 20131.7(a)(2). Again, this Office is not in possession of infonnation indicating whether or not thisoccurred.

Third, to the extent there were conflicts ofinterest between the McGuire finn'ssimultaneous representation of CAGNY and the Benefit Funds, those conflicts are waivable,3 andthe McGuire finn has represented that consent has been obtained. See Ltr. from McGuire toCourt dated August 22,2013. Conflicts under New York Rule 1.7 can be consented to if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law;(3) the representation does not involve the assertion of a claim by one clientagainst another client represented by the lawyer in the same litigation or otherproceeding before a tribunal; and(4) each affected client gives infonned consent, confinned in writing.

New York Rule 1.7(b). We have not uncovered any prohibitions in law, see N.Y. Rule 1.7(b)(2),of the McGuire finn's representation ofCAGNY and the Benefits Funds. Moreover, theMcGuire finn's representation ofCAGNY and the Benefits Funds does not involve a claim byone against the other in the above-referenced case, and so New York Rule 1.7(b)(3) also wouldnot preclude consent.4

Accordingly, if a conflict did exist, CAGNY and the Benefit Funds would both have toprovide infonned consent to the McGuire finn to continue to represent both. "'Infonnedconsent' denotes the agreement by a person to a proposed course of conduct after the lawyer hascommunicated infonnation adequate for the person to make an infonned decision, and after thelawyer has adequately explained to the person the material risks of the proposed course ofconduct and reasonably available alternatives." New York Rule LOG). It also requires "that theclient have the opportunity to consult other counsel if the client so desires." New York Rule 1.7cmt. 18.

Thus, to obtain infonned consent, the McGuire finn must explain to CAGNY and theBenefit Funds the nature of the conflict, the risks (such as risks related to confidentialinfonnation), and the potential outcomes. The sophistication of CAGNY and the Benefit Fundsand nature of the conflict are relevant to the infonnation that the McGuire firm must provide.

3 While a client can consent to future or speculative conflicts so long as the consent isknowing, see New York Rule 1.7 cmt. 22, the possibility of future or speculative conflicts is nolonger at issue here since the McGuire firm no longer represents CAGNY, see Ltr. from McGuireto Court dated August 22, 2013.

4 Only the McGuire firm can address whether New York Rule 1.7(b)(1) precludes consent.


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Hon. Richard M. Berman page 5August 26, 2013See N.Y. Rule 1.7 cmt. 18 ("The infonnation that a lawyer is required to communicate to a clientdepends on the nature of the conflict and the nature of the risks involved, and a lawyer shouldtake into account the sophistication of the client in explaining the potential adverse consequencesof the conflict."). The requirement that the consent be confinned "in writing," New York Rule1.7(b)(4), requires either a document from the client, a document from the lawyer promptlytransmitted to the client confinning oral consent, or a statement on the record by the client, seeNew York Rule 1.7 cmt. 20.

We thank the Court for its consideration of this matter.Respectfully,PREET BHARARAUnited States Attorney

By: /s/ Tara M La MorteBENJAMIN H. TORRANCETARA M. La MORTEAssistant United States AttorneysTelephone: 212.637.2703,2746Fax: 212.637.2702

cc: Raymond McGuire, Esq. (by-email)Dennis Walsh, Esq. (bye-mail)Bridget Rohde, Esq. (bye-mail)James Murphy, Esq. (bye-mail)

Su

: : R ~ ~ ~ ~ l !?"J,..,J ":i?.e,,,.-, Richard M. Berman, U.S.D.J.

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