Court Applies Standard Joint Representation Principle

July 4, 2012

In most situations, any jointly represented client can access the files of the lawyer who represents the joint clients. This basic principle can have a dramatic effect if the jointly represented clients become adversaries.

In In re Equaphor Inc., Ch. 7 Case No. 10-20490-BFK, 2012 Bankr. LEXIS 2129 (Bankr. E.D. Va. May 11, 2012), the court dealt with files that a law firm created during its joint representation of Equaphor and three individual co-defendants in a derivative action. When Equaphor later declared bankruptcy, the bankruptcy trustee moved to compel the law firm to turn over its litigation files. The individual clients resisted the turnover – emphasizing that Equaphor had been only a “nominal defendant” in the derivative action. Id. at *9. The court rejected this argument, noting that “while [Equaphor] may have been named as a nominal defendant, there is no such thing as a nominal client of a law firm,” and that “there is no support in the case law for a ‘nominal defendant exception’ to the principle that all clients are entitled to an attorney’s files.” Id. at *9-10, *10.

As in many other contexts, a corporate client’s bankruptcy can put the client in the hands of someone whose interests are dramatically different from those of the pre-bankruptcy corporation.