Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Company, Inc. (Aug. 30, 2018, S232946) ___ Cal.5th___ [2018 WL 4137013]

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.

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

Case Briefs