California Supreme Court adopts GMSR’s client’s arguments in widely followed case, clarifying the law regarding both arbitrations and attorney ethical duties

A large law firm, Sheppard Mullin, had for many years provided employment advice to a client on a recurring, as-needed basis.  Sheppard Mullin then undertook the defense of a new client, J-M Manufacturing Co., in a suit brought by the longtime client.  Although a conflict check revealed the conflict, Sheppard Mullin never disclosed the conflict to either client.  Instead, Sheppard Mullin told J-M that the firm “may currently or in the future” represent parties adverse to J-M.  J-M then signed a blanket waiver of all such existing and future conflicts.  An arbitration panel decided that Sheppard Mullin was entitled to recover fees for all services performed for J-M.  On appeal, Sheppard Mullin argued that (1) courts must defer to the arbitrator’s determination and, in any event, (2) the firm did not violate its ethical duties.  Sheppard Mullin was supported by amicus curiae that included most large law firms in California.

Today, the California Supreme Court sided with GMSR’s client, J-M, in a landmark case that impacts arbitration law, attorney ethics, and the practice of law in California.

For a more complete discussion of the two key issues, click below to read GMSR’s summaries:

California Supreme Court Clarifies Review of Arbitration Agreement Public Policy Challenges

California Supreme Court Opinion Yields Warnings Regarding Attorney Conflicts And The Preparation Of Engagement Agreements

To read the California Supreme Court opinion, click here.