Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Company, Inc. (2018) 6 Cal.5th 59

A large law firm, Sheppard Mullin, had for many years provided advice to a client on an as-needed basis. Sheppard then undertook the defense of a new client, J-M, in a suit brought by the longtime client. Sheppard never disclosed the conflict to either client. Instead, Sheppard 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 conflicts. An arbitration panel held that Sheppard Mullin was entitled to collect its fees for representation of J-M.

The California Supreme Court concluded that Sheppard’s failure to disclose the conflict made the waiver invalid and violative of public policy, requiring vacation of the arbitration award.

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

For additional case history, see California Court of Appeal opinion.

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