A paralegal named Denise Hargrove worked for Thompson & Knight Law Firm, then left the firm and started working for David & Goodman. The two law firms were representing clients in a case against each other.
Phoenix Founders, Inc. v. McClellan 887 S.W.2d 831 (1994)
Facts of the Case
- Phoenix Founders Inc. was represented by Thompson & Knight
- The Benekes (Ronald and Jane) were represented by David & Goodman
-A paralegal left working with Thompson and Knight, worked for David and Goodman for 3 weeks, and went back to original work (Denise Hargrove)
-While at David & Goodman, Hargrove billed six-tenths of an hour on the collection suit for locating a pleading
-She discussed the case generally with Mark Goodman, the Benekes' lead counsel
-David & Goodman, counsel for the Benekes, wrote a letter to Thompson & Knight asserting its renewed employment of Hargrove created a conflict of interest and demanding they withdraw as counsel for Phoenix.
-Thompson & Knight made no effort to question Hargrove in regard to potential conflicts of interest resulting from her employment at David & Goodman
-The paralegal resigned after having been given the option of either resigning with severance pay or being terminated
-The firm itself refused to withdraw from the case
-Beneke filed a motion to disqualify Thompson and Knight for being exposed to confidential information
-The court held an evidentiary hearing and overruled Goodman's motion, stating it found no evidence that Hargrove had been given confidential information on the case
-On motion for reconsideration, however, the trial court granted the Benekes' motion and disqualified Thompson & Knight from further representation of Phoenix
-The disqualification order states that Hargrove possesses confidential information relating to the Benekes, and that all such confidential information was imputed to the firm of Thompson & Knight at the time she was rehired
-The Benekes argue that the standards applied to the hiring of lawyers should also apply to the hiring of paralegals
-Thompson and Knight appealed October 6, 1994
-Rehearing Overruled December 22, 1994.
Whether or not the firm should be disqualified from the case due to the paralegal moving from one firm to another.
The highest court the case was heard was the Supreme Court of Texas
It reached the Supreme Court because of disqualifying a law firm from litigation
- The court holds that disqualification of a law firm is not necessary if the rehired paralegal is screened from working on the ongoing civil action pursuant to the standards issued by the Texas Supreme Court
-The stay that the appellate court issued remained in effect so that the trial court could reconsider the disqualification order in light of the appellate court's opinion.
Reasoning Behind Decision
The standard of being able to establish that the rehiring law firm effectively screened the legal assistant from any contact in the underlying suit had not been adopted by the trial court when they issued their order for disqualification.